Faced with fierce global competition, the onion dehydration units that convert the bulb into dry flakes and powder are now looking at the domestic market to sustain and expand their business.
According to industry estimates, the domestic consumption is pegged at a tenth of 55,000 tonnes producedannually. The domestic consumption is largely driven by institutional buyers such as star hotels and restaurants.
Consumption, potential“There is a big market in the metro cities and urban pockets. Dehydration industry can grow faster provided awareness and acceptance of such products grows in the domestic market,” said Vitthal Koradiya, President of the Onion Dehydration Association of India.
However, onion powder is yet to find acceptance in the domestic market by the retail consumers. Despite the recent rise in onion prices, the consumers are yet to take a liking for the dried version of their daily
“It is a matter of daily practice and routine. The taste also differs. Therefore, a very negligible portion of onion consumers would shift to dry onion in the event of a price rise of the raw onion. Otherwise, people continue to spend high on onions,,” said Ashok Walunj, Director of onion-potato market of APMC Vashi, Mumbai. The difference is apparent as dried onion flake or powder is mainly produced from the white variety of the bulb, while the traditionally consumed vegetable is the red one. Koradiya stressed upon the need for the government support to push the consumption of dried onion.
Exports market“We export roughly around 50,000 tonnes of dehydrated onions annually. But there is a potential for sale of upto 40,000 tonnes in the domestic market itself. If the government takes proactive steps to encourage consumption, there will be a sustainable future for this industry,” added Koradiya, who runs a dehydration plant at Mahuva near Bhavnagar.
The uncertainty in rainfall has been affecting the raw onion supplies (mainly white onion). Sharp price fluctuations of raw onion, which is grown mostly in Saurashtra and Nashik region, has put the $110-million (approximately ₹690-700 crore) industry in a tight spot.
A boost in domestic consumption would encourage entrepreneurs to venture into this business, he said. Association data point out about 70 units are operational in and around Mahuva region, while about 20 units are based around Nashik.
Higher export price“Capacity is not a constraint for us, as we see at least 4-5 new units coming up almost every year. They are investing with a target to cater to the local market. But acceptability continues to be a challenge,” he added.
The price of raw onion doubled this year at ₹15-17 a kg against ₹8 last year. According to trade estimates, 10 kg of raw onion makes one kg of dehydrated onion, be it flakes or powder.
The doubling of raw material cost has reflected in higher export price, making the Indian product expensive in the overseas market.
“As against the prevailing international price of $2,200 a tonne, our price is $2,600. We are facing competition from China, the US and Egypt,” said Koradiya adding that the government has also withdrawn the 3 per cent export subsidy to dehydration units thereby making it tougher for them to compete.
Also, because of the high prices, only 15,000 tonnes have been exported so far in current calendar year against 50,000 tonnes last year.
The business being seasonal mostly during January to June, the industry faces difficulty to keep their units running.