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24 July 2024

India, Pakistan in onion trade wrangle


India on Friday urged Pakistan to allow onion exports after its regional rival cut off trade in the vegetable by land because of soaring prices at home.

The cost of the humble onion, which provides the pungent foundation for thousands of different curries and dishes on the subcontinent, has shot up in both countries, leaving their governments grappling for solutions.

Onion prices have more than doubled in Pakistan after worse-than-normal harvest, with hundreds of trucks now stuck at the border with India after the abrupt order from the commerce ministry to stop exports by road and rail.

Exports by air and sea are still permissible, however.

Reacting to the move on Friday, Indian Foreign Minister SM Krishna said New Delhi was attempting to reverse the Pakistani decision.

"We are in touch with Pakistan and we are hopeful that we will find a solution to this (ban) and which will ease the problem," Krishna told reporters.

Relations between India and Pakistan, which have fought three wars since independence in 1947, are riven by mistrust while efforts to get their slow-moving peace process back on track have stalled in recent months.

The ban will do little to improve relations, and will almost inevitably be seen by some in India as a deliberate ploy to increase the hardship of consumers who are battling a 20-percent rise in food prices over 12 months.

Some vegetable traders in northern India said they had stopped their exports to Pakistan as retaliation.

"We took this decision because when we needed vegetables (onion), Pakistan has simply banned the export of essential items," Amritsar-based vegetable trader Anil Mehra told the Press Trust of India.

The news agency quoted a customs official in India as saying no trucks carrying vegetables had passed over the border.

The Pakistani clampdown is aimed at preventing traders from trucking produce to India, where customs duties on onions were eliminated last month and the prices are higher. India has also banned exports.

Onion prices in India reached Rs80-85 (€1.75-€1.87) last month and are currently around Rs70 a kilo, way above the "normal" retail price of Rs20-25.

Prices in Islamabad, where food items are generally more expensive than elsewhere, have risen from 40 Pakistani rupees last month to up to 90 rupees a kilo (€0.47 to €1.05).

The price rises on both sides of the border were caused by unseasonal monsoon rains which hit the crop, with the Pakistani shortage exacerbated by the exports to India.

"The exports (to India) triggered a shortage of onions in our domestic market," a Pakistani commerce ministry spokesman told AFP.

New Delhi is keen to be seen to be doing everything within its power to control the price of the staple, aware of the influence of onion prices on public opinion.

In one instance in 1998, a six-fold surge in the cost of onions was held partly responsible for the electoral defeat of the ruling Delhi state government.

Chaudhry Mohammad Ejaz, president of the Lahore vegetable market in Pakistan, said 400 trucks laden with onions were parked at the Indian border.

"It was a sudden and abrupt action (to end trade). The government should at least have given us a few days notice before issuing the order," he said.

Exporters "may suffer losses worth millions of rupees if the orders are cancelled or the goods are decayed. The authorities should let this consignment leave," he added.

A dearth of coconuts in Sri Lanka, which are an integral part of most people's diet on the island, and the soaring price of cooking oil in Bangladesh also pose a serious challenge to governments in the region.

On Thursday, India's commerce ministry said food inflation over 12 months had jumped for the fifth straight week, to 18.32 per cent for the week ending December 25.

Onion prices soared about 23 per cent over the week, while the cost of fruit, eggs and meat also increased.