Usha Project Final Trimister[1]

8/2/2019 Usha Project Final Trimister[1]

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Alluri. Ushakiran | Post Graduate Diploma Management in Agriculture -09-11 1

Trends in Existing Supply Chain for Exports

of Onions in India

Alluri. Ushakiran

PGDMA-09

National Academy of Agricultural Research Management,Hyderabad-500407


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CERTIFICATE

This is to certify that, Ms.A.Ushakiran; a bonafide student of Post Graduate Diploma inManagement Agriculture (2009-2011), NAARM, Hyderabad has successfully completed hertrimester project titled Trends in existing s upply chain for exports of onions in India during aperiod Feb to Apr 2011, towards the partial fulfillment of the requirements of the said course.

Director,

NAARM

Hyderabad.


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DECLARATION

This is to declare that I, A.Ushakiran, student of Post Graduate Diploma of management inAgriculture(2009-20011 batch), NAARM, Hyderabad have used original and authentic data,information and maintained full confidentiality to the best of my knowledge in the project reporttitled Trends in existing supply chain for exports of onions in India and that, no part of thisinformation has been used for any other assignment but for the partial fulfillment of therequirements towards the completion of the said course.

A.Ushakiran

PGDMA-09

NAARM,

Hyderabad


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Acknowledgement

At the outset, I thank my guide Dr.Jyothi Badri for providing me an excellent opportunity tolearn and experience the real life situations during my project. It is her inspiration that has keptme motivated all along my project and the discipline and integrity she expected from herstudent that made me learn the real lessons of life.

I express my heartfelt gratitude to Dr. G P Reddy & Dr. N H Rao without whose constantsupport; who provided me mental support throughout the project & made me comfortable at mywork.

I owe a lot to NAARM for laying the building blocks of logic and pragmatism and developing aninsatiable thirst for knowledge in me.

I would like to express my earnest gratitude and thanks to our Director, NAARM, andDr.N.H.Rao, Joint Director for their support and blessings. They have always been a source of inspiration and guidance.

The report is the result of contributions of numerous people too many to mention individually.

I owe everything to my parents and all my PGDMA classmates and friends for their constantsupport that has encouraged me to give my best.

Last but not the least; I thank each and everybody who has contributed directly or indirectly tothe successful completion of this project.


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TABLE OF CONTENTS

Executive summary 07

1. Introduction 08

1.1 Scope 09

1.2 Objective 09

2. Methodology 10

3. Results3.1 An overview of exports of perishable agricultural produce 11

3.2 World onion market scenario 15

3.2.1 (a). major onion importing countries-production 15

3.2.2 (b). major onion importing countries- value 16

3.2.3 (a). major onion exporting countries-production 17

3.2.4 (b). major onion exporting countries- value 17

3.2.5 (a). major onion exporting destinations for India-production 18

3.2.6. (a). major onion exporting destinations for India-value 18

3.3.

Domestic production of onions 193.3.1. (a). major onion producing states in India-production 19

3.3.2. (b). major onion producing states in India-value 19

3.3.3. (c). major vegetables gron in India 20

3.3.4. Production & area of onion among vegetables 21

3.3.5. Area of onion (%) among the states in India 21

3.3.6. Production of onion (%) among states in India 22

3.4. Marketing system : Institutional support of marketing and trade 22

3.4.1 Price support programe 23

3.4.2. Technological and extension support 23


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3.4.3. External trade support 23

3.4.4. Marketing channel 24

3.4.5. MEP 25

4. Suggestions 26

4.1. Strategy for increasing exports 26

5. Conclusion and recommendations 27


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Executive Summary

Onion is a vegetable spice used in every household of India. India has varying climaticconditions and provides an opportunity for growing a large number of horticulture cropsincluding vegetables. Onion is an important vegetable and has been grown in almost all parts of

India for thousands of years. Onion is regarded as a highly export oriented crop and it earnsvaluable foreign exchange for the country. Although India is the largest food producer in theworld, fresh vegetable export from India is very small owing to large number of constraints.These constraints relate to production practices, post harvest technologies, issues related tosupply chain, market access due to tough protocols set by different importing countries andgovernment policies. The Netherlands ranks first in the world s total onion production (source:www. FAO.org.in 2010-2011).

