Spiralling onion prices to pinch dehydration units

With onion prices continuously rising, the new season for the onion dehydration industry is likely to get delayed by a month or two. Furthermore, industry sources said that if wholesale prices do not come down below Rs 10 per kg, some dehydration units may not even start operations this year.

"Higher onion prices will definitely affect us, though not right now. The real impact may be visible at the time of opening of the new season (when these units start processing onions for value added products) which generally starts in December every year. But this time we believe the season may get delayed by a month and hence, dehydration units are likely to start in January," said Asgar Chattariya, secretary of the All India Dehydration Association.

Prices of onions in the wholesale market have been hovering around Rs 25-50 per kg, while at the retail level they surged to a range of Rs 85-100 per kg in select regions.

"Dehydrated products from onions are purely export items and we have to keep international prices too in mind in our business. At the current price levels, business is not viable for us," said Chattariya.

While the season begins in December, the demand for dehydrated onion products starts picking up in February every year and continues for the next five months. The units later shut their operations during the monsoon season.

"Domestic onion prices are a very big factor for us, as they impact our sales in the international market. For this reason, we have to maintain our prices. Currently, onion prices are too high and we are waiting for the new crop, which will come in December. If prices do not come down to below Rs 10 per kg at that time, many of us will not be able to open our units," said Vitthalbhai Koradiya, managing director of Maharaja Dehydration Privet Limited, Mahuva.

Generally, onion dehydrators open their units in December, but this year dehydrators may start business only in January or February, Koradiya added.

In India there are 90 active onion dehydration units. Of these, 75 units are located in Gujarat - at Bhavnagar, Mahuva, Vadodara and Gondal. The country has about 30 export oriented units of onion dehydrate products and the rest are suppliers.

India exports around 60,000 tonnes of onion dehydrate products to Europe, Russia and America every year. The industry also provides employment to more than 20,000 people.