It was almost 4 years back, I started thinking & triggering why shouldn't I venture into Onions Exports as well.
And some of the questions which came to my mind that time was :
1. Is it really worth?
2. can I get consistent orders?
3. Monetary requirements?
4. ROI
At one point in time, I started to interrogate with how the market runs in the local market, As I am not sure how do they run their shows. ( As I have no experience in Local market ) I started to understand that most of the Onions are coming from Nashik, Maharashtra which is regarded as one of the premium quality products in Asian markets. the local vendor if he has contacts directly with the Wholesalers then they used to get over a short call, Confirm the price and the quality they need & then the Wholesalers in Nashik loads it to the destination ( For eg. Bangalore )
I asked the Bangalore Wholeseller how are you getting the load Without seeing quality?
He answers me " I pay only the transportation when the goods arrive here in my shop, by the time it gets unloaded halfway through I have my buyers who will do auctions and pays the money in cash immediately. and that money after deducting my commissions and taxes and the transport bill I pay it to my Supplier.
I asked how is the rate Decided?
The rates are basically on the current market rates, what if we come up with the loss? he responds we take up the calculations of Profit & Loss every 15 Days. at the max. we know what is the Exact of the product we try to push it to the max. the extent of at least getting the Product cost ( With no profit & no loss ), at some point in time we end up getting into losses due to the low demand for the products in the market & the higher arrivals of the goods. ( This is called as Commission based Business ). Some vendors say that we work on Fixed rates ( These are comparatively low )
This was all about Local market scenarios, I just wanted to see how they work, this has absolutely made me understand that " You can work upon this product when you have VOLUMES"
So, moving on from there, Onions is a staple food & it is a very sensitive product where you cant transport the goods multiple times. I just could analyze that there are few countries that have absolutely No production of Onions and are independent on India as we are the 2nd Largest Producer & Exporter of Onions across the globe.
A fun Talk: You don't Require Degrees & Technical knowledge to start it You Just require a Little Common sense to keep it rolling.
I could understand that by studying various data you could get a wholesome of orders even if you focus on Neighbouring countries forget the rest.
I am still thinking of competition, Volumes which I can do and so on and so forth.
So, I moved on By choosing Sri Lanka, Because I know Tamil, As Language is a major barrier in Business, Its the nearest country, Of course, a Cool island neighbor
I could recall how local Markets operate But in International its slightly Different as you move on to the next level of selling your cargo & Have ethics.
So, Before I Moved into Nashik I started to Check who is there in my Connects who are in Nashik, I got to know none of my Connects are there over Nashik. I could see a few of my Colleagues/ Business contacts in Mumbai. But they asked why? what happened? I said I want to procure onions from Nashik, They started asking What? You are going to sell onions? etc.
My first attempt was to go sit in the Pimpalgoan market, Met a few guys there, They started to explain how they operate and how they would sell, etc. I was pretending as if I have already done many containers by talking bla bla things of myself so that they don't overpower me . I tried to see the quality I was overwhelmed by seeing all sides its Red, red onions. I Could get the specifications from by buyer of his requirement.
Drawbacks :
- You cannot check each and every onion accurately.
- You require your QC at loading spot
- You cannot expect the same Color & quality, variety throughout your Shipments around the year - As this is been dependent on the arrivals in the market.
So the First Container was loaded, I had no idea of shipments process exclusively for Onions. ( But I knew the process for general cargo ). I Spoke to my Shipping agent arranged for all requisite documents required exports, Customs formalities and Shipping the cargo from India through Mumbai to Colombo. ( Transit period - 5 days )
Documents required - Invoice, packing list, Certificate of origin ( Not mandatory ), Phytosanitary certificate.
A small mistake happened here which I got to know later, The cut off date was Monday and sailing was on Wednesday, My shipping company told me you need to give me goods this week Thursday for the shipment of your goods on Wednesday vessel, I agreed to it as he was handling my other general cargo for other countries and I didn't know he had experience in handling Perishable goods. So, As per his request, I got the Goods on Thursday morning, he unloaded in the CFS ( Which is very hot, No airflow ) then he started to convey, yes we received the cargo we will ship it as per the schedule, I forgot to ask whether my cargo is safe & how are the proceedings. So from Monday morning, he started to load and the cargo reached Colombo the next week. So, It took almost 14 days to reach the destination that too on an Open door container without Good ventilation.
Buyer Received the cargo, the only comment I got from him was "I got wet onions from you" Not a dried Fresh onions. The whole container was wet and the water sprinkling out with an Oozing Smell inside. I lost my money, But this was a Hard way to learn from.
Learnings:
- Manage your goods ( Quality )
- Don't load blindly believing 3rd parties.
- Have a QC
- Your cargo should reach the shipping port just 40 hours before the vessel is about to sail. ( Mumbai port only )
- Have an Experienced shipping company that has knowledge of onions shipment.
Through this learning, I got done with another container this time I was extra Cautious from the sorting, packing, loading, shipping & till the container reaches the destination. this time we got get the payments.
When does your buyer doesn't pay you?
- -Low quality
- Fluctuations in price
- delayed delivery
- Fake promises
This is a volume game, so you need to have good Cash flows in order to achieve the trade for a longer run. Right now we are dealing with 7 + Countries and Exporting close 12 + Containers a Month. we are happy to state that apart from my exports I am also being a mentor & guide to many startups to start Onion exports.
I hope you find this article helpful, I have cut shorted this article as there are lot more other activities which I had tested before entering into it.
If you find it helpful, please share it among your friends / Networks.
Let me know what you think about this article.
For a Mastermind Training on Onions Exports, Please ping me ( Don't try to learn it in a hard way )
Cheers,
Santhosh Raghavan