Turkiye Bans the Export of Potatoes and Onions to Prevent Further Price Hikes

Fresh Onion

Published Feb 2, 2023

Turkish Ministry of Agriculture banned the export of potatoes and onions due to increased prices, in an attempt to stabilize local supply in the domestic market. This could potentially stifle the export of these commodities mainly to neighboring countries such as Bulgaria, Georgia, and Jordan as well as to the United Arab Emirates, a rising market in the 2016-2021 period. Experts point out that the main reason for increased prices was the enlargement of input costs such as fertilizers, along with increased energy costs needed for storing.

On 24 November 2022, the Turkish Ministry of Agriculture prohibited the export of potatoes and onions. According to the announcement, the decision was taken to ensure food supply security. The export ban will stay in force until further notice and will affect trading partners like Bulgaria, Georgia, Jordan, and United Arab Emirates. Also, it has been decided that Phytosanitary Certificate/Health Certificate will not be issued for export applications for potatoes under HS Code 0701.90 (Fresh or Chilled Potatoes) and onions under HS Code 0703.10.19.00.11 (Fresh or chilled onions and shallots: onions: other: dried onion). In 2022, prices increased by more than 300% for onions and 190% for potatoes. Rising production costs and problems in the supply chain, with limited availability, were the main reasons for the price hike.

Price Data Chart Turkiye Fresh Onions

Source: Tridge

Based on Tridge price data monitoring, the wholesale price of fresh onions in Türkiye soared 319.56% WoW up to USD 1.47/kg in W3 of December 2022. Wholesale potato prices skyrocketed 191.89% YoY up to USD 0.71/kg in W1 of January 2023. Despite attempts by the Turkish government to restrain inflation, increased production costs have caused a massive surge in farm and wholesale prices. There was an increase of 100 to 400% in input costs, while a decrease in the supply of dried onions was another factor in the price increase. According to the latest data announced by the Turkish Statistical Institute (TUIK), vegetable production decreased by 0.5% YoY in 2022 and amounted to approximately 31.6M MT. Official data states that dry onions production fell by more than 6% YoY.

Seasonality of Fresh Onions in Türkiye

Source: Tridge

Onion is cultivated under intensive irrigation. The highest input cost is the energy cost of irrigation, and experts point out that the share of energy costs is around 30% of total production costs. The cost of electricity used in irrigation was influential in the price increase in 2022. Still, prospects for 2023 are that yields will be higher, at least if there are no extreme weather events like drought or frost.

Top 10 Onion Trade flows

Source: Tridge

Top 10 Potato Trade flows

Source: Tridge

The export ban on onions and potatoes will mostly affect neighboring countries like Bulgaria, Georgia, Jordan, and the United Arab Emirates. Türkiye’s export of onions to the UAE soared more than 8300% in 2016-2021, with a 13.56% market share and USD 6.11M in export value in 2021. On the other hand, Türkiye's export of potatoes to Georgia recorded a decline of 31.90% in the same period, down to a 3.2% market share and export value of USD 1.49M.

Disruptions in onion and potato supply date back to the pre-pandemic period and worsened during COVID-19. Since the COVID-19 outbreak, most consumers have gotten used to ordering fast food to their homes, and this has become a habit, and frozen fries and onion rings had high demand entropy from fast food processors according to Ferhat Erdem, Tridge Manager in Türkiye. Also, some suppliers tried to take advantage of this high-demand situation by stocking these products in their warehouses, which Türkiye's government regulated by monitoring and even raiding storage facilities.