Onion export demand has resurfaced as domestic prices plummet, but exporters continue to be affected by container shortages and high freight rates.

“Exports are up while domestic prices are down. But we are not able to meet our orders because containers are not available and freight costs are high,” said Ajit Shah, President of the Horticultural Products Exporters Association (HPEA).

Less than a year ago

“The feasibility of exporting onions is low due to high freight rates, although prices for all onions – from Bellary Rose to sambhar – are falling sharply,” said M Madan Prakash, Chairman of Agri Commodities Exporters Association (ACEA).

Bellary Rose onions are delivered from Karnataka to Tamil Nadu at around ₹1,300 per quintal. The cost of large or normal onions is around ₹1,000 per quintal, he said.

The onion price or modal rate at which most trade took place at the Lasalgaon Agricultural Commodities Marketing Committee (APMC) yard, the largest in Asia, was ₹600 per quintal on Tuesday for the late arrival of Kharif. Prices are around ₹100 quintal lower than the period a year ago.

Record output

“Onion prices are falling due to excess production,” Prakash said.

According to the first advance estimate of horticultural crops from the Ministry of Agriculture and Farmers’ Welfare, onion production this season (July 2021-June 2022) is estimated at a record 31.13 million tons from 26 .64 tons last season. The higher production is due to the increase in onion acreage this season to 19.14 lakh hectares from 16.24 lakh hectares a year ago.

The drop in prices has led growers in Mahrashtra to demand that the onion be purchased by the National Federation of Agricultural Cooperatives to build up buffer stocks at a higher price. The Center has set up a program to buy up to two lakh tons of onions.

Buffer stocks are built up to help farmers get better prices when they dip. On the other hand, they can be used to curb price increases due to a shortage or fear of a lower harvest.

“Lack of parity”

Shah of HREA said the Indian onion was quoted at less than $200 (₹15,225) per ton. He said exporters are fighting “a type of trade battle” because freight rates are lower for some countries.

“We haven’t made any shipments recently because there is a lack of parity,” ACEA’s Prakash said.

One of the main reasons is that fees for reefer containers have increased more than sixfold to $10,000 currently, compared to $1,500 for a 40ft container.

“Also, it takes longer to deliver cargo to destinations in Southeast Asia,” he said. For example, it took 15-20 days to reach Klang Port in East Malaysia earlier. Now it takes about 40 days.

Weakness of the Pakistani currency

Prakash said Pakistan continued to price competitively as its currency fell sharply against the dollar. The Pakistani rupee is quoted at 183.50 to the dollar, while the Indian rupee is ruling at 76.10 to the greenback.

“Pakistan currently has no more goods to export. His new crop will only come after two months,” Shah said.

Despite the obstacles, exports have picked up and are showing improvement, he said.

The increase in exports is significant after India lost ground in 2019 and 2020 following poor harvests due to unseasonable rains. Then India imposed a minimum export price and then imposed a ban to control prices.

This has caused problems in overseas markets for exporters, with Pakistani and Iranian onions filling the void. The Indian government has also taken steps to increase the acreage under onion, especially in non-traditional states. One of the objectives was to ensure stable prices throughout the year.

The initiative has yielded good results with production up 5 million tonnes and exports up.

Onion Price in Rs/quintal at Lasalgaon, Nashik District, Maharashtra
head down

Source: Agmarknet

Published on

April 12, 2022