Onion exports: A surprising showdown in which Pakistan wins briefly at India’s expense | Business & Economic News

Islamabad, Pakistan Pakistani onion farmers and exporters are celebrating a windfall from an unprecedented export surge over the past few months, but it’s an unexpected victory at the expense of their Indian counterparts across the border.

The South Asian nations are fierce rivals in many areas, but they are also major onion producers. But India is also the world’s second-largest onion exporter after China and a dominant force in the global onion market, often outselling onions from smaller countries.

So when India imposed an export ban in December, citing a decline in domestic onion production ahead of a general election, Pakistani farmers and exporters saw a rare opportunity and jumped at it. In 2023, India exported about 2.5 million tonnes of onions. Suddenly, there was a vacuum in the global onion market, which Pakistan has partly filled.

Pakistan exported more than 220,000 tonnes of onions from December to March this year, slightly more than the country’s usual annual onion exports.

Waheed Ahmed, president of the All Pakistan Fruit and Vegetable Importers and Exporters Association (PFVA), attributes this success to resourcefulness and the government’s willingness to allow exports without imposing an India-style ban, at least for the time being.

“When India imposed the ban, we urged the government to enable us to utilise the opportunity and our timely action has enabled us to generate over $200 million in revenue for the country,” Ahmed told Al Jazeera.

Pakistan eventually restricted onion exports, fearing that more produce would mean higher domestic prices. But exports already taking place through deals approved before the restrictions were imposed were expected to bring in an additional $50 million in revenue by the end of the fiscal year in June, Ahmed said.

In contrast, Ahmed said the country earns between $110 million and $150 million a year from onion exports. Last year, the country earned more than $235 million in total from vegetable exports, with onion exports accounting for about $90 million.

Domestic shortages and rising prices

The exports have provided a much-needed boost to Pakistan’s foreign-exchange reserves, which have faced tough economic conditions over the past two years. The country’s central bank data showed that reserves recovered to $9 billion this month, enough to cover six weeks’ worth of imports, after falling to $3 billion last year.

But like onions, this heartwarming story has multiple layers. Pakistan’s success in exporting onions led to a shortage of onions in the domestic market for several months.

More than 220,000 tonnes of the harvest was shipped overseas, reducing supplies of onions for domestic consumption and causing prices to rise between December and April, when exports of Indian onions were banned, dealing a major blow to ordinary Pakistanis.

During the first four months of this year, onion prices, which are usually around 50-80 rupees ($0.18-0.29) per kilogram, rose to as high as 250-350 rupees ($0.90-1.26) per kilogram before gradually declining in May.

“Onions are an essential part of our daily diet,” Sumaira, a housekeeper in Islamabad who only gives her name, told Al Jazeera, “but with prices of other things rising, the increase in onion prices will only increase our burden,” she said.

Hamid Baloch, a native of Pasni in the southwestern province of Balochistan who now works as a chef at a cafe in Islamabad, said the rising onion prices were affecting his business in terms of both production costs and sales.

“We used to buy in bulk and a five-kg bag of onions was selling for Rs 1,500 to Rs 1,800. [$5.39 to $6.47] Prices have started to fall this month and now you can buy it for nearly 500 rupees. [$1.50]”The 25-year-old told Al Jazeera as he sliced ​​onions to make chicken curry.

According to the World Bank, more than 39 percent of Pakistanis earn less than $3.50 a day, and Muhammad Azam is one of them.

Azam, a daily wage labourer in Islamabad, said the rising cost of living meant people like him struggled to buy basic necessities.

“I and my children cannot imagine eating chicken more than once every two months. The only things we have at home are pulses and vegetables like onions and tomatoes, but we have barely been able to buy even those in the past few months,” he said.

He, however, acknowledged that there has been a downward trend in prices not only of onions but also other items in recent weeks.

A chance from heaven

Inflation data and exporters both agree on a decline in onion prices.

According to government statistics, inflation, which hit a record high of more than 38% in May last year, continues to trend downwards, with inflation in May 2024 standing at 11.8%.

Imtiaz Hussain, a fruit and vegetable exporter in Karachi, said the fall in onion prices was due to the Indian government lifting an export ban.

“In early May, the Indian government resumed onion exports and markets in some countries in the Gulf and the Far East where we were able to sell to have gone back to sourcing onions from India,” he told Al Jazeera.

PFVA’s Ahmed said that during the short period when the government curtailed onion exports in March, exporters and farmers exercised “good sense and opportunism” to export as much onion as they could.

“Our aim was to continue exporting without creating a major shortage in the domestic market,” he said.

Countering the soaring onion prices, Ahmed said the price hike was due to retailers exploiting customers and blaming exporters.

“In our wholesale markets, onions are consistently sold for less than 150 rupees ($0.54) a kilogram, so why should we be blamed just because retailers sell them for more than 300 rupees? This is something the government should deal with, not us,” he said.

For Ahmed, the opportunity to earn foreign currency was a balancing act after floods in 2022 destroyed large swaths of crops, including onions, in southern Pakistan, causing extensive damage to farmers.

“Despite the damage caused by the floods, this opportunity has been a godsend. When farmers earn income from one crop, they will invest more in the next. To increase yields and income, we need to work on training farmers in modern agricultural techniques.”