KATHMANDU: The price of potatoes and onions has surged twofold within a week. The price of onions, which were available at Rs 90-100 per kg in the retail market last week, has skyrocketed to Rs 200 per kg. Similarly, the price of potatoes has surged to Rs 70 per kg, a significant increase from Rs 30 per kg just last week.
Traders attribute the spike in onion prices to the export ban enforced by India – the major supplier to the Nepali market. The Directorate General of Foreign Trade, under India’s Ministry of Commerce and Industry, has prohibited onion exports until March 2024. The ban came into effect on December 8.
Three months ago, India imposed a 40% duty on onion exports, effective until the end of December. Also, the government has levied a 13% VAT on onions which has made this essential ingredient of Nepali kitchens dearer, say retailers.
Prakash Gajurel, the general secretary of the Potato-Onion Importer, Exporter, and Wholesalers Association, expressed concern over the shortage of onions and potatoes in the market. He urged the government to reconsider the decision to impose VAT on these essential commodities. “We have repeatedly urged the government to revoke the VAT on onions and potatoes, but our appeals are falling on deaf ears,” he added.
Traders say there is a demand for 80 tons of potatoes and 40 tons of onions in the Kathmandu Valley alone. The overall daily demand nationwide stands at 200 tons of potatoes and 120 tons of onions.
Gajurel pointed out that many importers and wholesalers of onions and potatoes are contemplating exiting the business due to due to policy uncertainties. “Imports have come to a standstill. We are managing to release some quantity from our existing stock to the market. Onions and potatoes may become available in the market from next week,” Gajurel added
The situation has escalated with the Department of Commerce, Supplies, and Consumer Protection, along with the Inland Revenue Department, pressuring traders to issue VAT bills when selling potatoes and onions. Numerous wholesalers have opted to close their shops in response to this pressure.
Onion dearer in India
Binay Shrestha, information officer of the Kalimati Fruits and Vegetables Market Development Board, which manages Kalimati Fruits and Vegetables Market, attributed the price hike in the domestic market to the soaring costs in the Indian market. “Onion prices in the domestic market began to increase after onion imports started to decline gradually since October,” he added.
The average daily import of onions stood at 170 tons in October but dwindled to 60 tons in November and approximately 40 tons in December.
Nepal fulfills about 80% of its onion demand through imports, with the remaining 20% sourced from domestic farms, as per the Ministry for Agriculture and Livestock Development.
The price of onions in India has surged by up to 18% to INR 90 (NPR 144) per kg over the past month, according to Ram Raj Shrestha, a vegetable trader. Shrestha added that the minimum export price for Bangalore Rose and Krishnapuram varieties of onions in India is $820 per ton.
Bihar, Kerala, and Chennai are the leading onion-producing regions in India.
Since onion price is expected to reach an all-time high in India in the last week of December, traders see the price of onion climbing to as high as Rs 300 per kg in the domestic market.
Nepal imports onions worth around NPR 5 billion annually. Some 150 Nepali traders are engaged in onion and potato imports.
