According to EastFruit analysts, persistent rumors that Pakistan plans to limit onion exports have not yet been officially confirmed. However, the likelihood of such restrictions, formal or not, remains quite high. And this could have a significant impact on the market because Pakistan is among the top 5-7 global onion exporters in the world, according to EastFruit.
With this, Pakistan could join the long list of countries that have imposed bans or restrictions on onion exports in the past 12 months. Among these countries: Egypt, Turkey, Uzbekistan, India, Tajikistan, Kyrgyzstan, Kazakhstan, and others.
The main reason for possible restrictions on fresh onion exports from Pakistan is the rise in domestic prices for this vegetable, which remains one of the main products in the consumer basket. However, it must be taken into account that, firstly, onion prices are still lower than last year’s, and secondly, the local currency continues to devalue against the US dollar, which affects prices much more than the situation with supply and demand.
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The main onion markets for Pakistan are Malaysia, Sri Lanka, and the UAE. In general, Pakistan is one of the main exporters of onions to the Gulf countries. Annually, fresh onion exports from Pakistan range from 300 to 450 thousand tons. In 2022, due to floods, a significant part of Pakistan’s onion crop was lost, so the country became a net importer, buying almost 500 thousand tons of onions, mainly from Afghanistan, Iran, and Egypt.
Although mutual onion trade between Pakistan and Europe and ex-USSR Central Asia is relatively small, the impact of this ban on the market could be quite significant. A possible restriction on onion exports could lead to a further increase in onion prices in the Middle East. Already, Pakistani onions are sold in bulk in the UAE at prices of more than $1 per kg. A further increase in onion prices in this region will lead to an increase in onion imports from the EU countries and will make onion exports profitable even from Uzbekistan to the UAE. Accordingly, if the decision is made, it may become decisive in supporting the rise in onion prices in Europe and Central Asia.
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