Onions bring tears to farmers as export ban leads to financial losses
India's onion farmers have not had a great 2023- a slew of erratic weather events damaged crops and pushed them close to tears. The government acted to control retail prices by first hiking export duties, and then temporarily banning exports altogether. As part of our ongoing series "What's Ailing Rural India", CNBC-TV18's Santia Gora reports that these measures have only hurt farmers and onion traders more.
The conclusion of 2023 brought distress for onion farmers, and the onset of 2024 hasn't brought any relief. The government's measures have thwarted the farmers' aspirations to fetch better prices for their crops, already scarce due to widespread damage.
In August 2023, a 40% export duty on onions was imposed, followed by a complete ban on onion exports from December 2023 to the end of March 2024. Farmers assert that these actions have inflicted severe financial strain on their already meager resources.
While the government contends that its interventions were motivated by the greater good of maintaining retail prices, farmers argue that political considerations drove the decisions.
According to government data, onion exports from India were valued at $378 million in 2020-2021, $460 million in 2021-2022, and $561 million in 2022-2023. However, the eight-month export restrictions in 2023-2024 are expected to significantly reduce this year's figure.
The repercussions extend beyond the farmers to traders, who are particularly impacted by the timing of the export ban.
Vikas Singh, an onion exporter, lamented the inability to enter new export contracts due to the ban coinciding with the January renewal period for international contracts.
Furthermore, the export restrictions have led to a surge in onion prices in neighbouring countries such as Nepal, Bangladesh, Sri Lanka, Bhutan, and Malaysia, reliant on India for their onion supply. Traders fear long-term financial and livelihood consequences.
The ban also translates into a loss of market share for Indian exporters as other countries like China and Pakistan gain an advantage in supplying onions to nations that were previously dependent on India.
While experts acknowledge the challenging times for onion farmers and traders, they anticipate the impact to be temporary.
Pushan Sharma, Director of Research at Crisil Market Intelligence & Analytics, believes that, given India's significant onion production, normalcy next year could see these countries returning to import from India. However, this year they are compelled to seek alternative sources for their onion requirements.
Official quantification of losses is pending, and farmers await the promised compensations scheduled for March, August, and December. In the meantime, experts estimate that the export ban alone could result in revenue losses exceeding ₹10,000 crore for farmers and traders.
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