Onion exports decline 85% after Centre's minimum export price cap

Onion export from India slumped in the first 21 days of November this year as against the same month last year ever since the Centre notified a minimum export price (MEP) of $800 per tonne and also due to delay in harvest because of uneven weather.

The data sourced from private agencies shows exports, which were going down since the Centre imposed a hefty import tax of 40 per cent in August, further dropped after the MEP was imposed in late October.
 

In September, the data based on internal research by SilkRoute.ag, a global agritrade company based in Dubai, shows India exported around 166,711.31 tonnes, almost 48.11 per cent less than the exports during the same month last year.
 

Thereafter, in October, another 279,039.50 tonnes were exported, and that too was almost 11.80 per cent less than in the same month last year.
 

However, in November, after the imposition of the MEP, exports dropped by almost 85 per cent to just 19,347 tonnes (till November 21).
 

Exports to all major destinations where Indian onions are sold -- Bangladesh, Nepal, the United Arab Emirates, and Sri Lanka -- almost came to nil in the first 21 days of November as compared to the corresponding period of last year. Around 263 tonnes were exported to Bangladesh in November (till November 21). During the same month last year it was over 49,000 tonnes.
 

To Nepal, just around 88 tonnes were exported till November 21, which during the same period last year was around 8,654.5 tonnes.
 

To control prices, the central government, apart from imposing the export duty and the MEP, decided to procure an additional 200,000 tonnes from farmers after the duty triggered protests in Maharashtra, the country’s main onion-growing belt.
 

The export price before the duty was levied was somewhere around $320 per tonne free-on-board (around Rs 2,650 per quintal). The MEP will be in place till December 31, according to an official order.
 

“The measure has been taken to maintain sufficient availability of onion to domestic consumers at affordable prices as the quantity of stored rabi 2023 onion is declining by curbing the quantity of onion exports,” an official statement released at that time had said.
 

The MEP translated into a domestic rate of around Rs 67 per kilogram. It seemed to have had the desired impact with export almost crashing in the first 21 days of November.
 

“Onion prices had skyrocketed due to a delay in crop harvest by a month amid huge international demand, especially from Bangladesh, Nepal, and West Asia. The kharif crop, which normally starts hitting its peak around November, is late by at least a month this year and arrivals will pick up in the first week of December. The MEP and export duty have pulled down wholesale rates in Nasik mandis (Nasik is the main trading Centre). 
 

Our expectation is that as crop arrivals pick up in December, followed by two more harvests, the supply position of onions should ease in the first half of 2024,” said Tarun Satsangi, specialist, global commodity research and trade, SilkRoute.ag.

He said as supplies eased and prices cooled, the government might consider easing the MEP after December.
 

India annually produces 28-30 million tonnes of onions and is among the world’s largest producers. The crop is usually planted three times a year.
 

The first is kharif, the planting of which is in July-August and the harvest sometime in October-December. Then comes late kharif, whose planting is October-November and the harvest in January-March. The third is rabi, planted in December-January and harvested between March and May.
 

Of the three, rabi contributes around 75 per cent of the country’s annual production and are more storable than the others. 

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