Onion traders cry foul over underpriced exports to UAE

Centre has permitted 24,400 MT shipments to the country amid ban on exports ‘till further orders’; exporters allege selling price being set too low, triggering windfall profits for selected UAE importers

April 08, 2024 12:15 am | Updated 06:31 am IST - NEW DELHI

Image used for representative purpose only.

Image used for representative purpose only. | Photo Credit: PTI

Amid an extended ban on onion exports, farmers and traders are miffed that some shipments allowed by the government to markets like the United Arab Emirates (UAE) have been sold at a pittance, even as global prices have soared, yielding windfall profits for selected importers.

An Indian farmer is being paid just ₹12 to ₹15 rupees for a kg of onions procured for export, but the same onions are then being sold in UAE stores for more than ₹120 per kg, exporters alleged.

Fearing a domestic shortage of the politically sensitive crop, the government had imposed a ban on export of the kitchen staple in December, extending it indefinitely “till further orders” last month. However, it had kept the window open for exports to countries in response to requests received through diplomatic channels.

On March 1, the Union government permitted the export of 14,400 metric tonnes (MT) of onions to the UAE, with a quarterly cap of 3,600 MT. While over 3,000 tonnes of such exports were cleared last month, the Commerce Ministry last week okayed an additional 10,000 MT of onions for the UAE, “over and above” the quarterly quota.

Also Read | Govt allows onion exports to Bangladesh, Mauritius, Bahrain, Bhutan

Mismatch with global rates

Usually, global onion prices hover in the $300-400 a tonne range. In recent months, however, rates have soared in major markets like the UAE to as high as $1500 a tonne, exacerbated by the export bans imposed by India, Pakistan, and Egypt.

India’s recent shipments to the country, however, have been sent at around $500 to $550 a tonne, exporters have learnt.

“UAE importers have already got windfall gains of over ₹300 crore through such shipments, and if this situation continues, another ₹1,000 crore is likely with the additional 10,000 MT quota opened up now, apart from the gains likely on the additional 3,600 tonnes of export quota available for that country till June,” a leading exporter of horticulture produce told The Hindu.

UAE importers benefit

These exports are being channelled exclusively through the National Cooperative Exports Limited (NCEL), a government-owned body under the Ministry of Cooperation. Exporters were told that exports were being done on a government-to-government basis, with the importing country allocating quotas to nominated importers. Procurements for such exports is being done through an e-tendering process on the Agribazaar portal.

On the UAE side, the importers identified to receive these shipments are learnt to be private traders and supermarket chains, not government agencies dealing with food security concerns. As is typical for trade deals, local onion suppliers are required to bid for the lowest possible price they can offer; buyers were also expected to be picked on the highest price offered, but exporters say that is not the case here.

Ambiguous price discovery

The Horticulture Produce Exporters’ Association has been seeking clarity on the process for permitting exports and setting the price for shipments. In an email to NCEL on March 25, it flagged concerns that the prices at which onions are being sold abroad are lower than international prices, which were about $1450 a tonne at the time. The mail, that was also marked to the Commerce and Consumer Affairs Ministries, noted that the buyers were not government bodies but government-nominated firms.

NCEL officials are learnt to have told Indian traders that they have no say in selecting the price and exporting entities, as that is being determined by an inter-Ministerial committee.

Detailed queries sent by The Hindu over the past week to the Ministries of Commerce, Consumer Affairs, and Cooperation on the modalities for determining the export price, and identifying the exporters and importers under this window, went unanswered. An Agriculture Ministry source said it was only concerned with providing crop estimates.

‘Importer-exporter nexus’

“Illustratively, if our farmers are selling onions at about ₹12 to ₹15 a kilo under the current system, even if you factor in shipping and packaging costs, the price being set for exports of about ₹40-45, is way lower than what the importing entities are selling at — around ₹120-₹130 in UAE stores,” said another exporter.

Last week, a delegation of horticulture exporters met top officials across concerned Ministries, seeking clarity on the situation, with some hinting that an importer-exporter nexus may be at work. They also mooted that exports through the NCEL to countries whose needs are not linked to food security should be linked to market prices.

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