India will have a bumper crop of onions on its hands, thanks to a high number of farmers allocating their land for onions. However, with the restrictions that the coronavirus has caused, the crop could simply go to waste. The fact that the lockdown in India has been extended does not help the business side of things.
India has extended the lockdown for another two weeks, which could have serious implications for the onion season. According to Sagar Tikyani, founder of Indian trading company Dilip Agro, the country is about to have a bumper crop: “The current new summer crop for onions is expected to be higher than the last year, thus we are expecting a bumper harvest. This can mostly be contributed to more farmers choosing to cultivate onions, as they got very good prices last year. Unfortunately, the larger harvest will be of no use to anybody if the world does not come out of the Covid-19 crisis in a relatively short time.”
It goes without saying that the measures India and other countries have taken had an impact on the trade. Tikyani states the prices of logistics are most problematic. “We are constantly monitoring the situation in India and most importantly in the countries that we export to, which are mostly Asian markets. As of now we’re working and exporting but we have cut down our sales targets for our company due to the uncertainty. The major problem is the availability of vessels and most importantly drivers who move the containers. This has resulted in transport costs being increased by at least 50%, and this is just for the movement of cargo to the ports. Despite of all the troubles, we are working and taking the risks as there are good prices available in foreign markets.”
Although a lot of importers and exporters were hoping the country would open up again, Tikyani doesn’t feel the extension was a surprise. “India has extended the lockdown to the 3rd May. This was not an unexpected move, given that the curve has not flattened and has instead only steepened. The result is that we’re not getting enough labor to do the grading/sorting/packaging at the efficiency rate we’re used to. The time taken to process a container has doubled for this reason. With the lockdown being extended, highly leveraged companies may find it tough to stand still against this storm of Covid19. But, the highest casualties will not be seen in businesses but among the farmers.”
Trade has not come to a complete stop though, Tikyani emphasizes. Shipments are still being sent, and demand for the onions is definitely still there. “Despite of all the known problems, we are still able to deliver to our clients and are open to any new orders that come up. It is a good time to make money in my opinion for any country that relies on Indian onions, as prices are higher due to the lower supplies coming from India. And lower supplies is clearly stemming from the fact that most export companies do not have enough labor and drivers to process their shipments. Which is why we’ll keep working hard to process as many orders as we can.” he concludes.