Indian Economy News

Onion exports jump 25% in two months

Mumbai:Onion exports have gone up 25 per cent over the past two months, after a four-month slump, because of less competition in destinations such as Sri Lanka and West Asia.

Between December 2014 and March 2015, Indian onion exporters were facing tough competition from Pakistan, both in quality and prices. Onions from Pakistan were sold in West Asia at $100 lower than the price offered by Indian exporters. Their quality was also superior to the India counterpart, adversely affected by unseasonal rainfall in December, February and March.

Rising exports have also helped spurt modal prices in the benchmark Lasalgaon market at Rs 1,175 a quintal on Tuesday as against Rs 1,000 a quintal on May 2. Also, arrivals have risen to 13,000 tonne from 10,000 tonnes in the same period under consideration. For exports also, prices have surged by $25-50 to $375 so far this month.

“But, Pakistan has run out of stock. So, overseas importers do not have any option but to accept onion from India. Despite being quality inferior than global standard of the fair average quality (FAQ), the consignments are accepted,” said Ajit Shah, President, Horticulture Exporters Association.

Data compiled by the National Horticulture Research and Development Foundation (NHRDF) showed, India’s onion exports at 265,066 tonnes between April – May last year. Exports have been up by 20-25 per cent this year, said Shah.

In the preceding four months, however, onion exports from India remained lackluster due to high domestic prices. Onion was selling at around Rs 25 a kg in domestic market due to reports of crop damage on unseasonal rainfalls and hailstorms. In exports terms, therefore, India was uncompetitive.

Consequently, India’s overall exports between April 2014 and February 2015 reported a decline of 30 per cent as Indian market was capture largely by Pakistan. Data compiled by NHRDF, onion exports in the first 11-month of 2014-15 plunged to 0.97 million tonnes as against 1.26 million tonnes in the same period last year. Considering 0.11 million tonnes of export quantity of March 2014 to remain unchanged in March 2015, India’s overall onion export may hit seven-year low at 1.08 million tonnes in the financial year 2014-15.

Now, onion exports from India have rebounded as, according to trade sources, Indian exporters are offering the commodity at $60-70 a cheaper than any other originating countries including China and Iran. Consequently, India gets advantage over competition despite poor quality of product.

Due to political unrest, consignments from Yeman were also not coming into the Middle East markets.

But now, market is slowly coming in track. Export from Yemen has started, of course, in negligible quantity. Exporters from China and Iran have also gradually initiated testing market pulse in Dubai and Doha.

“Now, stockists have started sorting out good quality from rain soaked onion for future sale. While good quality onion gets exported, the rain soaked one is brought into the market resulting into a sudden spurt in arrivals into mandis. Quality of Indian onion is inferior and therefore, such onion cannot be dispatched for long distance for fear of rotting. Consequently, onion exports from India were low until the last few months,” said R P Gupta, Director, NHRDF.

Meanwhile, onion availability may become scarce in lean season of August – September ahead of ensuing kharif crop harvest. Various estimates suggest between 25-30 per cent of crop damage due to unseasonal rainfalls in February – March.

Gupta, however, believes that much would depend upon the ensuing monsoon rainfalls which would give a fair indication of sowing, crop development and harvesting.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.