International Journal of Commerce and Business Management. Volume 5 Issue 2 October,

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1 IJCBM Volume 5 Issue 2 October, International Journal of Commerce and Business Management RESEA RCH PAPER Growth trends in area, production and export of onion from India -An economic analysis B.S. KULKARNI, S.M. PATIL AND V.A. RAMCHANDRA ABSTRACT The onion is an important vegetable and has been grown in almost all the parts of India for thousands of years. The onion is regarded as a highly export oriented crop and earns valuable foreign exchange for the country. The quantity of onion exported from India to different countries has increased from million kg in to million kg in with an increase in the export value from Rs crores to Rs crores. The study utilizes the secondary data collected from different sources like Export statistics for Agro and Food products, APEDA 2010, Department of Horticulture, Bangalore and the information was also accessed from the official websites of Agricultural Processed Products Export Development Authority (APEDA) and Food and Agricultural Organisation (FAO). The data collected pertained to the period to Tabular analysis was used to work out the percentages for easy comparison. The growth rate and instability analysis was used to study the growth in area, production, productivity and export of onion. The share of export in the production has also increased from 7.27 per cent ( thousand tones) during 2000 to per cent ( thousand tones) in India is presently exporting onion to mainly Gulf countries, Far East countries, Bangladesh and Sri Lanka where there is not much scope to increase the quantity as some countries have also started their own production. The scope, however, exists for diversifying the market to European countries and Japan as these countries do not prefer strong and pungent onions. In these countries, yellow onions having mild pungency, bigger bulb size with thick fleshy layers are preferred. KEY WORDS : Onion, Growth trends, Production and export Received : ; Revised : ; Accepted : How to cite this paper : Kulkarni, B.S., Patil, S.M. and Ramchandra, V.A. (2012). Growth trends in area, production and export of onion from India -An economic analysis. Internat. J. Com. & Bus. Manage, 5(2): Onion (Allium cepa L.) is a major bulbous crop among the cultivated vegetable crops and it is of global importance. India has varying climatic conditions and MEMBERS OF THE RESEARCH FORUM Correspondence to: B.S. KULKARNI, Department of Agri. Business and Export Knowledge Centre, University of Agricultural Sciences, DHARWAD (KARNATAKA) INDIA Authors affiliations: S.M. PATIL, Cost of Cultivation Scheme, University of Agricultural Sciences, BENGALURU (KARNATAKA) INDIA V.A. RAMCHANDRA, Department of Agricultural Economics, University of Agricultural Sciences, D H A R WA D ( K A R N A T A K A) I N D I A provides an opportunity for growing a large number of horticulture crops including vegetables. The onion is an important vegetable and has been grown in almost all the parts of India for thousands of years. The onion is regarded as a highly export oriented crop and earn valuable foreign exchange for the country. Though India produces a significant quantity of onion it is not regular and sufficient enough to meet the demands for both domestic requirement and exports. In India it has been grown in thousand hectares with the production of thousand tones ( ). India being a second major onion producing country in the world has a productivity of MT/ha only (Anonymous, 2008). The reasons for lower productivity of onion in India could be attributed to the limited availability of quality seed and lack of development of hybrids in onion is the major limiting factors among the others.