The project is to study the trends in the existing trade practices and supply chain of exports of onion of major exporters operating in India, its export destinations, post harvest process and

price realizations in international market.

First an attempt is made to map the complete export process of onions. Then complete supplychain, right from procurement from the farm gates till the price realization from the importers isstudied. All the intermediaries / channel partners are covered to see the efficiency of the supplychain. The focus was also to study the assistance provided to exporters under various schemesapproved by Govt. The report is the reflection of current market scenario of export of onion indetail.


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1. Introduction

The onion quality makes it a prince among vegetables and is said that onion is the dynamite of natural food. It is a good cleanser and healer. If it is eaten more often, it is certain that therewould be fewer colds, less anemia, fewer ills and less insomnia (Wikipedia).

Onion is one of the important spice crop grown in India and is cultivated over a large area spreadalmost throughout the country for domestic consumption and exports. India produces all thethree types of Onion- red, yellow and white. Besides improved varieties, some local varietiesespecially Nasik Red, Patna Red, Bombay Red, Poona Red are also grown by the farmers. (onioncase study an Indian scenario, 2010)

India has the second largest area under onions in the world after China (APEDA 2011). In termsof quality export India is the second largest exporter after the Netherlands. Besides India andChina, the other major Onion producing countries are USA, Turkey, Iran, Pakistan, Japan,Russia, Brazil and Spain. Onion is mainly cultivated in India in Maharashtra, Karnataka, Andhra

Pradesh, Gujarat, Uttar Pradesh, Orissa, Madhya Pradesh, Tamilnadu and Bihar[source:Maharashtra state agricultural marketing board (MSAMB) 2011].

India has been traditionally exporting onion mostly in fresh forms and occasionally in processedforms. The major importing countries for fresh or chilled onions are Nepal, Malaysia,Bangladesh, Middle East countries, Sri Lanka, and Singapore. These five markets absorbed over92% India s supplies with respect to fresh or chilled onions (Times of India, 2011)

The existing market for Provisionally Preserved Indian Onion is Germany, Bahrain, UK, USA,Malaysia, Brazil, Finland and Australia. These seven markets absorbed over 85% of India s

supplies of onions with respect to provisionally preserved.


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Scope

Onion market in India has been very fluctuating since a long time due to various reasons likepolitical, economical, technological, and legal issues. Though India is ranked second under areaand production, the prices are barrier in Indian domestic market. Earlier onion export was

restricted by the Govt. of India (GOI) and controlled through single canalizing agency &therefore the export was not reached to its potential. Due to increase in production of onion in thecountry, there was continuous demand by major onion producing states in the country led byMaharashtra for decontrol of exports. Considering this demand, the Govt. of India has removedall the quantity restrictions on onion export from 09/05/2003. However the 'No ObjectionCertificate' is made continuous for onion export shipments.

Objectives

The present investigation is proposed to understand the trends in price fluctuations and its overall

impact on supply chain of onion export with the following objectives

1. To study the existing trade practices and supply chain of exports of onion in India.2. To identify the leading exporters of onion and understand the onion export volumes,

export destinations, and price realizations in international markets.3. To study the assistance provided to exporters under various schemes approved by Govt.


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2. Methodology

Exploratory method- secondary research data. Statistical analysis- MS excel, and SAS tools.

An extensive study has been done based of the secondary data collected from various sourceslike,

1. Export Potential of Onion: A Case Study of India2. Case Study -1 : Onion3. Kumar, Praduman. 1996. Market Prospects for Upland Crops in India. CGPRT

Centre, Working Paper Series No. 204. Paroda, R. S. 1999. Towards Sustainable Agricultural Exports New Paradigms.5. Presidential Address, Fourth Agricultural Science Congress, Jaipur, India.6. Singh, Narendra and Netra Pal. 1996. Bulb and Root Vegetables. In Fifty Years of

Crop7. Science Research in India, R. S. Paroda and K. L. Chadha (eds.), Indian Counci of

Agricultural Research, New Delhi.8. FAO.org.in9. APEDA10. NHB11. AGMARK.


