Pakistani farmers and exporters saw an opportunity to seize it when India banned exports in December, before the country’s elections, citing a drop in local onion production
Pakistan onion farmers are enjoying a good time due to the unexpected hike in exports over the last few months at the expense of their Indian competitors.
The major producers of onion are mostly South Asian countries, which also pose serious competition in several other fields. India on the other hand is also the second-largest exporter of onions in the world, just behind China. India also holds a dominant position in the global onion market, frequently driving out onions from the smaller countries with its supply.
Pakistani farmers and exporters saw an opportunity to seize it when India banned exports in December, before the country’s elections, citing a drop in local onion production. India exported over 2.5 million tons of onions in 2023. There was an abrupt void in the global onion market, which Pakistan partially filled.
Between December and March of this year, Pakistan was able to export over 220,000 tonnes of onions, which was slightly higher than the country’s typical annual export volume of onions.
Waheed Ahmed, the principal patron of the All Pakistan Fruit and Vegetable Exporters, Importers and Merchants Association (PFVA), credited his organization’s success to astute planning and the government’s temporary willingness to permit exports without enacting legislation akin to India.
Crop Surplus
Eventually, the Pakistani government decided to put export restrictions on onions since the surplus of the crop was driving up domestic prices. However, Ahmed stated that by the end of the fiscal year in June, shipments that have already begun thanks to agreements approved before to the restrictions should generate an additional $50 million in revenue.
In contrast, Ahmed stated that the nation’s annual revenue from onion exports usually ranges from $110 million to $150 million. Exports of vegetables brought in more than $235 million for the nation last year, with onions accounting for about $90 million of the total.
Increased Prices and Reduced Supplies
The shipment provided much-needed foreign reserves to Pakistan, which has endured a dire economic scenario for the past two years. According to figures from the National Bank of the nation, foreign exchange reserves, which were as low as $3 billion in the previous year, have risen to $9 billion this month—enough to fund imports for six weeks.
But the feel-good story has more layers than onions. There was a temporary scarcity of onions in the local market due to Pakistan’s successful exports of onions.
Over 220,000 tonnes of the harvest were exported, meaning there were less onions available for domestic use. This led to an increase in costs between December and April, when Indian onions were prohibited from being exported, severely hurting the average Pakistani.
Onion prices, which are normally between 50 and 80 rupees ($0.18 and $0.29) per kilogram, increased to 250 to 350 rupees ($0.90 to $1.26) per kilogram in the first four months of the year before progressively declining in May.
Falling Onion Prices in Pakistan
The World Bank mentioned that more than 39 percent of Pakistanis make less than $3.5 a day.
Exporters and inflation data agree that the price of onions has decreased. According to official data, inflation resumed its declining trend in May 2024, with a record high of 11.8 percent. In May of last year, inflation had reached a record high of over 38 percent.
Imtiaz Hussain, a fruit and vegetable exporter from Karachi, claims that the Indian government’s lifting of its export prohibition is the cause of the falling price of onions.