Saddled with higher inventories and a dip in international prices, onion dehydration units in Gujarat are finding it difficult to commence production in the new season beginning February.

This is even as the prices of the bulb have been on a declining trend over the past few weeks as the harvest of the late kharif season crop has begun in the key producing regions.

Factories suffer

Trade sources revealed that out of the 110 onion processing units located at Mahuva in Bhavnagar district, over 70 have either closed or reduced their operations due to piling up of stocks and reduced international prices.

Of the total dehydrated onion production of about 75,000 tonnes last year, about 25,000 tonnes is still left with the industry as the carryover stock this year, leading to reduced plant utilisation.

Prices on a slide

“There is no parity in the international markets as the prices have dropped to about $900-1,000 a tonne for the dehydrated onions in different varieties. Last year, the prices had touched $1,200. We are heavily dependent on the export market because about 85 per cent of the overall dehydrated onion is exported,” said Vitthalbhai Koradiya, President, All India Dehydration Association.

No. 2 producer

India is the second largest producer of dehydrated onions accounting for around 40 per cent of the global output, while US is the largest producer with a 45 per cent share.

China contributes around 10 per cent and Egypt accounting for the rest.

For India, the key markets continue to be West Asia, Europe and the South-East Asian nations, said Koradiya adding that exporters are seeing newer geographies such as the US, Europe and Russia.

MEP sought

Koradiya further mentioned that the association and the stakeholders of the trade have also raised demand to introduce minimum export price (MEP) for dehydrated onions too. “We have represented to the Union Commerce Ministry and also to the Finance Ministry. But there has been no assurance from them,” said Koradiya.

To make each kg of dehydrated onion, about 8-10 kg of raw onion or fresh onion is consumed.

Piling up of stocks

“Of the overall 75,000 tonnes of production last year, only 55,000 tonnes were shipped last year and we have about 20,000 tonnes of carryover stock. The prices have declined in the international market, therefore export isn’t viable. And on the other hand, in the domestic market, there is thin demand for dehydrated onions, which is not likely to absorb the excess stock,” said Manoj Ram, a dehydration unit owner and exporter from Mahuva.

According to him , about 25 units are operational at the beginning of the season, which is considered between February and June.