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Results

Existing trade practices and supply chain of exports of onion inIndia.

An Overview of Export Process of Perishable Agriculture Produce

Obtaining an Import-Export Code Number: This is a legislative requirement under Foreign TradeDevelopment and Regulation (FTDR) Act, 1992. This number has to be obtained from theDGFT/ the licensing authority, ministry of commerce whose main responsibility includes themaintenance of data base of exporters and importers by allowing a PAN-based IEC number.

IEC is issued by paying a demand draft of Rs.1000/-towards the payment of fee. The certificateis issued with in 3-15 days after the submission of application. Now online registration can alsobe done by visiting the website of DGFT. This number is mandatory or else the customauthorities will not permit the clearance of goods to an importer.

Registration with Export Promotion Councils: Registration is an essential requirement if anexporter wishes to avail benefits granted by the government under EXIM policy. Among theimportant registering authorities are various export promotion councils or commodity boardssuch as the marine product export development authority, APEDA, The Tea Board, the office of the jute commissioner, Development commissioner of Free Trade Zones/Export ProcessingZones and the Federation of Indian Export Organizations. But for the export of fresh fruits andvegetables, processed foods and livestock products the exporter has to register with APEDA byapplying to the authority with a demand draft for Rs.5000/- towards the fee for Registration CumMembership certificate (RCMC) which is issued with in 15 days of application. Online facility isalso available on the APEDA website.

Obtaining BRC (Bank Realisation Certificate): It is mandatory for the exporter to open anaccount in the name of the organization or business with a bank who is authorized by RBI to dealwith foreign exchange. This is a legislative requirement under FEMA (Foreign ExchangeManagement Act). All the export carried out with this number will be realized through thisaccount.

Getting an overseas purchase /export order: After fulfilling all the legislative requirements to

carry out a foreign trade, the next step in the process flow is to acquire a valid offer fromoverseas. After processing a valid export order it is to be scrutinized with reference to the termsand conditions of the contract. The export order must specify the mode of payment inunmistakable terms such as the Letter of Credit, Document of Payment, Documents againstAcceptance.


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Letter of credit: To cover the credit risk, payment through irrevocable letter of credit is advisedwhich is issued to the exporter through his foreign exchange bank which in turn keeps in touchwith importers bank. The most important documents required by an importer for this purposeare:

A) bill of exchange B) commercial invoice

C) bill of lading D) marine insurance policy

E) packing list F) certificate of origin.

Purchase order/ Specification: This note contains all relevant details pertaining to thespecifications/ requirements of the importers. A merchant exporter who purchases the requiredgoods from the market or gets them produced by other manufacturer also has to provide thenecessary specifications/requirements/ instructions to the supplier of the goods to be exported.

Agreement with producers/farmers/suppliers: A contract is signed between the exporter and theproducers/farmers/supplier for the procurement of commodities and as per recent APEDAregulations farmers are required to register with the District Horticultural Department for whicha Certificate of Farm Registration is issued. This registration ensures the traciability of theproduce, which has become an essentiality in the post WTO regime of global trade.

Registration of pack houses/processing plants: This is also necessary as per APEDA and otherEPC regulations. The registered pack houses are given a registration number, which is availablein APEDA database and this certificate is valid for two years. The products are required to bepacked and labeled under hygienic conditions for which registered pack houses are used.

Certificate of AGMARK Grading (CAG): APEDA has made CAG mandatory for the exports of perishable produce which is regulated by Agricultural Produce Grading and Marketing Act,1937.It is issued by directorate of Marketing and Inspection (DMI), Ministry of Agriculture onexporters request.

