CENTRAL ASIA BLOG: Cautionary tale as onion prices crash amid glut on a "tragic" scale

CENTRAL ASIA BLOG: Cautionary tale as onion prices crash amid glut on a
Weep. / Filo gèn, cc-by-sa 4.0
By Tawney Kruger in Tashkent April 18, 2024

If you’ve an appetite for lashings and lashings of French onion soup then Uzbekistan is the place to be right now. According to trade experts, you can buy one kilogram of onions for as little as $0.12.

Estimates suggest that due to what the trade news and analysis site EastFruit refers to as “tragic onion overproduction”, somewhere between 150,000-200,000 tonnes of onions may end up being discarded or used as cattle feed in Uzbekistan. A similar story is playing out in Kazakhstan and other parts of Central Asia. It’s a desperate situation for farmers and a cautionary tale.

The stark price drop means that for $100 you could be the proud owner of 830 kilograms of onions. In 2023, onion prices were 4.4 times higher in Uzbekistan at $0.52 per kilogram. 

Reports last year suggested that a rush to increase the volume of onion farming was in part triggered by false rumours on Telegram about onion prices set to shoot up due to restrictions on onion exports from India.

For those who invested in onions last autumn with the intent of profiting from big sales in the spring, the market crash has been devastating. With prices plummeting towards zero, selling off the 2023/2024 harvest is proving nearly impossible. 

Andriy Yarmak, an economist at the Food and Agriculture Organisation (FAO), pointed out to EastFruit that onion demand in Central Asia does not change much in response to price shifts. That’s because consumers in the region typically use onions as ingredients or garnishes, rather than as the dominant ingredient in main dishes. Central Asians have no reason to purchase onions in significantly larger quantities than usual despite the bargain prices on offer.

While the onion farmers frown, or perhaps dissolve in tears, the market experts at Eastfruit can claim a painful analytical victory. Last year, they forewarned that the onion overproduction evident in Uzbekistan would lead to a yield expansion of up to 40% and a 400,000-tonne surplus of onions from the 2023/2024 onion-growing and harvesting.

One might say that the dreamt of boom in onion profits chased by the farmers proved to be something like a magical onion in a fairy tale that offered riches: they peeled off layer after layer, only to find there was no treasure within.