Onion farmers are incurring huge losses after an export ban was imposed to cope with supply outstripping domestic demand, traders say.
Late last year, windfall prices of 900 Kyats (US 90 cents) per viss (about 1.6 kilograms) for small bulbs and 1,400 Kyats per viss for large motivated farmers to increase planting over the previous year. but they could not export their crops this year. Onion prices have since fallen gradually 150 Kyats per viss for small bulbs and 200 for large size.
A brokerage owner on the Pakokku wholesale exchange said farmers had perhaps relied too much on their onion crops this year, chasing last year’s prices.
“But when farmers grew more this year, onion exports were banned by the government so they incurred huge losses in the market,” the broker said. “They are now complaining loudly about falling onion prices”.
Major onion growing areas are Pakokku and Yenangyaung in Magwe Division and Monywa in Sagaing Division. The major markets are Seikphyu in Magwe, Kyaukse in Mandalay Division, Myanugmya in Irrawaddy Division.
“The returns on our onion crop can’t even cover labour costs let alone the input costs of seeds, kerosene, fertiliser, insecticide and other direct costs,” a farmer from Yenanchaung said. “Despite falling onion prices, there are no buyers in the market … we’ll have to use our crop as fertiliser.”
The annual onion export price was made volatile by supply fluctuations and the fact that exports might banned when domestic prices rise, a staff member at the “Union of Myanmar (Burma) Federation of Chamber of Commerce and Industry” said. The major export markets for Burmese onions are China, Malaysia, Thailand and India.
According to the official statistics, more than 18,400 tons (18,695 tonnes) of onions were exported in the 2008-09 fiscal year. But the domestic price for premium onions reached a record high of 1,800 Kyats per viss in mid-August last year, and about 140 tons had to be imported for the domestic market.
“The falling onion price is determined by supply and demand in the market. The impact of falling prices affects producers as their income is reduced but exporters benefit … [as] they [their prices] will be more competitive in the export market,” a Rangoon University economist told Mizzima. “If the crops reach consumers, they too will benefit from the falling prices.”
Falling onion prices in Burma are rare but they were also seen in December 2008, when they reached a record low of 160 Kyats per viss on December 15 at the Bayintnaung Commodity Exchange. In Magwe Division and in central Burma, the price was even worse for farmers, at 50 Kyats per viss. At that price harvesting was futile, so the farmers left their crops in the field to rot.
A former economics professor told Mizzima that the shelf life of onions was limited to six or seven months.
“After this period, they first lose weight. If the supply excessively surpasses the demand and consumption, it will become waste,” he said, adding, “they can easily rot. … Since this crop cannot be stored for long, the farmers incur huge losses. When the onion export is banned at this time, their losses will be even worse”.