MRL test report: This requirement is country specific. However exports to EU always require aMRL test report for grapes, as it is heavily fertilized crop. APEDA accredited privatelaboratories are the major service providers in this sector which charges Rs. 7000/test towardstheir fee out of which 50% is born by APEDA on behalf of farmers/exporters.

Fumigation certificate: This is prerequisite for the issuance of Phytosanitary Certificate. and isissued by the private agencies accredited by Plant Quarantine Organisation of India under theDirectorate of Plant Protection and Storage, Ministry of Agriculture.

Preparation of packing list: At this stage, exporter prepares a packing list which is a list of contents of a package as well as the dimensions of the package such as its size, gross weight,quantity etc.


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standard fee based on the volume of the consignment. For fruits and vegetables two differentrates are there. If the mixed container of fruits and vegetables are sent by exporters, for issuingphyto-sanitary, quarantine officials charges taking rate of vegetables for the whole container.

Preparation of shipping bills: It s is a legislative requirement under Custom Act-1962 after the

agent has taken control of the consignment, a shipping bill is prepared and submitted at customscenter with Rs. 60/- towards the processing charges of SB.

Custom clearance: At custom center, shipping bill (SB) is assessed for its correctives and cesscharges by customs clerk. He then forwards the same to higher authority, which is counterisignedby commissioner of customs and returned to the clerk. He in turn prepares TR-6 challan andissues it to the agent. After the payment of charges all the three copies of SB is returned to theagent except the original, which is kept with the custom center.

Dock Receipt: Once the shipping bill has been cleared by the customs, the agent forwards a copy

of the shipping bill (duplicate/triplicate) to the Shed Superintendent/Dock Officer of theconcerned port trust and thereafter a Dock Challan is made towards the payment of port charges.

Security checking of the cargo: X-ray screening of the cargo is necessary under Board of CivilAviation Security regulations before it is moved to the center of perishable cargo.

Let export order: The cargo is moved to the Centre for Perishable Cargo (CPC) until the space isavailable for the cargo in the aircraft/ship. At the time of export the cargo is taken to the boardwhere it is exported in the presence of Custom Preventive Officers who after proper examinationand sampling signs. Let Export Order on SB (Duplicate/triplicate).

Forwarding the documents to the exporters: The agent than forward the relevant documents(including the quadruplicate of SB), Export Promotion Copy to the exporter. After receiving theabove documents from the agent, the exporter files a claim with the Maritime Collector of Central Excise for the draw back of excise duty.

Export General Manifest (EGM): The carrier-the airlines/shipping line-files a detail of each andevery consignment carried by it and destined out of India on that voyage in a statement calledEGM with the customs. Each line in a EGM pertains to a particular consignment.

Shipment advice: It is Document the exporter sends to the importer with regard to the shipmentof consignment.

Presentation of documents in the bank: Documents are than presented to the negotiating bank.From there the documents are than transmitted to the banker of the importer, after which theimporter takes the custody of the consignment once the goods reach their destination and otherrelevant formalities are completed at that end.


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Forwarding of documents to RBI from Customs Office: RBI monitors inflow and receipt of foreign exchange by tallying invoices with customs processed documents.

The leading exporters of onion and understanding the onion export

volumes, export destinations, and price realizations in internationalmarkets.

World onion market scenario: Onion is a very important crop for exports all over theworld. The developed countries are the major importers. The fluctuations in the market prices arethe most determining factor responsible for the imports and exports among the countries. Theprices are dependent on the quantity and quality of the produce arrival to the markets. The majorcountries involved in producing onions like Netherlands, India, Mexico, Egypt are basicallyrainfed and due to the uncertainty in the climatic conditions, there is always a shortage in thesupply of the produce to the markets.

Fig1(a)(b) : List of major onion importing countries in the world where USA, UK, Malaysia,Germany, Russian Federation, Saudi Arabia, Canada, Japan, Pakistan, and Belgium are theleading players.

