Buyers are not keen on onions from India. Over the past 2 years, India has imposed export restrictions on onions with the result that major export markets have now found other suppliers. Getting those customers back is not easy.
As a result, the local onion price in India fell by 10% in July. “Our overseas customers are not placing orders citing the export ban imposed for 12 months in September last year,” Ajit Shah, chairman of the Horticulture Produce Exporters Affiliation (HPEA) told The Hindu Businessline. "Customers have switched to onions from other countries and are now not coming back."
Archenemy Pakistan benefits
While the demand for onions from India is tepid at best, exports in neighboring country Pakistan are doing better. “Our onions cost around $320 to $350 per ton delivered on the boat,” says Shah. "Pakistan is $75 below that. In addition, the exchange rate of the Pakistani rupee is more favorable against the dollar than the Indian rupee." Onion exports from India to countries such as Sri Lanka and Malaysia are lagging behind due to tariffs and the effects of the corona pandemic.
“This year, unlike the last few years, we do not seem to be heading towards an onion shortage in India,” Suvarna Jagtap chairman of the Agricultural Produce Advertising Committee (APMC) told The Hindu Businessline. "We have had sufficient rain and the first onions of the new harvest will soon hit the market. We expect the onions from the large growing areas of Maharashtra and Kharif in September." Wholesale prices for good onions have fallen from 2.200 rupees (approximately €25) to 2.000 rupees (approximately €22) per 100 kilos in one month. "Ad hoc decisions about introducing an export ban hinder exports. Other countries have fallen into the gap that we have left as a result."
Significant price drop
In retail in September 2019, a kilo of onions cost an average of 100 rupees (€1,13) or more. That was reason for the Indian authorities to take measures to control the price. In addition to the export ban, onions could be imported duty-free and companies were only allowed to keep a limited stock. Over the past month, the retail price of onions has fallen to an average of 35 rupees ($0,40) in New Delhi and 28 rupees ($0,32) in Mumbai.
According to the Indian Ministry of Agriculture, the harvest from July 2020 to June this year was 26,92 million tonnes. During the same period a year earlier, this was 26,09 million tons. Due to good balances, the onion has gained popularity among Indian farmers. The area last season was 1,6 million hectares compared to 1,43 million hectares the previous season. "A bright spot in the current difficult market is that the corona measures are being relaxed," says Jagtap. "With the opening of the resorts and restaurants, we hope that the demand for onions will also pick up again."