The Egyptian government announced on Wednesday, September 20 a 3-month ban on onion exports, justifying it by skyrocketing prices in the local market.
"The price of onions has soared to EGP 35 per kilogram in some local markets across Egypt, up from EGP 27 last month and EGP 12 a year ago," writes the government-owned newspaper Al Ahram. The same source reports a statement by Alaa Khalil, Director of the Field Crops Research Institute at the Ministry of Agriculture, who affirms that "the increase in onion prices this year is due to the fact that middlemen and some traders have been hoarding onions".
To comment on this decision, we spoke to Yassen Abdelhay, export advisor at the Egyptian fresh produce exporter Arafa for export and agriculture development. According to Abdelhay, the increase in prices on the domestic market is due to several factors, including the reduced acreage in Egypt this season, the global shortage of onions, and the devaluation of the Egyptian pound.
Abdelhay explains: "At the beginning of the season, prices were already higher than the previous seasons. The first reason for the rise was the reduction in cultivated areas, followed by an increase in global demand, as the onion market was shaped by higher prices and lower production worldwide. In terms of EXW prices, the wholesale market started at around 400 USD per tonne at the beginning of the season, then rose to around 600 USD per tonne this month. The main concern, however, is retail prices on the local market, which have reached unprecedented levels, recording over 30 EGP per kilo. It's important to mention that onion prices affect the inflation index, and any increase in onion prices will affect inflation accordingly."
The exporter expresses mixed feelings about the decision to ban onion exports. "From an exporter's point of view, I am depressed by this decision because many exporters have contractual obligations that they will not be able to meet, and exporters will lose their position as sustainable suppliers of onions on the world market, that they strengthened this season. On the other hand, the government's point of view has political and social justifications and governments all over the world are taking similar measures to secure goods for their domestic markets."
In the immediate term, the decision will stabilize onion prices on the domestic market, adds Abdelhay. "This will help improve the prices next season, as stable prices now mean that next season will start with competitive prices." He concludes, "In addition, the acreage of onions in Egypt will be higher next season, given the high demand at the global level and the irregularity that increasingly marks European and global onion production."
Another Egyptian onion exporter we spoke to said that spring onions, whose campaign has just begun in Egypt, are not affected by the export ban.