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Business News/ News / India/  Indonesia seeks 900,000 tonne onion from India amid export ban

Indonesia seeks 900,000 tonne onion from India amid export ban

Onion farmers have been suffering losses amid unseasonal rains, hailstorms and the current drought,

High prices led to a complete export ban on onion in December. (PTI Photo) (PTI07_31_2023_000077A) (PTI)Premium
High prices led to a complete export ban on onion in December. (PTI Photo) (PTI07_31_2023_000077A) (PTI)

New Delhi: Indonesia has sought 900,000 tonne of onion from India amid the ban on exports, a top government official said. This assumes significance as Indonesia is India's largest trade partner in ASEAN, and imports onions mostly from the US, India and New Zealand.

The request comes after India imposed a 40% export tax on onions last August, followed by a minimum export price of $800 per tonne in October, to stabilize domestic supply and prices due to a crop shortfall. Despite these measures, high prices led to a complete export ban in December, effective until the end of the 2023-24 financial year.

“After India’s export ban on onion, traders and importers in Indonesia have been requesting Indian onion, and there is a demand for 900,000 tonnes of onions worth $100,000. Hence, a request has been sent to the Indian government," the official said.

India accounts for about a fourth of the global onion output and is the largest exporter after the Netherlands and Mexico.

In April-October of the ongoing financial year, India exported 1.4 million tonne (mt) of onions, including 36,146 tonne to Indonesia. During the corresponding period of FY23, it exported 1.35 mt of the kitchen staple. In FY23, India’s onion export totalled 2.5 mt, including 116,695 tonnes to Indonesia, according to data from the commerce and industry ministry and exporters.

“The Embassy has not received any information on this issue. Factually, Indonesia is also a producer of onion, particularly small size red onion. In 2023, Indonesia has imported onion with total of 194.107 tonne, and out of this, total import from India is only 79.000 tonne," the Indonesian embassy in New Delhi said.

Queries sent to the spokespersons of consumer affairs, food & public distribution and commerce and industry ministries remained unanswered till the publishing time of this story.

“After the export ban, our containers were detained at the port gate. We have requested the government to allow the export of containers which have been cleared by customs," said Sanket Hoge, a Mumbai-based agri export consultant. 

"The exporters sold at 20 a kg in the local market after paying 45 for crops, packing, labour, stuffing, transport freight, clearance charges, and sea freight. Around 25 per kg losses are faced by the exporters for each container," he said. Exporters also suffered heavy losses at the Bangladesh border.

Production challenges, including erratic rains and extended dry spells, have impacted onion output in the kharif and late kharif (monsoon sowing) seasons. This led to a sharp decline in cultivation area and production, intensifying the political debate ahead of the national election.

On Wednesday, the average retail price of onion was at 41.12 a kg, 49.6% higher than the previous year, according to official data.

Onion cultivation area declined nearly 96% year-on-year to 8.6 million hectares (mh) in top grower Maharashtra in the 2023-24 kharif season. Production of the vegetable fell 94% year-on-year to 750,000 tonne in the state.

In Karnataka, the second largest grower, acreage shrank by about 75% to around 11 mh and production by 43.3% from the previous kharif season to 770,000 tonnes, according to agriculture ministry sources.

As per the government’s preliminary assessment, India may have produced 3 million tonnes (mt) and 1.5 mt of onion in the 2023-24 kharif and late kharif seasons, respectively. This is significantly lower than the 4.1 mt and 2.4 mt produced in the respective seasons last year.

In the previous rabi season, onion production stood at 24.6 mt. Average monthly domestic consumption was 1.4-1.7 mt, but that may be lower now depending on the price.

In the 2022-23 crop year, India had produced 30 mt of onions.

“If we look at the data of the last few years, onion farmers have been suffering losses. Despite unseasonal rains, hailstorms and the current drought, the farmers are standing strong, making their way through the conflicting conditions," Hoge said.

Farmers borrow from banks or cooperative societies for crop cultivation, but in the last few years, the debt burden on farmers has increased significantly, he said. “The central government did not give any direct subsidy when onions were selling at 2 per kg. However, the government intervenes regularly to control rising market prices," Hoge added.

The absence of exporters from markets due to the ban has depressed onion prices, with further declines anticipated in the coming days.

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Puja Das
Puja Das is a New Delhi based reporter, covering food, farm, fertiliser, water, and climate change policies for Mint. Puja reports on food security, farmers' distress and how the agriculture sector is impacting India's rural economy along with policy initiatives to help meet the pledges made at COP21 in Paris. Puja holds a post-graduation degree in Broadcast Journalism from the Indian Institute of Journalism & New Media, Bangalore.
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Published: 03 Jan 2024, 04:35 PM IST
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