Indian Government Bans Onion Exports to Control Rising Prices

In 2019, India experienced its heaviest monsoon rains in the last 25 years. The heavy rainfall and the consequent floods significantly damaged India’s onion yields. At the beginning of August, the onion prices were around 20 INR to 25 INR per kg (0.28 to 0.35 USD per kg). However, by the end of September, the floods led to an increase in the prices to 70 INR to 80 INR per kg (0.98 USD to 1.12 USD per kg), according to Kirti Foods, an Indian dehydrated onion manufacturer and exporter.

The onion is ubiquitous in Indian dishes, and the soaring onion prices have disgruntled the citizens Fearing a backlash, the Indian government has decided to ban the exports of onions to halt the rising onion prices. After the ban took effect on September 29th, the price of onions has started to decrease. According to Ramji Valaya, an export manager at Kirti Foods, the current price of onions has decreased to around 30 INR to 40 INR per kg (0.42 USD to 0.56 USD), a significant decrease from the price before the export ban.

Kirti Foods mainly produces its dehydrated onions during June and July and the company purchases its raw onions during February and March. The new production season for onions has currently commenced and a new supply of onions is expected to arrive in the market by January and February of 2020. Since a stable onion price is favorable to the approval rating of the government, the Indian government is expected to intervene in the market to keep the supply and price stable. As such, the company expects its purchasing price to be significantly lower than the record prices during September.