0.00

50.00

100.00

150.00

200.00

250.00

300.00

350.00

P r o

d u c t i o n i n U S

l a c k M t .

Fig.1(a) Major onion importing countries

2007 Value

2008 Value

2009 Value


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There is no much fluctuating trend found among the countries. But it s a decreasing trend for thecountries like USA, UK, Germany, Russian Federation and Belgium where as an increasingtrend for the others like Malaysia, Saudi Arabia, Japan, Pakistan etc. This is because of decreasing demand and acceptance of the fresh onions by consumers in these countries. Thefollowing table shows an overview of the onion scenario across the globe.

0.00

50.00100.00

150.00

200.00

250.00

300.00

350.00

V a l u e

i n U S

l a k h $

Fig.1(b) Major onion importing countries

2007 Value

2008 Value

2009 Value

Information about onion in world: 2010

A. Area Wise:China -1 st

India -2 nd USA -3rd

B. Exports Wise: (Lakh Mt)Netherland 2009India 891.21Mexico 793.93Egypt 387.82

C. Imports wise: (Lakh Mt)USA 241.31UK 171.01Malaysia 132.93Germany 121.41

Information about onion in India: 2010

A. Area Wise: (lakh ha.)Maharashtra 200.0

Karnataka 141.3Madhya Pradesh 55.0Bihar 52.7

B. Production Wise: (000 Mt) Maharashtra 3146.5Karnataka 2266.2Madhya Pradesh 1081.8Gujarat 1016.1

C. Productivity Wise: (Tons/ha.)Madhya Pradesh 196.69Bihar 192.81Karnataka 160.38Maharashtra 157.33

D. Exports Wise: (000 Mt) Bangladesh 764.1Malaysia 303.1United Arab Emirates 147.1Sri Lanka 129.3


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Fig.3(a)(b): India majorly exports onions to Singapore, Malaysia, Middle East, Srilanka.Maldives, Mauritius etc. Consumers in the importing countries have traditionally developedspecial taste and liking for Nasik/Pune/Bombay onions due to its pungency, flavor and colour.These qualities have had added advantages for Nasik/ Pune/Bombay onion in the export.

BANGLADES

H

MALAYSIA

SRILANKA

UNITED

ARABEMIRA

TES

PAKISTAN

SINGAPORE

PHILIPPINES

NEPAL OMANMAURITIUS

2007-08 352.42 202.17 135.05 139.34 4.1539 18.037 9.661 35.538 12.205 10.736

2008-09 685.45 283.89 152.2 189.68 128.12 24.302 33.295 40.669 11.977 10.836

2009-10 764.1 303.14 129.33 147.17 102 24.622 10.866 38.985 19.835 11.013

0100200300400500600700800900

P r o

d u c t i o n i n 0 0 0 ' M t .

Major onion export destinations for India

0

20

40

60

80

100

120

V a l u e i n R s . 0 0 0

' l a c s .

Fig3.(b) Major onion export destinations for India

2007-08

2008-09

2009-10


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Domestic Production of Onion:

0.00500.00

1,000.001,500.002,000.002,500.003,000.003,500.004,000.004,500.00

P r o

d u c t i o n i n 0 0 0 ' M t .

Fig.4(a) Major onion producing states in India

2008-09

2009-10

0

500

1000

1500

2000

2500

3000

A r e a i n

l a c k

h a .

Fig.4(b) Major vegetables grown in India

2006-07

2008-09

2008-09

2009-10


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Onion is a crop of national importance and considerable attention has been paid by the NationalAgricultural Research System of the country to the improvement of this crop. The NationalHorticultural Research Development Foundation, sponsored by the apex level cooperative calledthe National Agricultural Cooperative Marketing Federation of India (NAFED), and the NationalResearch Center on Onion and Garlic of the Indian Council of Agricultural Research (ICAR) areengaged in systematic efforts for the improvement of onion. Besides these two organizations,several other crop research institutes of the ICAR and state agricultural universities are alsoinvolved in research on onion. In 1995, a National network scheme was initiated at 15 centers by

the ICAR Research Network for the promotion of hybrid research in vegetable crops to developF1 hybrids for 9 important vegetables among which onion is also one of the important crops(Singh and Pal, 1996).

