India cotton curb spices onion row
By Syed Fazl-e-Haider
KARACHI, Pakistan - India and Pakistan are struggling to end what increasingly
has the smell of an inflation-induced commodity war, as a ban by Pakistan on
the export of onions to India continues despite a retreat by Indian traders who
had countered by halting exports to Pakistan of other vegetables.
Unseasonal rains have hit the onion crop in both countries, where the bulbs
provide the pungent foundation for thousands of different curries and dishes.
That has driven up prices on both sides of the border, but the shortage in
Pakistan had been exacerbated by exports to India - which itself has also
banned onion exports. Both countries say the export curbs are intended to bring
So far, the Pakistan ban appears to be working - prices have crashed to between
10 and 12 Pakistan rupees (PR) (11 to 14 US cents) per kilogram from as high as
PR 90 before the export curb and below the December price of PR 40. Prices
halved within 24 hours of the ban being imposed.
In India, prices that reached 80-85 Indian rupees (IR) - or US$1.75-$1.87 -
last month are currently around IR 70 a kilo, still almost three times the
"normal” retail price of IR 20-25, according to Agence France-Presse. India
plans to sell onions at IR 35 a kilogram, almost half the current market rate,
the prime minister's office said in a statement on Thursday, according to a
Last year, Pakistan produced 1,534,350 tonnes of onion, against a target of
1,902,000 tonnes. This season, around 60,000 tonnes have been exported to
"The exports [to India] triggered a shortage of onions in our domestic market,"
Agence France-Presse reported a Pakistani commerce ministry spokesman as
In retaliation to Pakistan's ban, which has not been applied to sea-borne
exports, Indian traders immediately stopped nearly 70 trucks laden with
tomatoes, potatoes, ginger and chili from going to Lahore.
Last weekend, those exports were resumed as a goodwill gesture while traders
and the government urged Islamabad to at least allow movement of trucks already
stranded at the Wagah border crossing.
Om Parkash, who heads the Amritsar-Lahore Traders' Association, said 300 trucks
loaded with onions meant for India had not been cleared by Pakistan’s Ministry
of Commerce, Indian Express reported on Thursday. Traders in Amritsar said
Pakistan should at least clear orders already placed by Indian traders even if
it wants to ban exports.
"We have urged them [Pakistan] that the contracted quantities, which were to
come via the land route, should be released," The Economic Times quoted Indian
Commerce Minister Anand Sharma as saying.
A one-time waiver from the ban is expected to be allowed to the local exporters
who have received payment and their export consignments are on the way to cross
the Wagah border for completion of export orders, Daily Times reported on
Tuesday, citing official sources. As of Friday, no such waiver had been
Confusing the issues, the vegetable wrangle follows the halt called by India
last May to shipments of raw cotton to Pakistan, again due to a rise in
domestic prices, which had surged more than 25% since October 2009. The
government action was aimed at ensuring adequate supplies of cotton at suitable
prices for its own garment and textile industry.
An inter-ministerial meeting, called by Pakistan's Ministry of Commerce on
January 10 to consider India's request for resumption of onion exports, was
inconclusive, according to Business Recorder, with the commerce ministry
drawing attention to the cotton export ban.
The Indian Commerce Ministry has reportedly told Islamabad through the External
Affairs Ministry that it is ready to revisit the cotton export ban and other
issues if the gesture is reciprocated by Pakistan by removal of the ban on
movement of onions.
Pakistan is the world's fourth-biggest cotton producer but often has to turn to
import to feed its textile sector, which accounts for about 60% of its exports.
India plans to review import and export policies of all "essential commodities"
to improve supplies, Bloomberg reported on Friday, citing the statement from
the office of the Indian prime minister. Export of edible oils, pulses and
non-basmati rice will "remain banned", according to the report.
In India, the rising cost of onions is helping to drive up food inflation,
which in the week ending December 25 rose to 18.32% compared with a year
The surge in onion prices prompted the Indian government to scrap import duties
on the commodity and ban its export, encouraging Pakistani traders to exploit
the situation and the much higher prices they could obtain by selling to Indian
Tomato prices, which climbed to PR 70 per kg in the local market, have declined
since India resumed exports. India is a major exporter of vegetables to
Pakistan, with tomatoes alone accounting for up to 32% of total goods crossing
the land border and soybeans 55%. Other exported food products include
chillies, ginger, potatoes and capsicums.
Syed Fazl-e-Haider (http://www.syedfazlehaider.com) is a
development analyst in Pakistan. He is the author of many books, including
The Economic Development of Balochistan (2004). He can be contacted at email@example.com.