2 B.S. KULKARNI, S.M. PATIL AND V.A. RAMCHANDRA Onion producing and exporting countries in the world are China, India, USA, Turkey, Japan, and Spain, but, major onion importing countries are Malaysia, the United Arab Republic, Canada, Japan, Lebanon and Kuwait. Amongst the onion producing countries in the world, India ranks second in area and production, the first being China. Growing onion is done for three purposes. One purpose of growing onion is to harvest the fresh green onion plants for sale and consumption. Another purpose of growing onion is for onion bulb production. And next purpose of growing onion is for onion seed production. Growing onion can be done in different texture soils ranging from the light textured sandy loam to heavier clay loam soils. Growing onion can be successful if proper drainage system is available in the onion production plot. Furthermore, ample irrigation is also required not to let the onion crop suffer from the stress of moisture paucity. Growing onion also requires ample organic matter in the soils and soil ph range of 5.5 to 6.5. The quantity exported is less than ten per cent of its production. India s contribution to the export is less than 5 per cent in the international market although its position is second in the onion production. With this background the present paper is an attempt to study the production and export scenario of onion from India. Objectives : To study the production scenario and export of onion from India. To estimate the growth and instability in area, production and export of onion from India. To estimate the growth and instability in export of onion from India. To suggest appropriate policy measures. METHODOLOGY The study utilized the secondary data collected from different sources like Export statistics for Agro and Food products, APEDA 2010, Department of Horticulture, Bangalore and the information was also accessed from the official websites of Agricultural Processed Products Export Development Authority (Anonymous, 2010) and Food and Agricultural Organisation (Anonymous, 2008). The data collected pertained to the period to Tabular analysis was used to work out the percentages for easy comparison. The growth rate analysis was used to study the growth in area, production, productivity and export of onion. Similarly the instability in area, production, productivity and export of onion was also assessed through co-efficient of variation technique. Compound growth rate: For the analysis of data, the compound growth rate technique was employed to know the per cent growth per annum in area, production, productivity and export of onion from India. The procedure used for computing the compound growth rate is as follows: Yt = Ab t V t...(1) where, Yt = Data on area, production and productivity in the year t A = intercept indicating Y in the base period (t=0) T = time period V t =error term B = (1 + g) g = average compound growth rate to be estimated Instability analysis (Co-efficient of variation %) : CV (%) Standard deviation Mean CV = Co-efficient of variation x 100 ANALYSIS AND DISCUSSION This section highlights the production scenario, growth in area, production, productivity and export of onion from India. Production scenario: Onion is being cultivated in India in an area of thousand hectares with a production of thousand tonnes (Table 1). It is mainly cultivated in Maharashtra, Karnataka, Gujarat, Madhya Pradesh, Bihar and Rajasthan states. Maharashtra is the leading state in the cultivation of onion (4,14,000 ha) with a production of thousand tones, contributing per cent to the country s production. Karnataka is the second largest producer of onion contributing per cent of the India s onion production. Considering its production potential, there is need to understand the export prospects. Onion export: Production and export details of onion are presented in Table 2. It is observed from the table that in the recent years in tune with the increase in production there is increase in the quantity exported. The share of export in the production has also increased from 7.27 per cent ( thousand tones) during 2000 to per cent ( thousand tones) in During the year 2011 there was reduction in export of onion due to ban on export of onion by the government to meet out the domestic demand. There were many ups and downs recorded in export quantity and value which is due to 160

3 GROWTH TRENDS IN ONION Table 1: State wise area and production of onion in India ( ) Sr. No. State Area ('000 ha) % to total area Production (in '000 MT) % to total production 1. Andhra Pradesh Bihar Gujarat Karnataka Madhya Pradesh Maharashtra Orissa Rajasthan Tamil Nadu Haryana West Bengal Uttar Pradesh Others All India Table 2: Export scenario of onion from India Production Export Years (000 tons) (000 tons) % of export fluctuation in production and prices, and sometimes due to ban imposed on export to safeguard the interest of consumers in the country. Big onions produced in Maharashtra, Gujarat, Karnataka and Tamil Nadu are exported from Mumbai, Chennai, Tuticorin, Kandla and Kolkata ports to Dubai, Kuwait, Saudi Arabia, Middle East, Malaysia, Singapore, Seychelles and Bangladesh. Onion grown in India is very much in demand in Gulf countries and Singapore, Malaysia, Sri Lanka and Bangladesh because of strong pungency. Small onions produced in Karnataka and Andhra Pradesh is exported from Chennai port to Singapore and Malaysia, and multiplier onions to Singapore, Malaysia, Sri Lanka etc. Maharashtra has maximum share in onion export. India is presently exporting onions to mainly Gulf countries, Far East countries, Bangladesh, and Sri Lanka where there is not much scope to increase the quantity as some countries have also started their own production. The scope, however, exists for diversifying the market to European countries and Japan. These countries do not prefer strong and pungent onions. In these countries, yellow onions having mild pungency, bigger bulb size with thick fleshy layers are preferred. This indicates there is a need to harness other potential markets too considering the quality requirements and taste changes preferred by the consumers. In order to see the export performance of onion over the period growth in the export was assessed in the following paragraphs. Growth and instability in onion : The technique of compound growth rate and coefficient of variation were used to analyse the growth and instability in area, production and productivity of onion in India during to for pre-wto, post-wto and overall periods. Growth and instability in area, production and productivity of onion : It was interesting to note (Table 3) that the growth in area, production and yield of onion for all the periods was found to be significant. However, the growth in post-wto period was found to be highest for area, production and productivity with 3.31 per cent, per cent and 5.68 per cent as compared to the pre-wto and overall periods. The growth in area, production and productivity during the pre- WTO and overall period was found to be 2.93, 6.24 and 4.37 per cent and 0.37, 3.72 and 1.26 per cent per annum, respectively. As far as the instability analysis (Table 4) was concerned, highest instability was observed during the overall period with respect to area and production of onion with per 161