A large variety of vegetables are grown in India. Potato is the leading vegetable grown in Indiafollowed by onion. Although onion is cultivated almost all over the country, the major oniongrowing states are Maharashtra, Karnataka, Gujarat, Bihar, Madhya Pradesh, Rajasthan, AndhraPradesh, Tamil Nadu, Haryana and Uttar Pradesh. These nine states together account for over 90per cent of both the area and production of onion in the country [Fig.4(a)(b)] .

0

5000

10000

15000

20000

25000

30000

35000

40000

P r o

d u c t i o n i n

l a c k t o n n e s

Fig. 4(c) Major vegetables grown in India

2007-082008-09

2008-09

2009-10


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88.00

88.50

89.00

89.50

90.00

90.50

91.00

2006-07 2008-09 2008-09 2009-10

T o t a

l o n i o n P r o

d u c t i o n a n

d a r e a i n %

Fig.5 . Production and area percentage of onion among vegetables

% production of onion amongtotal vegetable production

% area from total vegetablearea grown

0.0

50.0

100.0

150.0

200.0

250.0

300.0

A r e a o

f o n i o n i n

l a k h h a .

Fig.6. Area of onion grown among states in India

2006

2007

2008

2009

2010


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In the northern part of the country, onion is usually grown in winter (rabi) season. However, inthe southern and western states of Andhra Pradesh, Karnataka, Tamil Nadu, Gujarat andMaharashtra, it is grown in winter ( rabi ) as well as in the rainy (kharif) seasons. A red onionvariety, N 53, has been successfully developed for the Northern Indian plains and the NationalHorticultural Research Development Foundation has taken up this technology on a large scale atfarmers fields in Har yana, Punjab, Eastern Uttar Prudish, Bizarre and Rajasthan. Thus onion iscultivated and is available to domestic consumers, as well as for the exports, throughout the year.

The assistance provided to exporters under various schemesapproved by Govt.

The Marketing System: Institutional Support for Marketing and Trade

Exports of onions from India are not free but are permitted only through certain designatedcanalizing agencies. Foremost among these agencies is the National Agricultural CooperativeMarketing Federation of India, Limited (NAFED), which was from 1974-75 till January 1999,the sole canalizing agency for onion exports. In the year 1998 the GOI felt that only Nafed wasnot sufficient to work as a canalizing agency & then the GOI of India has appointed other 12canalizing agencies (except NAFED) for onion export which are as follows

1. Maharashtra State Agricultural Marketing Board, Pune (MSAMB)2. Gujarat Agro Industries Corporation, Ahmedabad (GAIC)3. Karnataka State Co-operative Marketing Federation Ltd., Bangaluru (KSCMF)4. Andhra Pradesh State Trading Corporation Ltd., Hyderabad (APSTCL)5. National Co-operative Consumers Federation of India Ltd., New Delhi (NCCF)

0.0500.0

1000.01500.0

2000.02500.03000.03500.04000.04500.0

P r o

d u c t i o n i n

0 0 0

' M t .

Fig.7. Production of onion among states in India

2006

2007

2008

2009

2010


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6. Spices Trading Corporation Ltd., Bangaluru (STCL)7. North Karnataka Onion Growers Co-operative Society Ltd., Hubli (NKOGCS)8. Madhya Pradesh Agro Industries Development Corporation Ltd., Bhopal

(MPAIDC)9. Andhra Pradesh State Co-op Marketing Federation Ltd., Hyderabad (APfed)10. Madhya Pradesh State Co-op Oilseed Growers Federation Ltd., Bhopal (MPOGF)11. Karnataka Agricultural Produce Processing and Export Corporation Ltd.,

Bangaluru12. 12.West Bengal State Essential Commodities Supplies Corporation Ltd.,Kolkata

