Southeast Asian demand for baby onions comes to the rescue of exporters

Demand for smaller onions from Southeast Asia is boosting exports of this product, although high freight rates have affected Indian onion shipments to West Asia, one of its main markets.

“There is a good demand for small onions (25 to 35 mm in diameter) in countries like Malaysia and Thailand. In addition, the demand is also good for sambhar onions (shallots) from these destinations, ”said Madan Prakash, president of the Agri Commodities Exporters’ Association (ACEA).

Southeast Asian countries, like Malaysia, buy shallots from Thailand, but as supplies are low from Bangkok, demand for Indian women has declined.

Competitive rates

“Indian baby onions are competitive in the Far Eastern markets. There is also a good margin for exporters, ”said Mukesh Singh, Managing Director of Mubala Agro Commodities Pvt Ltd which trades in domestic and overseas markets.

Shallots are delivered and packaged at 45 per kg in Chennai. For Southeast Asia, shallots are listed at $ 850 (63,275 yen) per tonne, cost and freight. “During peak season, shallots cost up to $ 1,300 (96,775 yen) a tonne,” Prakash said.

At the same time, the small size onions are delivered at ₹ 20 per kg from Maharashtra. “There is also a demand for these Bengal onions,” said the president of ACEA.

“We are getting good prices for small onions from Southeast Asia. Even Hong Kong has started buying from us, ”said Ajit Shah, president of the Association of Horticultural Exporters (HPEA).

“Now that the Center has announced the remission of duties and taxes on exported products, we can try to remedy this,” said Singh of Mubala Agro.

“New players win”

Nashik-based exporter Vikas Chaudhary said onion exports from India have been affected due to high freight rates which have made Pakistani products more competitive in markets such as Dubai and other Gulf destinations.

“New players besides Pakistan are gaining ground in the Gulf markets. Currently our quality is also not up to par since these onions were harvested in April, ”Singh said.

In India, onions are harvested three times – early kharif in October-December, late kharif in January-March, and rabi in March-May.

“Although Indian onions are only slightly more expensive than Pakistan’s in the Gulf market, the latter wins because of the freight advantage,” said the head of Mubala Agro Commodities.

Shah of the HCEA said Indian onions are currently listed at $ 310 per tonne (23,075) free on board. “Pakistani onions are priced lower by around $ 30 (2,250),” he said.

Lankan forex crisis

The other problem that has plagued Indian onion exporters is the currency crisis in Sri Lanka. “Colombo has stopped imports due to the crisis,” ACEA’s Prakash said.

“Sri Lanka was a good market for us. Given the crisis, we are now looking at the South East and the Far East, ”said Singh of Mubala Agro.

“Exporters are facing problems after shipping to Sri Lanka. Payments don’t come. Otherwise, we get a good request from the island nation, ”Shah said.

Singh said the onion trade is now focused on clearing stocks ahead of the early arrival of onions from Kharif next month. “The harvest from Karnataka has started to arrive on the market and the quality is good. It is finding takers even in the northeast, replacing the Nashik onions, ”he said.

Exporter Vikas Chaudhary said onion arrivals had increased, currently pushing prices down to 17-18 yen per kg. “Demand is also weak given the current month which is auspicious Shravan,” he said.

According to the Agriculture Ministry, the modal price (the rate at which most trade takes place) in Lasalgaon – Asia’s largest bulb market – is currently at 1,760 per quintal compared to 1,650 earlier this month. At the same time last year, the modal price was 1,670.

“Things should improve on the export front in three weeks, especially when the new crops hit the markets from Maharashtra,” HCEA’s Shah said.

Export brakes

Onion exports have been hit in the past two fiscal years after the Center suspended shipments as retail bulb prices exceeded 100 per kg. In addition to the suspension of exports, the Center authorized duty-free imports of onions and imposed stock limits.

Onion exports hit a record 34.92 tonnes lakh (lt) in 2016-17. Since then, they have decreased. In 2019-2020, exports hit their lowest level in five years at 11.49 lt before rising to 13.07 lt in the previous year. Exports could have been higher without government restrictions on shipments.

According to the Ministry of Agriculture, onion production reached a record 26.92 million tonnes (mt) last season (July 2020-June 2021) compared to 26.09 mt the previous season, as the cultivated area increased. from 1.43 to 1.6 million hectares (mh). mh.

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