The government in India has immediately imposed a 40% levy on onion exports. The aim is to lower onion prices in the country and thus curb food inflation. That should be good for the mood among the population, who will go to the polls later this year.
In the first six months of this year, India exported 1,45 million tons of onions, the news agency reported. Reuters. That is 63% more than last year, when the counter stood at 890.000 tons. According to the statistical service APEDA, part of the Indian ministry of agriculture, exports in the 2022-2023 fiscal year will even reach 2,5 million tons. The price has increased by 20% this summer: to $28,87 per 100 kilos. Converted to about €26,53. That is the highest price in three years. The main customers of Indian onions are Bangladesh, Malaysia, United Arab Emirates, Sri Lanka and Nepal. Countries where a lot of onions are traditionally consumed.
food inflation
India is facing a challenging growing and storage season due to weather extremes caused by the El Niño weather pattern. August is the driest month in more than a hundred years. Heat in July caused many losses in onion stores. These extremes are pushing food prices to their highest level in three years. Food inflation reached its highest level in fifteen months in July and the government is doing everything it can to curb it. Especially now that there will be state elections in various states later this year, followed by national elections in 2024.
Indian exporters saw demand for onions increase sharply, especially in the first half of this year, because much less product was available on the world market. There was a lot of demand for onions from Bangladesh and the Middle East. A price increase of 40% eliminates the country from the world market. China and Pakistan can meet part of the onion demand. However, the quantity available for export is limited, an exporter told Reuters.
The Netherlands
Hopefully Dutch exporters can also benefit from the demand. Especially when product flows change to supply other countries. Dutch onions are currently on sale global market relatively expensive and that slows down the export engine. Exports to India itself hardly occur. Only a small volume was exported to that country in 2019 and 2020. Only Malaysia is a country that is on the list of both India and the Netherlands. In the 2021-2022 season, 56.500 tons of onions were exported here. Last season that was 33.120 tons. That volume contrasts sharply with that of India. In 2022, it exported 332.500 tons of onions to Malaysia. This makes it the second largest destination, after neighboring country Bangladesh. That country purchased almost 700.000 tons of onions last year.