W38: Onion Update

In W38 in the onion landscape, food prices in India have surged in recent months, driven by erratic monsoon rains. The consumer price index reached 11.5% in July, leading the government to impose export restrictions on select food items. Onions have become notably expensive due to crop damage and supply chain disruptions caused by unpredictable rains, resulting in an 80% price increase. The government has implemented a 40% export tax on onions until December 31 to stabilize supply and lower prices. Despite the initial price drop, concerns persist as the new harvest in Karnataka has also been impacted, potentially leading to rising domestic onion prices in the coming weeks.

Furthermore, onion traders in Nashik, Maharashtra, have suspended auctions in all agriculture produce market committees (APMCs) in the district indefinitely in protest against the Indian government's decision to increase export duty on onions up to 40% until Dec-31. This protest raises concerns about a potential shortage of onions in retail markets and a price hike. Traders are demanding the cancellation of export duty, a 50% reduction in market fees, participation by agricultural cooperatives, and a 50% subsidy in onion transportation. The protest follows a similar closure of auctions last month, which was temporarily resolved through government intervention.

Egypt has experienced a substantial increase in onion exports to the European Union (EU), reaching 128 thousand tons from Jul-22 to Jun-23. This surge was due to a diminished EU onion crop caused by the previous year's drought, making Egyptian onions more appealing. Notable EU importers of Egyptian red onions included Italy, Slovenia, Romania, and Greece, accounting for 45% of Egypt's total onion exports to the EU. The Netherlands continued to be a key importer of Egyptian onions, albeit with a reduced share compared to previous years.

The EU is the world's largest onion importer, with annual imports ranging from 280 to 380 thousand tons from non-EU countries. However, this remains below the 2018/19 peak of 550 thousand tons. Serbian onions led the way among European non-EU suppliers, with India and China contributing significantly. Central Asian countries faced challenges, leading to decreased onion exports to the EU. Uzbekistan, for instance, became a net onion importer due to weather-related issues.

In addition, the Egyptian government has imposed a three-month export ban on onions due to soaring prices in the local market. Onion prices in some Egyptian local markets had risen significantly, reaching USD 1.13 per kilogram (EGP 35/kg), compared to USD 0.87/kg (EGP 27/kg) the previous month and USD 0.39/kg (EGP 12/kg) in 2022. Factors contributing to the price increase include reduced onion acreage, a global onion shortage, and the devaluation of the Egyptian pound. While some exporters are concerned about the impact on their contractual obligations, the government's decision aims to stabilize domestic onion prices, potentially benefiting consumers. The ban is forecasted to result in more competitive prices for onions in the next season due to increased planting.

Ukraine is set to impose an embargo on the import of onions, tomatoes, cabbage, and apples in response to a trade dispute with Poland. The Deputy Minister of Economy and Trade announced this decision, citing failed negotiations and a lack of response from the Polish government after Ukraine filed a complaint with the World Trade Organization (WTO). The dispute also extends to additional products, such as flour and cereals, and it follows the European Commission's cancellation of the ban on Ukrainian grain imports.

Lastly, heavy rainfall, attributed to El Niño, adversely affected onion production in southern Brazil. São José do Norte, in particular, experienced significant rainfall, with approximately 400 mm in the first half of September. This excessive rainfall has led to substantial crop losses, with some growers reporting a 50% reduction in their onion yields. This comes after a successful 2022/23 season, raising concerns about a 20% decrease in production and reduced quality for the 2023/24 season.

By clicking “Accept Cookies,” I agree to provide cookies for statistical and personalized preference purposes. To learn more about our cookies, please read our Privacy Policy.