(WBSECS)

Price Support Programs: Since NAFED is responsible for providing marketing support toproducers and ensure that they receive a remunerative price for their product, it also undertakessupport price purchases of various commodities for the government. For onion, NAFEDintervenes in the domestic marketing whenever there is glut in the market and prices reachuneconomical levels. Prices prevailing in major markets all over the country are reviewed everyday in this process. Procurement prices of onion are decided by NAFED on the basis of cost of production and procurement is initiated in the markets and from the farmers directly. Thisbenefits the producers, particularly the small producers, who have low carrying capacity and areconstrained to sell immediately after harvest on account of financial constraints.

In case of external trade, NAFED is responsible for fixing the minimum export price (MEP) of onions, which is done on a monthly basis. The Price Fixation Committee of NAFED decides thisprice. Factors such as market trends, world prices and domestic prices, and margins areconsidered for arriving at the MEP of onion.

Technological and extension support: A National Horticultural Research DevelopmentFoundation has been set up by NAFED to undertake research on development of varieties of onion suitable for cultivation in different agro-climatic regions of the country as well as thedevelopment of suitable production practices.

Besides NAFED, other public research agencies are also involved in technology developmentand upgradation for onion. The technologies and package of practices developed are passed on tothe producers through an extensive system of extension. Seed and at times, other critical inputsare provided to farmers by NAFED. Plant protection operations have also been undertaken to

provide protection against pest and disease infestations. Technical know how is extended tofarmers to improve production and productivity. Seed production is undertaken by the NAFEDsponsored National Horticultural Research Development Foundation and seed is sold by NAFEDunder its own name.

External trade support: From 1974-75 to January 1999, the NAFED was the sole canalizingagency for external trade and exports of onions from India. In January 1999, the new export -


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import policy of the GOI introduced certain changes in the system of onion trade by includingsome other agencies as additional canalizing agencies for onion trade. The reasons for allowingother agencies to enter into the canalized exports of onion is that the Government does not wantany agency to acquire a monopoly position in this respect and also to facilitate the easyprocurement, distribution and exports of the commodity from the widely distributed producingcenters of the country. However, NAFED continues to be a monitoring agency.

Each canalizing agency is allocated a quota for exports. An inter-ministerial group comprisingrepresentatives of the Ministries of Commerce, Consumer Affairs, and Agriculture and NAFEDdecide the quotas for exports to be allocated to each canalizing agency. These quotas are decidedfor varying periods of say 15 days to a month and generally not for a long period. The share of NAFED in the total quantity exported is around 50 per cent, with the remaining being shared bythe other co-canalizing agencies. Having been responsible for exports of onions since itsinception, NAFED has been able to establish markets for Indian onion abroad, which is evidentfrom the increasing volume of onion exports.

NAFED has set up modern state-of-the-art storage facilities in Maharashtra, Gujarat and TamilNadu near its major procurement centers. Onion requires storage facilities that require sufficientinflow of fresh air. Consignments are packed in hessian bags which allow air to pas through.Export consignments meant for long distance are transported by NAFED s associated shippers inspecially equipped sea vessels in which air is blown in storage areas through fans and blowers.

India grows three types of onions red, white and yellow. The bulk of the country s exports areof the red variety. Generally only A grade onions are exported. Grading is done manually onthe basis of bulb size by trained people deployed by NAFED who are well versed with the

requirements of different export markets. Occasionally B grade onions are also exported but themarket for such onion is only Dubai. Tastes and preferences of consumers vary and theBangalore rose variety, a small variety of onion, is preferred and exported to Singapore andMalaysia.

Marketing channels: In case of private trade in onion for domestic consumption, producers sellonion to commission agents in assembling regulated markets which are now in operationextensively throughout the country. The commission agents sell onion to sub-wholesalers ordirectly to retailers, who in turn, sell to the consumers.