4 B.S. KULKARNI, S.M. PATIL AND V.A. RAMCHANDRA Table 3: Compound growth rates of area, production and yield of onion in India during to (Per cent per annum) Compound growth rate (%) 1. Area 2.93** 3.31** 0.37* 2. Production 6.24** 10.19** 3.72** 3. Productivity 4.37** 5.68** 1.26** Table 4: Coefficient of variation in area, production and yield of onion in India during to Coefficient of variation (%) 1. Area Production Productivity (Per cent) cent, and per cent as compared to pre-wto and post- WTO periods. However, the instability in productivity was highest during the post-wto period with per cent. The co-efficient of variation was lowest in pre-wto period for area, production and productivity with 15.70, and 4.16 per cent as compared to the post-wto and overall periods. Growth and instability in export of onion from India: The compound growth rates and instability were estimated for quantity and value of onion exported from India for pre-wto period, post-wto period and overall period. (Tables 5 and 6). From Table 5 it could be observed that, during all the three periods, the growth in quantity of onion exported and the export value was found to be significant at one per cent level. However, during the pre-wto period, the growth in quantity exported was highest with 8.74 per cent per annum as compared to the export value with 7.96 per cent per annum. On the contrary, the growth in export value of onion during the post-wto period was highest with per cent as compared to the quantity exported (13.18 %) due to the hike in international prices of onion during the period. During the overall period, there was not much considerable difference in growth with respect to quantity of onion exported and its value with 8.18 per cent and 9.00 per cent, respectively. The instability in export of onion indicated that during the pre-wto period, the growth in quantity of onion exported was highest with per cent as compared to value with per cent. On the contrary, the growth in value of onion was highest as compared to the quantity exported during the post-wto and overall periods with and per cent for post-wto and and per cent during the overall period, respectively (Table 6). Constraints and suggestions for improvement in onion export: There are some constraints seen in onion exports and suggestions to overcome these problems so that onion export from India is not only continued but may be increased: Table 5: Compound growth rates of export of onion from India Compound growth rate (%) 1. Quantity 8.74** 13.18** 8.18** 2. Value 7.96** 17.20** 9.00** Table 6: Coefficient of variation in export of onion from India Coefficient of variation (%) 1. Quantity Value (Per cent) 162

5 GROWTH TRENDS IN ONION Popularization of improved varieties, quality seed production and distribution, expansion of area in nontraditional pockets and contract production for export. Planning for contract production for export market expansion of area and production of Kharif onion for early harvesting. Unawareness of proper post harvest practices and quality training of farmers and others involved in onion production, post-harvest management and marketing. Packing material used is not attractive. Introduction of attractive, eco-friendly packages, consumer packages etc. Electrically-ventilated containers for export of yellow onions to Europe. Adequate transport with reasonable rates, synchronize the rail/road transport with schedule of vessel and providing insulated wagons. Developing more ventilated storage godowns for onions. Providing handling sheds and make available modified containers with proper ventilation To develop market intelligence for different seasons, quality of produce and corresponding season crop in other competing countries. Conclusion and policy implication: The concept of developing the onion villages may help increase the export of onion. The provision of financial assistance to exporters to complete in the international market may also be looked into. Export on regular basis not only helps in getting foreign exchange earnings but also allows farmers to get remunerative price for their produce thereby encouraging them to sustain the production and availability of onions. Government should in fact have long term export policy and should even introduce contract production system in suitable pockets. REFERENCES Anonymous (2008). Food and Agricultural Organisation (FAO). Anonymous (2010). Export statistics for Agro and Food products, APEDA, WEBLIOGRAPHY http: //fao.org.com http: // 163

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