The government in India has extended the export ban on onions without specifying an end date. This decision was taken to keep local onion prices low, which is favorable to consumers. This is important in light of the upcoming parliamentary elections. It means that one of the largest onion exporters will not return to the market.
The ban on onion exports was initially ended on March 31. This ban was imposed in December. The government is now putting a stop to this, Indian media report. Local prices on vegetable markets have halved since the end of last year. Bad news for traders, but onion-loving consumers benefit from this.
Reduce food inflation
Falling food inflation is what the government is aiming for. Prime Minister Narendra Modi hopes to claim his third term as head of the world's most populous country next month. The elections last a total of seven weeks and start in the second half of April. Consumers now pay 1.200 rupees for 100 kilos of onions. Converted to €13,28. That was double in December.
It is bad news for the countries that depend on onions from India that Modi's government took this decision last Friday, March 22. Bangladesh, the United Arab Emirates and Malaysia are the largest buyers of onions from the country. With 2,29 million tons of onion exports in the 2022-2023 season, the country can call itself the largest exporter of this product in the world. For comparison: the Netherlands exported 1,1 million tons that season and 1,3 million tons in the previous season. The three countries mentioned account for volumes ranging from 670.000 to 400.000 tons.
New chances
Exporters believe that this will undoubtedly drive the price up further. Nearly half of all onions in Asia come from India. China and Egypt are rivals on the export market, but they have to deal with much longer logistics chains and therefore higher costs. Whether and to what extent the Netherlands can benefit remains to be seen. What could potentially work to our advantage is if volumes of onions from elsewhere are channeled to Indian customers, creating new opportunities.
In addition to a significantly lower price, another consequence of the export ban is noticeable in India. Growers also have to deal with very low onion prices and are no longer interested in growing them. Indian onion experts therefore expect the acreage to decline sharply if the government continues to ban exports.