INDIA – The world’s biggest exporter of onions, India, has imposed with immediate effect a 40% export duty on onions up to the end of this year, to improve the domestic availability of the vegetable.
The duty comes at a time when many countries around the world are facing a shortage of onions. According to HarvestFresh, the poor market last year is mentioned by growers in South Africa as a motivation to plant less.
The heat and drought have led to smaller calibres being produced in Spain and Belgium. In Argentina, the weather has also had a great impact on the harvest.
“The export duty will make Indian onions more expensive than those from Pakistan, China, and Egypt. This will naturally lead to lower exports and aid in reducing local prices,” said Ajit Shah, an exporter based in Mumbai.
Average wholesale onion price in key markets has jumped nearly 20% from July to August, to 2,400 rupees (US$28.87) per 100 kg on concerns that erratic rainfall would lead to lower yields.
India is heading for its driest August in more than a century, with scant rainfall likely to persist across large areas, partly because of the El Niño weather pattern, two weather department officials told Reuters on Friday.
India mainly exports red onions, for which there is a year-round market. However, another Mumbai-based exporter pointed out that the new supplies are delayed as onions harvested during the summer months usually rot quickly.
“This situation has prompted the government to take precautionary measures,” the exporter added. A severe shortage of onions in several countries could lead to a global food crisis, as the scarcity of the common household staple is now pushing up prices of other vegetables.
The shortage and subsequent rise in onion prices are reportedly impacting the prices of other fruits and vegetables such as carrots, tomatoes, potatoes, and apples, and hampering their availability across the globe, according to the United Nations and the World Bank.
“The Indian duty would prompt China and Pakistan to raise prices, as they have a limited surplus for exports,” said the second exporter.
In view of the worldwide shortage, other producing regions have imposed cuts on exports to protect their local markets. There have been restrictions in South America and Central America, in Pakistan, and, recently, also in Morocco.