Indian onions outpriced in global market on higher domestic price, shipping woes

Onions prices have been climbing since the beginning of 2021 after the government lifted the ban on exports that was imposed in September when rates began to surge.

January 18, 2021 / 04:32 PM IST

Indian onions have been outpriced in the global market, as prices at home rule higher than those in competing nations. High freight charges and schedules of ships, too, are coming in the way of exports.

“The situation for onion exports is not favourable as our prices are higher than the offers from China and Pakistan. The schedule of vessels and freight charges are also not matching up to buyers expectations,” said a Gujarat-based exporter, who did not wish to be identified.

“Export movement of onions has begun but they are not in full swing. Demand is still lower and restricted, though stocks with the importing countries are lower,” said Chennai-based Rajathi Group Director Madan Prakash.

Exporters are also up against the second wave of novel coronavirus (COVID-in some of the countries to restrictions on the movement of people and goods.

“In Malaysia, there is Movement Control-1 due to COVID-19. Importers feel demand will be lower and are buying limited quantities only,” said Prakash, whose group exports agricultural products. The Gujarat-based exporter also concurred with his view.

Domestic prices were hovering between Rs 30 and 35 a kg, said Nashik trader Sushant Musale.

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According to the agriculture ministry, most trades in new onions took place at Rs 2,650 a quintal at Lasalgaon, one of the important markets in the Nashik trade hub, on January 18. During the same time last year, prices were at Rs 3,500 a kg.

Onions prices have gained since the beginning of 2021 after the government lifted the ban on exports that was imposed in September when rates began to surge.

Retail prices of onion topped Rs 100 a kg in the second and third weeks of October before a slew of measures, including duty-free imports and imposition of stock limits, brought the prices down.

Old onions, harvested in April and whose stocks is still available, are ruling at around Rs 20 a kg in Nashik markets.

“Compared to prices here, local rates in countries such as Pakistan are lower, making them competitive,” said the Gujarat-based trader. Though Pakistan has a limited onion season, crop arrivals have begun, putting pressure on the global market.

Prakash and Musale said Egypt and Turkey onions were also competitive compared to Indian onions.

According to Prakash, exporters get packaged cargo for shipments at around Rs 31 a kg in Mumbai.

Shipping problems

Exporters are facing problems in shipping their produce. Prakash said the problem of container shortage continues, while trans-shipment cargoes end up getting delayed by almost a week.

“Sometimes, cargoes to Vietnam go via other ports. They are getting delayed now. From the earlier 14-15 days, the consignments take 21 days now,” he said.

Traders and exporters expect domestic prices to decline further after this week as arrivals are expected to increase.

“Harvest of late kharif crop is on in full swing. Arrivals will increase and thus put pressure on prices,” Prakash said.

Musale said that onion harvest had begun in other states such as Madhya Pradesh and Gujarat also. “These arrivals will result in prices dropping,” he said.

Onion prices had spiked across the country in October after rains affected the crop in Maharashtra, Karnataka, Andhra Pradesh, Madhya Pradesh and Gujarat. A shortage of seeds and the onset of anthronose and twister bacteria in the standing crop also pushed up prices.

Since October 1 year till January 18, onion arrivals have been pegged at 8.3 lakh tonnes in Maharashtra compared with 10.26 lakh tonnes during the same period a year ago.

(Subramani Ra Mancombu is a Chennai-based journalist who writes on commodities and agriculture)
Subramani Mancombu is a journalist based in Chennai who writes on commodities and agriculture
first published: Jan 18, 2021 04:31 pm

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