Iraq and Turkey are providing tough competition to India in the latter’s traditional onion export market, particularly with the Union Government taking ad hoc decisions to ban shipments over the last few years.

“Iraq and Turkey are waiting to fill in any gap left by India in the onion export market. They gained when India banned onion exports from September 24 to December 31 last year,” said Agri Commodities Exporters Association (ACEA) President M Madan Prakash.

“These countries besides Pakistan are always behind us. The ban on exports is proving to be a problem in winning back our traditional hold,” said Ajit Shah, President of Horticulture Produce Exports Association (HPEA).

Export ban

When the Centre bans onion exports for six months, it proves difficult to recover the market share, said traders.

In the last few years, the Centre has been resorting to banning exports or fixing minimum import price for onion exports to rein in rising domestic prices. On September 24 last year, the Union Government banned exports after retail prices began to zoom in the domestic market.

As prices in the retail markets topped ₹100 a kg, the Centre, besides the export ban, imposed limits on stocks traders can hold and permitted duty-free imports that lasted until January 31 this year. Onion prices surged last year on lower production as the crop was affected by unseasonal rains.

The export ban was lifted from January 1, but exporters had to face problems in getting buyers.

“Initially, we had problems in exporting as our traditional buyers had ample stocks from Turkey and Iraq, whose consignments were also waiting at ports such as Colombo,” said ACEA’s Prakash.

Uncompetitive prices

In particular, exporters faced problems in winning back the market in Malaysia, Sri Lanka and the Gulf. Besides, Pakistan also offered its onion competitive prices, making it tougher for India to gain market share.

Unseasonal rains and damage to standing crops during January-February resulted in onion prices topping ₹4,000 a quintal in the domestic market and this, too, affected the competitiveness of Indian onion in the export market after the export ban was lifted.

Currently, prices have crashed by nearly 75 per cent to around ₹1,000 in the trading hub of Nashik in Maharashtra with the Rabi onion crop arriving in various markets across the country. The Rabi onion has a longer shelf-life and thus is ruling ₹100-200 higher than late Kharif onions, which too are hitting the markets alongside.

“The onion situation reminds us of what happened with regard to masur dal (red lentils). We were a large exporter 25 years ago but we now import it,” said HPEA’s Shah.

“We should not have banned onion exports. Pakistan has gained much out of this,” he said.

“We find it difficult even to export our exclusive Bangalore rose onion in view of the ban that applied to all types of onion. Even after six months, we find it a problem to find buyers,” said ACEA’s Prakash, also director of Chennai-based Rajathi Group that exports the bulb.

Shipments stats

Export trade points out to data that show that after hovering between 10 lakh and 20 lakh tonnes, onion shipments hit a record 32.94 lakh tonnes during 2016-17 but after that, they have been hovering below 22 lakh tonnes.

During 2019-20, onion exports dropped to a decade low of 11.47 lakh tonnes before increasing again last fiscal. However, the export ban during September-December played spoilsport. Still, during the 5-½ months of the fiscal, exports topped the previous year level.

According to a statement made by Union Minister of Agriculture Narendra Singh Tomar in Parliament, onion exports totalled 84,000 during January-February this year soon after the ban was lifted.

“The problem we face is that every time we try to recover from such ban, the movement is initially slow,” Shah said.

PK Gupta, Director (acting) of Nashik-based National Horticultural Research and Development Foundation, said that Indian onions were priced higher and hence, other destinations gained.

“Buyers are not ready to purchase our onions when others are offering it more competitively,” he said.

Suvarna Jagtap, Chairperson of Asia’s largest onion market at Lasalgaon in Maharashtra, said that this year the bulb’s exports were hit as importing nations curbed shipments in view of the Covid-19 pandemic.

“Last year, prices were high that affected our competitiveness,” she said.

“Right now, we have become competitive in the global market. We are getting orders from countries such as Malaysia,” said ACEA’s Prakash.

Currently, Indian onion is quoted at $250 a tonne (₹18,700) free-on-board compared with Pakistan’s quote of $230 (₹17,200). Turkey onion is quoting at $280 (₹21,000), while the Netherlands’ produce, another serious player in the export market, is priced at $335 (₹25,000).

“We are getting packed cargoes of onion at Mumbai at ₹13,500 a tonne,” said Prakash.

Shah said India should allow exports and imports of agricultural produce freely so that markets would find their levels automatically and farmers would gain.

Onion production is seen higher at 26.29 million tonnes, a record, during the current crop year to June against the final estimate of 26.09 million tonnes in 2019-20.