Russia-Ukraine conflict: Dehydrated onion exports from India take a 20% hit

The ongoing Russia-Ukraine conflict has added another casualty in the form of dehydrated white onion exports, which are expected to be down 20 per cent this year.

Gujarat accounts for 80 per cent of India's onion output. Dehydrated or dried onions are largely exported from India to Europe which lifts 60 per cent of whole, cut, sliced, broken or as powdered bulbs from the country. Russia and Ukraine together account for another 20 per cent of exports. Onion in all these forms is used widely as a food preservative.

According to Agricultural and Processed Food Products Export Development Agency (APEDA) data, India had exported nearly 75,000 tonnes of dehydrated or dried onion products valued at just over Rs 1,000 crore, in FY21. However, this year several factors, led by Russia-Ukraine war, are set to pull down annual exports by at least 10,000-15,000 tonnes. That is a 20 per cent dip at the upper end of the band.

"Firstly, Russia and Ukraine form a decent share in exports and there has been almost zero exports due to the conflict. Moreover, there has been an impact on export demand from other European countries which form 60 per cent of exports due to Indian dehydrated onion products becoming globally uncompetitive and cheaper alternatives emerging from regions like Egypt," said Savji Thanth, vice president of All India Vegetable Dehydrated Manufacturer Development Association (AIVDMDA).

According to Thanth, residues of ethylene oxide have been found in dehydrated onion products from India in Europe which are currently being addressed by the industry.

"In addition, European customers are shifting to Egypt which has not only increased its production from erstwhile 8000-10000 tonnes to now 30000 tonnes but also tends to be cheaper at $1200 freight cost per container to Europe as against $8000 per container from India," said Thanth.

What further aggravates the industry's position globally is the 9.3 per cent import duty on dehydrated onions from India to Europe as against zero import duty from Egypt. Moreover, a dip in exports has led to a carry forward stock of 5000-10000 tonnes of dehydrated white onions with exporters, said Manoj Ram, president of AIVDMDA.

This is despite farmers in Gujarat enhancing the coverage of white onion sowing in Saurashtra region to over 100,000 hectares.

On one hand, fall in export demand has hit the industry which has its biggest dehydration cluster in Mahua in Gujarat with nearly 150 units. On the other hand, white onion arrivals too have taken a hit due to heavy fall in yield amid unseasonal rains last year.

"As against an ideal 150,000 bags of 50 kg each arriving, this time the same has been down by 40000-50000 bags, thereby affecting white onion prices both at farmer and dehydrating units end," said Asgar Chattariya, one of the leading onion dehydrators in Mahua.

Currently, a 20 kg bag of white onion is priced anywhere between Rs 110 and Rs 170 depending on quality, down by at least 20 per cent from last year, Chattariya added.