US & Japan object to ban on onion exports

US & Japan object to ban on onion exports


The United States and Japan have raised concerns about India’s frequent bans on onion exports at the World Trade Organization (WTO), claiming that such prohibitions without prior notice put importing countries in a tough position. Both these countries said India was asked to justify its ban on onion exports at the WTO’s agriculture committee meeting in June, 2021. “However, India failed to provide any concrete response, instead just stating that it was in effect temporarily,” they stated. Both countries then demanded an explanation from India as to why the notification was not made before the measure was taken, despite the fact that prior notification is required under Article 12 of the Agriculture Agreement. “Explain how India has taken into account the impact of the action on the food security of importing members. Please explain why India chose export bans over an export quota, which would enable a set quantity of exports,” Japan and the United States urged in a joint statement.

The government restricted the export of all varieties of onions in September, anticipating a shortfall after exports increased by 30% from April to July 2021. Onion producers, as well as neighbouring countries like Bangladesh and Nepal, which rely significantly on exports of Indian onions, were outraged by the unexpected export prohibition. The commerce ministry partially removed the restrictions in October, allowing up to 10,000 tonnes of Bangalore rose onions and Krishnapuram onions to be exported with immediate effect. After the arrival of the fresh crop, the government abolished all export prohibitions on onions, and prices in the domestic market began to ease. Export restrictions on onions have become an annual occurrence at the start of winter, with unseasonal rains occasionally damaging the crop, causing the politically sensitive staple food’s price to skyrocket. To keep prices down in FY20, India bought onions worth $80 million from Afghanistan, Turkey, and Egypt.

From 1st January, the government lifted all restrictions on onion exports, with its prices starting to ease in the domestic market after the arrival of the new crop. The government restricted the export of all varieties of onions in September, anticipating a shortfall after exports increased by 30% from April to July. A day after the Centre banned exports of onions to contain a spike in domestic prices, farmers in the largest agriculture producing state of Maharashtra, held agitations, calling the move “arbitrary” and seeking the removal of the restriction. Before the move, prices of the kitchen bulb in Lasalgaon, the country’s biggest onion market in Maharashtra, had doubled to Rs 3,000 per quintal since March.

Farmers from Lasalgaon, Nasik, Ahmednagar, Akola, Solapur and Pabhani, among others, blocked state highways. They complained that the sudden decision of the government would drag down their returns just after they started to get better prices for their produce. The surge in prices, which forced the centre to ban onion exports, was caused by the massive destruction of crops due to moisture during heavy monsoon downpours. Heavy rains washed away the crop in states, including Karnataka, Madhya Pradesh and Gujarat.

NCP President Sharad Pawar said he has discussed the issue with commerce minister Shri Piyush Goyal and urged him to rethink about it. “The ban endangers India’s export share in the onion markets of Gulf countries, Sri Lanka and Bangladesh,” Pawar said in a tweet, adding that it could allow other countries, such as Pakistan, to displace India. Containers have been stopped at JNPT port and hundreds of trucks have been stopped at the Bangladesh border. This has hit onion prices which have dropped to Rs 2,000 per quintal within a day which means losses for farmers again. According to onion traders in Nashik, around 450 containers are at JNPT port. All India Kisan Sabha General Secretary Shri Ajit Navale said the ban not only deceives onion growers from Maharashtra but across the country. “Farmers are angry with this decision and have decided to protest by coming out on roads,” he warned, alleging that the decision was taken because of the upcoming Bihar elections as high onion price are undesirable for any government seeking re-election.

This sudden ban on exports has not only affected the Indian farmers, producers, suppliers but also the neighbouring countries. US and Japan have raised concerned at WTO and India needs to justify its action.

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