 "Onion dehydration industry faces grim scenario as prices rise")
The onion dehydration industry is left with no option but to 'halt production' and close down units after the steep rise in onion prices. Reduced supply because of decrease in output and unseasonal rainfall compromising the crop's quality in major-producing regions have jacked up prices.
Onion dehydration units generally commence production from January and continue till July. Shipments also take place during the same period. But, this year, with the steep price of raw onion raising the production cost of dehydrated onion, demand from international buyers have been diverted to countries like China and Egypt.
Industry sources say 10 kg of fresh onions gives 1 kg of dehydrated onions as the commodity contains around 90% water. The 1 kg of dehydrated onions turns into 10 kg when it is put back into water.
“Our industry is fully dependent on global demand and this is a crucial period for us. But, this time, the scenario is very grim on account of high price of raw onion since the beginning,” said Kirit Mehta, president, All India Dehydration Association.
Of the close to 75 onion dehydration units in India, around 65 are located in Mahuva taluka of Bhavnagar district in Saurashtra region of Gujarat. Mahuva is the biggest arrival centre for onion in the state.
Present price of onion is in the range of Rs 12-17 per kg in the wholesale market. This price is much higher than the viable rate for the onion dehydration industry. The price has not gone below Rs 10 over the past three months and for the onion dehydration industry, anything over Rs 7 per kg for raw onion is bad news.
Mehta stated, “As raw onion prices are high this year, nearly 50-55 units have closed down production because of paucity of demand. High rate of raw onion has increased output cost and, as a consequence, leaving us incompetitive in the global market.”
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Currently, Indian dehydrated onions cost $2,600 per tone to overseas buyers. However, prices of Chinese and Egyptian onions are quoted in the range of $1,700-2,500 per tonne. This makes Indian dehydrated onion exports unviable.
Vitthalbhai Koradiya, managing director of Maharaja Dehydration Pvt Limited in Mahuva, Bhavnagar, said, “Quality is the biggest issue this year as unseasonal rain had damaged kharif onion crop in Gujarat and Maharashtra, which has raised the price of the vegetable.”
Data compiled by the National Horticultural Research and Development Foundation (NHRDF) suggests that onion production is estimated at 19.35 million tonne in 2014-15 crop year, slightly less than 19.4 million tonne in the previous year. Industry sources said that huge quantity of current cycle of crop has been damaged mainly in Maharashtra and Gujarat due to unseasonal rain. Major onion producing states in India are Maharashtra, Madhya Pradesh, Karnataka, Gujarat and Bihar.
“Overseas buyers want to import from India but high prices of Indian dehuderated onion are not supportive for business. Moreover, winter crop will arrive in market soon but high price and quality issues are likely to continue because of damage to the crop following unseasonal rainfall,” said Asgar Chattariya, secretary, All India Dehydration Association.
Total production of dehydrated onion in India was about 65,000 tonne in 2014 and the country exported over 55,000 tonne. Russia is the main buyer with nearly 40% share of the total shipments. European Union and the United States of America are other major buyers.
According to the industry, output is likely to be around 25,000 tonne this year. So far, the country has exported about 4,000 tonne this year compared to the 17,000-20,000 tonne it shipped last year during the corresponding period.
While global demand is static, domestic supply of dehydrated onion products has remained normal. According to an official of Rajkot-based Balaji Wafers Private Limited, which utilises dehydrated onions to manufacture some of its food products, the company’s demand has been met without any interruptions from its suppliers.