Onion Price Spike Slows Pace of Ex­ports

Ex­ports have de­clined by 30% since prices in do­mes­tic mar­ket started in­creas­ing

The Economic Times - - Finance & Commodities - Jayashree.Bhosale@ times­group.com

Pune: A steep spike in do­mes­tic prices has put a break on onion ex­port mo­men­tum. Do­mes­tic whole­sale prices of onion have dou­bled in the last fort­night and coun­tries like Pak­istan, China and Egypt with stocks are com­pet­ing with Indian ex­porters in tra­di­tional mar­kets like Mid­dle East and Sri Lanka.

In­dia’s onion ex­ports had dou­bled in 2016-17 over the pre­vi­ous year as Indian onion prices were the most com­pet­i­tive in the world. Com­pared to 12 lakh tonne onion ex­ported in 2015-16, In­dia’s onion ex­ports was 24 lakh tonnes in 2016-17. “Onion ex­ports have de­clined by 30% since prices in do­mes­tic mar­ket started in­creas­ing. Ex­ports can de­cline fur­ther if onion the prices con­tinue to rise,” said Ajit Shah, pres­i­dent, Onion Ex­porters As­so­ci­a­tion of In­dia.

The bullish sen­ti­ment in onion is backed by three fac­tors; pro­cure­ment by Mad­hya Pradesh gov­ern­ment, heavy rain­fall in Gu­jarat and ex­pec­ta­tions of a lower and de­layed crop in Kar­nataka. In­dia had seen a bumper crop of onion in 2016, which led to prices tum­bling be­low pro­duc­tion costs. Farm­ers protested, forc­ing Mad­hya Pradesh gov­ern­ment to pro­cure onions at .₹ 8/kg. The MP gov­ern­ment dumped onions at .₹ 2/kg to .₹ 3/kg, wip­ing out ex­cess sup­ply from the sys­tem.

Heavy rain­fall in Gu­jarat re- duced onion move­ment in the state. Kar­nataka grows a small kharif crop of onion, which nor­mally hits the mar­ket from Au­gust. How­ever, this crop is likely to be down by at least 50% and would be de­layed due to de­fi­cient rain­fall. “Presently, we are get­ting most of the onion sup­ply from Ma­ha­rash­tra as lo­cal crop is less and de­layed, which is keep­ing prices on higher side,” said BL Shankarappa, an onion trader from Kar­nataka.

”The present price rise is spec­u­la­tive as prices are ris­ing sharply al­most ev­ery­day. This has ad­versely af­fected ex­port. No ex­porter is buy­ing from the do­mes­tic mar­ket,” said Dan­ish Shah, an onion ex­porter from Ma­ha­rash­tra.

Jay­datta Holkar, chair­man, Lasal­gaon APMC, the big­gest hub for onion trade in the coun­try said ar­rivals have been good de­spite in­crease in prices.

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