Lower onion prices double dehydration exports from India

Falling onion prices may have brought tears to farmers but the commodity has given the dehydration units a reason to rejoice. Lower commodity prices have resulted in increased global competitiveness of dehydrated onions thereby doubling exports from the country.

Dehydrated onion exports have gone up from 12,000 tonnes to 25,000 tonnes on a y-o-y basis during the January-May period. Industry sources said that thanks to low prices in domestic market, prices of dehydrated onions from India have dipped by $700 per tonne to about $1,800 per tonne this season.

"Onion prices in local market have come under pressure due to higher production and this has enabled Indian dehydrated onion producers to offer their products at competitive rates in the international market. The prices are in our favor and business has grown over doubled in this season," said Vitthalbhai Koradiya, president, All India Dehydration Association and managing director of Maharaja Dehydration Private Limited.

The industry expects to export over 50,000 tonnes in 2016. Due to high onion rates, India had exported about 30,000 tonnes dehydrated onion in 2015. Currently, in wholesale markets, onion prices are ruling at Rs 3-7 per kg which was about Rs 12-15 per kg last year at this time. Onion production has gone up to 20.3 million tonnes in 2015-16 as against 18.9 million tonnes in 2014-15.

Asgar Chhatariya, managing director of Chhatariya Foods Private Limited said: "As on date prices of raw onion are in our favour and if we can maintain our prices at $1,600-2,000 per tonne than total export may touch to 50,000 tonnes by end of December this year."

India mostly exports to Europe, Russia, US and small amount to African countries. Most of the export business comes during January to June and after first rain dehydration units close till November every year.

Asgar Chhatariya said: "Dehydration units are preparing to shut down their units as monsoon is about to come. By end of June almost all the units will close their doors and do a business on stock they have for next few months."

There are about 90 onion dehydration units in India. Of it nearly 75 units are located in Gujarat while rests are spread in Maharashtra and Madhya Pradesh.

However, while for export, onion dehydration industry is enjoying the growth, it is not expecting any revival in domestic consumption of dehydrated onion. Since last couple of years, domestic consumption of dehydrated onion has limited to around 5,000 tonnes and for this year, the industry is expecting the same.

Koradiya said: "We are trying to create awareness but despite of our constant approach, domestic consumption of dehydrated onion is not increasing and limited to about 5,000 tonnes."

In India, people prefer to use fresh onion. Dehydrated onion products consumed by hotels, caterers and ready to eat food makers.