Demand for onions smaller in size from South-East Asia is helping exports of the commodity even as high freight rates have affected Indian onion shipments to West Asia, one of its main markets.

“There is good demand for small onions (of 25-35 mm diameter size) in countries such as Malaysia and Thailand. Besides, demand is also good for sambhar onions (shallots) from these destinations,” said M Madan Prakash, President, Agri Commodities Exporters’ Association (ACEA).

South-East Asian nations, such as Malaysia, buy shallots from Thailand but since supplies are low from Bangkok, demand has cropped for Indian ones.

Competitive rates

“Indian small onions are competitive in the Far-East markets. There is good margin too for exporters,” said Mukesh Singh, Managing Director, Mubala Agro Commodities Pvt Ltd that trades in domestic and overseas markets.

Shallots are delivered and packed at ₹45 a kg in Chennai. For South-East Asia, shallots are quoted at $850 (₹63,275) a tonne, cost and freight. “During the peak season, shallots quoted as high as $1,300 (₹96,775) a tonne,” said Prakash.

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

“We are getting good prices for small onions from South-East Asia. Even Hong Kong has begun to buy from us,” said Ajit Shah, President, Horticulture Produce Exporters’ Association (HPEA).

“Now the Centre has announced the Remission of Duties and Taxes on Exported Products, we can try and make good out of it,” said Mubala Agro’s Singh.

‘New players gaining’

Nashik-based exporter Vikas Chaudhary said onion exports from India have been affected due to high freight rates that have made Pakistan’s produce 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 upto to the mark since these onions were harvested in April,” said Singh.

In India, onions are harvested thrice — early kharif during October-December, late kharif during January-March and rabi during March-May.

“Though Indian onions are only marginally costlier than the Pakistan ones in the Gulf market, the latter is gaining in view of freight advantage,” said the Mubala Agro Commodities official.

HCEA’s Shah said Indian onions are currently quoted at $310 a tonne (₹23,075) free-on-board. “Pakistan onions are quoted lower by about $30 (₹2,250),” he said.

Lankan forex crisis

The other issue that has affected Indian onion exporters is Sri Lanka’s foreign exchange crisis. “Colombo has stopped imports in view of the crisis,” said ACEA’s Prakash.

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

“Exporters are facing problems after shipping to Sri Lanka. Payments are not coming. Otherwise, we get good demand from the island nation,” said Shah.

Singh said the focus of onion trade now is to clear the inventory ahead of the early kharif onion arrival next month. “Karnataka crop has begun arriving in the market and the quality is good. It is finding takers even in the north-east, replacing Nashik onions,” he said.

Exporter Vikas Chaudhary said onion arrivals have increased, resulting in prices ruling at ₹17-18 a kg currently. “Demand is also slack in view of the current auspicious month Shravan ,” he said.

According to the Ministry of Agriculture, the modal price (rate at which most trades take place) at Lasalgaon — Asia’s biggest market for the bulb — is currently at ₹1,760 a quintal against ₹1,650 at the start of the month. During the same time last year, the modal price was ₹1,670.

“Things should look up on the export front in another three weeks, particularly when the new crops come to the markets from Maharashtra,” said HCEA’s Shah.

Curbs on exports

Onion exports were hit during the last two fiscals after the Centre suspended shipments as retail prices of the bulb topped ₹100 a kg. Apart from suspending exports, the Centre allowed duty-free imports of onion and imposed stock limits.

Onion exports had touched a record 34.92 lakh tonnes (lt) during 2016-17. Since then, they have declined. In 2019-20, exports hit a five-year low of 11.49 lt before recovering to 13.07 lt last fiscal. Exports could have been higher but for the Government’s curbs on the shipments.

According to the Ministry of Agriculture, onion production was a record 26.92 million tonnes (mt) last season (July 2020-June 2021) compared with 26.09 mt the previous season with the area under the crop rising to 1.6 million hectares (mh) from 1.43 mh.

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