A second channel is the cooperative channel in which producers market their onion throughcooperative marketing societies at the village level. NAFED and the other canalizing agenciesprocure their requirements from cooperative societies and rarely buy from commission agents orwholesalers in markets. This benefits the small producers as they collectively receive a betterprice for their product.


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MEP (Marketing export price): Marketing export price is the optimum price laid for the benefit

of the sellers as well as buyers for all the good exported from a country. For onions NAFED

MEP (Marketing export price): Marketing export price is the optimum price laid for the benefitof the sellers as well as buyers for all the good exported from a country. For onions NAFEDdecides the MEP along with the exports committee for our country.

The government removed ban on onion exports during February 2011 with a high MEP of USD600 per tonnes. However, the government had to slash the MEP for three times this in march toUSD 275 per tonnes to boost exports and check steep fall in domestic prices of onion.Onion prices, which touched Rs 70-90 per kg in December 2010, have now declined to Rs 10-15per kg in retail markets. Lowering of MEP will help farmers in better realisation of their productas they will be able to find wider market for themselves The MEP for Bangalore Rose andKrishnapuram onions varieties was USD 1,400 per tonne.India exports onion to the Middle East and Gulf nations.The country exported about 1.8 million tonnes of onion in 2009-10 fiscal.

First channel Second/ Cooperative channel

Farmers/ Producers Farmers/ Producers

Commission agents inassembling regulated

markets

Sub-wholesalers

cooperative marketingsocieties at the village

level

Retailers

CONSUMERS

NAFED & other

canalizing agencies


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4. Suggestions for improvement:1. Popularization of improved varieties, quality seed production and distribution, expansion

of area in non- traditional pockets and contract production for export.2. Planning for contract production for export market expansion of area and production

of kharif onion for early harvesting.3. Unawareness of proper post harvest practices and quality

Training of farmers and others involved in onion production, post-harvest managementand marketing to creat awareness.

4. Packing material used is not attractiveIntroduction of attractive, eco-friendly packages, consumer packages etc.

5. Electrically-ventilated containers for export of yellow onions to Europe . Adequatetransport with reasonable rates, synchronize the rail/road transport with schedule of vessel and providing insulated wagons.

6. Developing more ventilated storage godowns for onions. Providing handling sheds and

make available modified containers with proper ventilation.7. To develop market intelligence for different seasons, quality of produce and

corresponding season crop in other competing countries.

Strategy for increasing export: The strategies suggested to improve the export of onionsare :

1. Production and distribution of quality seed of improved varieties in adequate quantitiesby following seed village concept.

2. Development of disease and insect pests resistant, heat / moisture stress tolerant varieties

by taking such work at NRC for Onion and Garlic.3. Development of biological control measures against pests and disease by taking up work with NRC for Onion and Garlic and NHRDF.

4. Development of yellow coloured hybrid and OPs for export to European and Japanesemarkets by popularizing the technology for production during late-kharif based on work undertaken by NHRDF and adopting contract production.

5. Development of bigger bulblet varieties in multiplier onion.6. Training of farmers, traders and exporters involved in onion production, handling and

marketing.7. Creation of adequate curing and storage facilities at field level and at ports.

8. Popularizing various onion products in export markets developing varieties suitable forvarious processed products.


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5. Conclusions and Recommendations:

The exports of onion from India have been a success story. The country has been able to exportlarge quantities of onion after ensuring that the domestic requirements are met. The canalizingagencies, especially NAFED, have been able to establish markets for Indian onion abroad as they

take good care to maintain the quality of the produce for the export market. For this purpose,storage and grading facilities have been created. Large scale facilities created for packaging of onion by the exporting agencies help in the quick handling of export consignments. However,while markets have been established for Indian onions abroad, exports are concentrated toneighboring countries in South and South East Asia and the Middle East. In order to improveunit value realization, it is necessary to tap the potential of markets in the European Union andother developed countries. These countries import large quantities of onion and it is importantthat India should quickly try to penetrate these markets. This will require the production of onions possessing the traits desired by consumers in these potential markets but the Indianresearch system is well equipped to develop such varieties.