Onion exports: How Pakistan briefly won at India’s cost in unlikely matchup | Business and Economy News

Islamabad, Pakistan – Pakistani onion farmers and exporters are celebrating a windfall due to an unprecedented surge in exports over the past few months, an unlikely win at the cost of their counterparts across the border in India.

The South Asian nations, bitter rivals in myriad arenas, are also major onion producers. But India is also the world’s second-largest onion exporter after China, and is a dominant force in the global market for the vegetable, its produce often crowding out onions from smaller nations.

So, in December, when India imposed an export ban due to a decline in local onion production, ahead of national elections, Pakistani farmers and exporters jumped at what they recognised was a rare opportunity. In 2023, India exported nearly 2.5 million tonnes of onions. Suddenly the world onion market had a gap — one that Pakistan partly filled.

Pakistan managed to export more than 220,000 tonnes of onions between December and March this year, which was a little more than its usual annual onion export volume.

Waheed Ahmed, patron-in-chief of the All Pakistan Fruit and Vegetable Exporters, Importers and Merchants Association (PFVA), attributed this success to quick thinking — and a government willingness, at least for a while, to allow exports without placing a ban similar to India’s.

“When India placed the ban, we urged the government to allow us to avail the opportunity, and by our timely action, we managed to earn more than $200m in revenue for the country,” Ahmed told Al Jazeera.

The Pakistani government did eventually impose restrictions on onion exports, as the outward flood of the produce meant soaring domestic prices. But exports already under way through deals approved before the restrictions are expected to bring another $50m in revenue by the end of the fiscal year in June, said Ahmed.

By contrast, Ahmed said, the country typically earns between $110m and $150m from onion exports per year. Last year, the country was able to earn more than $235m in total from vegetable exports, with onion exports contributing about $90m.

Domestic shortage and price hike

For Pakistan, which has faced a desperate economic situation over the last two years, the export brought much-needed foreign reserves. The country’s central bank data showed that forex reserves, which were as low as $3bn last year, have recovered to $9bn this month, enough to cover imports for six weeks.

However, like onions, the feel-good story has multiple layers. The success of Pakistani onion exports resulted in a shortage of onions in the domestic market for a few months.

With more than 220,000 tonnes of the harvest being shipped overseas, the availability of onions for local consumption dwindled, pushing prices upwards between December and April, the duration when Indian onions were blocked from being exported, hitting ordinary Pakistanis hard.

The first four months of the year saw onion prices, typically 50 to 80 rupees ($0.18 to $0.29) per kilogramme, rise as high as 250 to 350 rupees ($0.90 to $1.26) per kilogramme, before gradually dropping in May.

“Onions are a staple in our daily meals,” Sumaira a housemaid in Islamabad who goes by one name, told Al Jazeera. “But with everything else getting more expensive, the rising onion price just adds to the burden,” she said.

Hamid Baloch, originally from Pasni in the southwestern province of Balochistan but currently working as a chef in a cafe in Islamabad, said the increase in onion prices impacted his business both in terms of production costs and sales.

“We buy in bulk, and one bag of 5 kilos of onions was going for 1500 rupees to 1800 rupees [$5.39 to $6.47] before it started coming down this month. Now it is available for close to 500 rupees [$1.50],” the 25-year-old told Al Jazeera while slicing onions for the chicken curry he was preparing.

According to the World Bank, more than 39 percent of Pakistanis earn less than $3.5 a day, and one of them is Muhammad Azam.

A daily wage worker in Islamabad, Azam said the rising cost of living meant people like him struggled to afford necessities.

“My children and I cannot even think about eating chicken more than once every two months. All we have are pulses and vegetables like onions or tomatoes, but in the last few months, even those were nearly impossible to buy,” he said.

However, he acknowledged that the last few weeks have seen a declining price trend in not only onions but other items as well.

Godsend opportunity

Inflation data and exporters both concur with the reduction in onion price.

Government figures showed that inflation, which had hit a record high of more than 38 percent May of last year, continued its downward trend, with the inflation figure for May 2024 recorded at 11.8 percent.

According to Imtiaz Hussain, a fruit and vegetable exporter in Karachi, the declining price of onions was due to the Indian government reversing its export ban.

“In early May, the Indian government reopened its onion exports, and markets in the Gulf region and some countries in the Far East, where we were able to sell, went back to procuring their onions from India,” he told Al Jazeera.

Ahmed, the PFVA official, said that exporters and farmers showed “good sense and opportunism” to export as many onions as they could during the short time period, when the government curtailed onion exports in March.

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

Countering the inflated onion prices, Ahmed said that the increase was due to retailers exploiting customers while blaming exporters.

“In our wholesale markets, onions were continuously available for less than 150 rupees ($0.54) per kilogramme, so why should we get the blame if retailers sell them for more than 300 rupees? This is for the government to address, not us,” he said.

For Ahmed, the opportunity to earn foreign exchange was a balancing act after 2022, when floods destroyed large crops, including onions, in Pakistan’s southern areas, causing immense devastation to farmers.

“We suffered due to the flood, but this opportunity was a godsend. If farmers earn from one crop, they will invest more in the next crop. We just need to work on training our farmers to learn better, modern agricultural practices to increase their yield and revenue.”