India: Centre re-imposes MEP on potato

The MEP on potatoes was scrapped in February 2015 after prices slumped. Imposition of MEP means exports of potatoes priced above Rs 24.24 a kg won’t be permitted.

The average retail price of potatoes has risen by Rs 4 per kilogram and was hovering around Rs 30 per kg in many parts of the country since the start of this month, mainly due to heavy rains in potato growing areas and some loss to standing crops.

Potato production in 2014-2015 crop year was estimated at around 48 million tonnes (mt), up from 42 mt the previous year.

The decision to impose MEP on potatoes was taken at a high-level meeting of top officials chaired by the Cabinet secretary on Tuesday.

The officials said, it was also decided to warn sugar millers and traders to not increase prices artificially. The Centre would exercise all its powers under the Sugar Control Order to check prices.

According to a central government estimate, sugarcane acreage in 2016-17 crop year was around 5-5.1 million hectares, almost the same as last year.  “During the last five years, production of sugar in the country has been in excess of its domestic consumption and there is no shortage of sugar,”  an official said.

On pulses, officials said the meeting discussed the National Pulses Mission and also the progress made in creating two mt of buffer stocks. State governments were advised to take all possible action against hoarders and black marketers to check price rise.

Meanwhile, research agency ICRA in a report said that domestic sugar prices, which had risen by Rs 1,000 per tonne from June 2016 to July 2016, won’t come down soon because of expected decline in production in 2016-17 and also in the current year.

“We expect the sugar prices to remain firm for the next three-four quarters given that the sugar production is likely to decline further to 23-24 million tonnes in 2016-17  because of a decline in the availability of cane in Maharashtra and Karnataka. Although the monsoons are likely to be better during the current year, the impact on the output is likely to be seen only in sugar season 2017-18, given the growing period of sugarcane.  Further, we believe that the imposition of a 20 per cent export duty by the government is unlikely to have any significant negative impact on the prices and profitability of the sugar mills in the near term,”  Sabyasachi Majumdar, senior vice-president, ICRA said.