1. Weekly News

India

India Implements Strategy to Stockpile 500,000 MT of Onions Amid Production Decline

The Indian government has launched a strategy to stockpile 500 thousand metric tons (mt) of onions to stabilize prices. So far, about 71 thousand mt have been procured under this initiative. This effort comes in response to a 20% reduction in onion production during the 2023/24 growing seasons, primarily due to insufficient rainfall in key farming areas. Observing market stabilization and anticipating a bumper crop due to favorable rains, the government eased export restrictions on May-24. However, a 40% export duty remains, along with a minimum export price (MEC) set at USD 550/mt.

Peru

Peruvian Onion Exports Surge in Value and Volume in May-24 Due to Rising International Prices

Peruvian onion exports reached 7,783 mt on May-24, valued at USD 3.52 million, marking a 309% year-on-year (YoY) increase in volume and a 753% increase in value compared to May-23. This significant value increase is due to a rise in international onion prices, which averaged USD 0.45 per kilogram (kg), a 108% increase YoY. During this period, Peruvian onions maintained their presence in seven markets. Colombia was the primary destination, accounting for 33.8% of the exports, translating to USD 1.19 million and 4,906 mt at an average price of USD 0.24/kg. The Dominican Republic imported 1,367 mt, amounting to USD 1.07 million at an average price of USD 0.78/kg. This represented a 30.3% share of the market. The United States (US) was third, with 27.6% of the exports, worth USD 969,000 in 666 mt at an average price of USD 1.45/kg.

Uzbekistan

Uzbekistan Sees 10.4% YoY Increase in Vegetable and Fruit Exports for Jan-May 2024

From Jan-24 to May-24, Uzbekistan exported 722.1 thousand mt of vegetables and fruits, marking a 10.4% YoY increase, according to the Statistical Agency of the Republic of Uzbekistan. Russia was the main buyer, accounting for over 32% of the total export volume. The top five buyers also included Pakistan, Kazakhstan, China, and Afghanistan. The total value of these exports amounted to USD 420 million, with the highest revenue coming from onions (USD 44 million), cabbage (USD 41.2 million), and mung beans (USD 26.8 million).

2. Weekly Pricing

Weekly Onion Pricing Important Exporters (USD/kg)

Yearly Change in Onion Pricing Important Exporters (W26 2023 to W26 2024)

India

In W26, onion prices in India remained stable at USD 0.33/kg after rising for three consecutive weeks. Month-on-month (MoM) and YoY prices increased by 32% and 123%, respectively, due to an imbalance between supply and demand. The onions arriving in markets from June 24 onwards are from stocks maintained by farmers and traders. Onion exports to Sri Lanka, Bangladesh, Malaysia, and other countries have resumed after the government lifted the ban, with approximately 100 containers of onions (30 mt each) being exported daily from the Nashik district. Moreover, traders report strong domestic demand for onions.

Mexico

Mexican onion prices surged by 106.82% week-on-week (WoW) to USD 0.91/kg from USD 0.44/kg in W25. Similarly, MoM prices surged 121.95% from USD 0.41/kg in W23. Key factors triggering this price increase include the seasonality of onion cultivation. Adverse weather conditions, such as droughts and frosts, have also impacted the quality and quantity of onions available. Additionally, lower onion production at certain times of the year naturally limits market supply. As a result, onion prices are at their highest level in 26 years, according to Central de Abasto, wholesale market.

Egypt

Egypt's wholesale onion prices declined 7.14% WoW to USD 0.13/kg in W26 from USD 0.14/kg in W25, reversing the previous week's increase. This decline reflects the calm progression of Egypt's onion season, where Egypt dominates the red onion market while the Netherlands leads in yellow onions. Despite this, the ample supply of Egyptian red onions this season has pushed prices down despite limited competition. Western Europe, particularly England, exhibits substantial demand for Egyptian red onions due to consumer preferences. Meanwhile, consumers in Eastern Europe prefer yellow onions sourced primarily from the Netherlands, which is challenging to compete with due to their notably lower prices this season.

Spain

In W26, Spain's wholesale onion prices declined 5% WoW to USD 0.19/kg from USD 0.20/kg in W25, reversing the previous week's stability. Onion farmers in Malaga are facing the "worst crisis of the century" due to a lack of buyers and unsustainable prices, according to the Association of Young Farmers (ASAJA Malaga). Early onion producers in the province are experiencing the most difficult situation in decades, with a saturated market and prices that do not even cover harvesting costs.

3. Actionable Recommendations

Strengthen Domestic Stockpiling Initiatives

In response to India's initiative to stockpile onions aimed at stabilizing prices amidst production challenges, it is crucial to expand these efforts further. With 71 thousand mt already procured out of a targeted 500 thousand mt, India should continue enhancing its stockpiling initiatives. This includes increasing procurement targets to build robust onion reserves that can effectively mitigate price volatility during periods of shortage. Mexico could benefit from similar strategic initiatives as it is experiencing price surges due to seasonal factors and adverse weather impacting onion production.. This involves ensuring the timely distribution of stockpiled onions and investing in modern storage facilities to maintain onion quality and extend shelf life.

Strengthen Resilience Against Climate Variability

Climate variability poses significant risks to onion production, as evidenced by Mexico's price spikes exacerbated by adverse weather conditions like droughts and frosts. In contrast, Egypt benefits from stable onion prices due to favorable growing conditions and strategic market positioning. Both countries should invest in climate-smart agriculture practices to enhance resilience against climate risks. This includes adopting resilient onion varieties, diversifying agricultural production, and implementing efficient irrigation systems and water conservation measures. These actions will help sustain crop health and productivity amidst changing climatic conditions.

Expand Export Opportunities and Market Diversification

Peru's significant growth in onion exports, leveraging international price increases, highlights the potential for expanding export opportunities. To capitalize on this growth, Peru should diversify its market base beyond traditional buyers, aiming to reduce dependency and mitigate market risks. Another emerging exporter of onions and vegetables, Uzbekistan should also focus on diversifying its export destinations. This includes maintaining high-quality standards to sustain competitive pricing and exploring new markets through strengthened bilateral agreements that facilitate smoother export processes and minimize trade barriers.

Sources: Eastfruit, Agrotimes, Agraria, Business Standard, Excelsior, FreshPlaza