Onion prices soar on supply shortage

Vegetable vendor weighs onions for customers at a wholesale market. (AP)

Onion prices in the UAE continue to remain high as the supply of one of the most used vegetable from India has dried up following Indian government’s blanket ban on the commodity’s export, as well as a drastic cut down on the arrival of onion containers from Iran, Egypt and Pakistan.

The retail price of onion in the UAE market has touched Dh5 per kilogram, up from Dh1.5/kg earlier. “We used to get 10 to 12 containers of onion regularly. Yesterday, not even one container came from India,” said Sidharth Chomal Kamal, Managing Director, Sun Floritech International, fruits and vegetables wholesale dealer in Al Awir Vegetable market.

“Even the arrival of Pakistani containers has come down drastically because Pakistani traders are selling onions in the Indian market. Traders are keenly waiting for the Pakistani vessel to get fresh onion supply,” he added.

“Normally, Indian onions are cheaper by around 15 per cent compared with Pakistani onions,” he said.

Wholesale price of a kilogram of onion in the UAE market is Dh2.80 and the Indian onion is Dh2.50/kg. Iranian onion commands Dh2.2 per kg and Egyptian onion costs Dh1.8 per kg.

Retail prices are about 40 per cent higher than the wholesale price. The price used to be less than Dh1.5/kg. Traders pointed out that the November-December period has been traditionally crucial for the supply of onions as, usually, supply constraints from India and Iran ease during this period.

However, after Indian government banned export of onion to control skyrocketing domestic prices this year, Pakistani onion started going to the Indian market. Price of onion is a politically sensitive issue in India and the government intervened when the price touched Rs80 per kg (approximately Dh6.5/kg).

“There was production problem in India due to rain and severe storm in Maharashtra, Andhra Pradesh and other production areas. Next onion season will start only in January 2011 and the price is likely to come under control in the new year,” said another trader.

Onion prices in India came down by 30 per cent after the government totally banned its export. Earlier this week, the Indian agriculture ministry extended the ban on onion exports until January 15, and started importing onions from Pakistan, as retail prices jumped to Rs80 per kg from Rs35 per kg.
“The cost to import onions worked out to $500-$600 per tonne, which went up to $1,000. Whatever supply is coming to the market is getting liquidated immediately because many traders have stopped importing onions due to high risk rate and only traders with regular customers and supply source are dealing with the vegetable,” said another trader.

Onion prices almost doubled after Indian government introduced a Maximum Export Price of $525 per ton, an increase of $150 per tonne. As these measures could not control onion prices, the Indian government totally banned export of onions.