Onion prices hold steady
Onion prices remained steady despite the government's decision to impose a 5 per cent tariff on imports of the key cooking ingredient to encourage local producers and reduce import dependency.
This development comes as a relief to consumers as the kitchen staple saw volatile changes in market price over the past few months due to supply shortages.
With the new customs duty already in effect, the retail price of imported onion rose by Tk 1.34 to Tk 30-35 per kilogram (kg) as of yesterday. A week earlier, the price per kg was Tk 25-40, according to the Trading Corporation of Bangladesh (TCB).
However, the TCB data showed that the average price of the imported bulbs has remained relatively stable at Tk 32.5 per kg. The price of locally cultivated onion was also steady.
"There has been no effect on onion prices and this is unlikely to change," said Mohammad Mazed, general secretary of Shyambazar Onion Samity, an association of onion wholesalers.
At the wholesale markets, imported onion was sold at Tk 25-26 per kg yesterday, up from Tk 23-24 a week earlier, said traders at Shyambzar, one of the country's biggest wholesale markets for kitchen products.
Finance Minister AHM Mustafa Kamal announced the new tax during his budget proposal for fiscal 2020-21 last week.
"Plenty of onion is cultivated locally but with zero duty on imported bulbs, domestic farmers are deprived of fair market prices when you consider the production costs," he said.
Onion production in Bangladesh increased 14 per cent after 2.37 lakh hectares of land were added for cultivation in the just-concluded season.
The farmers were inspired to expand their operations after witnessing a drastic increase in the price of onion due to a supply shortage that stemmed from an export ban by India, Bangladesh's primary import source for the kitchen staple.
After the ban began in September last year, locally produced onion prices escalated to a record high of Tk 250 per kilogram, forcing many consumers to cut the popular item from their diets.
Bangladesh's annual onion production capacity has been steady at 17-18 lakh tonnes for the last three years but a further 11 lakh tonnes had to be imported each year during that time as well to meet the supply deficit, according to data from the Bangladesh Bureau of Statistics (BBS).
Imports declined 33 per cent year-on-year to 8 lakh tonnes in the first nine months of the ongoing fiscal year, the BBS data showed.
India withdrew its export ban in March this year but bilateral trade with Bangladesh through land ports came to halt on the third week of the same month as the neighbouring nation went into lockdown to contain the deadly coronavirus.
However, trade through most of the land ports, particularly Benapole, resumed last week.
And so, trucks laden with onions started arriving through the Benapole port, the country's most active land port.
However, Bhomra, one of the main ports for goods coming from India, remains idle, said Dipankar Ghosh, a clearing and forwarding agent.
The price of onion has remained practically the same even though import costs increased by Tk 1.30-Tk1.40 per kg and this would benefit the economy.
"The government will earn some revenue through this measure."
However, there will be little effect on the price of onion if there is adequate supply from India.
"Onions are a perishable commodity and the prices mainly depend on the supply and demand, not tariffs. Therefore, prices drop when supply increases and vice-versa," Ghosh added.
Meanwhile, Aminul Islam, a wholesaler of locally grown onions in Pabna, a major growing district, said the price of domestically produced bulbs has edged up only marginally.
Farmers harvested 10 per cent -- or 25.57 lakh tonnes -- more onions in the outgoing fiscal year. A year earlier, it was 23.3 lakh tonnes, according to data from the Department of Agricultural Extension.
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