Onion ban leads to soaring prices leaving vendors, consumers and restaurants worried

The Government of India (GoI) has imposed a ban on onion exports until 31 March 2024, causing a ripple effect in Bhutan’s domestic market. The prohibition has resulted in a steep increase in onion prices, soaring from Nu 120 to Nu 150 per kg, depending on the source.

Local vegetable vendors, such as Mon Maya in Thimphu, expressed concerns as she witnessed a decline in onion purchases. Mon Maya said, “The buyers, faced with the inflated prices, are opting for smaller quantities, impacting our sales and profit margins.”

Lhamo, another seasoned vegetable vendor, said, “There is already a significant drop in overall vegetable sales due to shifts in market places and hawkers all over the city, and then there is this ban on the export of the onion, which is resulting in people refusing to buy onions or buying a lesser quantity.”

Similarly, Jigme Zangmo, a restaurant owner known for dumplings, voiced her budgetary struggles due to the escalating onion prices. With onions being a key ingredient in their cuisine, restaurant owners, like Jigme, are caught in a dilemma: absorbing the increased costs or risking customer dissatisfaction by adjusting menu prices.

Both Mon Maya and Lhamo, along with other vendors, are puzzled about the ban, and want a clarity on the issue from authorities.

The Department of Agricultural Marketing and Cooperation (DAMC) shed light on India’s decision, explaining that the export ban aims to safeguard the consumer price index and ensure ample availability of onions within India.

Lachi remarked, “Onions are a kitchen staple, and this ban has hit us hard. It’s not just about the price; it’s about the availability and impact on our daily meals.”

Contrary to expectations, DAMC revealed that Bhutan has no onion reserves in cold storage facilities, relying on seamless imports from India for years. In response to the crisis, wholesalers and retailers have stepped in, stockpiling onions to address the shortage and stabilise the market.

The notice issued by the Ministry of Commerce and Industry, Department of Commerce, Directorate General of Foreign Trade, GoI included amending the export policy for onions.

The amendment, effective 8 December 2023, includes a minimum export price (MEP) of USD 800 per metric tonne until 31 December 2023.

Additionally, export permissions may be granted to other countries based on their governments’ requests.

Bhutan’s interim government is expected to take up the issue with the GoI after which prices will stabilize.

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