Onion prices surge for supply squeeze after India’s export ban extension
Retailers are selling onions at as high as Tk 200 a kilogramme in and outside of Dhaka, compared with Tk 130 on Thursday, in a shock development for consumers reeling under the higher cost of living.
The prices jumped in the wake of India's extension of the onion export ban on Friday.
The neighbouring country extended the ban until March – three weeks before the current phase of restriction expired on December 31 – in order to increase the supply in the domestic market and control the price of the vegetable.
Although wholesalers and retailers in Bangladesh are blaming India's ban extension for the sudden increase, market observers questioned the spike since the embargo was not new.
"The ban has already been in place and it has just been extended and that's long before the current phase expires," said one observer.
"There is no reason for the onion price to almost double overnight."
But retailers were selling the homegrown variety of onion at Tk 204 a kg at Karwan Bazar in Dhaka today, compared with Tk 130 per kg on Thursday. Prices of Indian onion rose to Tk 110 from Tk 70 per kg.
A week ago, the price of local variety of onion was Tk 105 to Tk 125 per kg and it has increased to Tk 180 to Tk 190 today, according to the state-run Trading Corporation of Bangladesh (TCB). The price of imported onions has surged to Tk 160-170 from Tk 90-110.
Md Nurul Islam, a retailer at Karwan Bazar, told The Daily Star that onion prices spiralled after India extended its export ban.
"Besides, there is not enough supply as per demand in the local market."
"I went to the Shyambazar wholesale market to buy at least 10 sacks of onion, but I could purchase only three sacks due to short supply."
Mohammad Abdul Mazed, general secretary of the Shyambazar Onion Wholesalers Association, said India's export ban has had a big impact on the country's market. Rains in the past few days have also affected the prices.
"Supply crunch is another reason for the price hike."
The price has rocketed not just in Dhaka but also in other parts of the country.
For example, each kg of onion was sold at Tk 180 to Tk 200 this morning in Pabna.
According to wholesalers, the price suddenly jumped in the wholesale market in the district owing to the rain in the last couple of days brought on by Cyclone Michaung.
Last week, each maund of onion was sold at Tk 4,000 to Tk 4,500 in the wholesale market. The price went up to Tk 7,000 to Tk 7,500 in the Bonkola wholesale market in Pabna's Sujanagar upazila, said Md Montu Khan, a farmer and wholesale trader.
Asked about the reason, Montu said due to the incessant rains in the last couple of days, most farmers have stopped harvesting the early variety of onion while fields submerged.
In Chittagong, the retail price of imported onions rose from Tk 110 on Friday to Tk 240 on Saturday.
Mahin Khan, a consumer, said he bought half a kg of Indian onion at Tk 110 per kg from Kazir Dewri CDA Market on Thursday.
"Today, I went to the same grocery shop to carry out monthly shopping and the retailer demanded Tk 240 a kg for the same onion," he said.
Sujoy Chwodhury, a retailer, said they were forced to charge higher prices as the prices were hiked at the wholesale market.
At the wholesale markets in Khatunganj, the price surged as most traders claimed they did not have any stock.
Arif Ahmed, a commission agent, said: "We stopped selling onions from 11:00am due to empty stock."
In Dinajpur and some other northern districts, prices have gone up by Tk 90 to 100 per kg.
Local markets in Dinajpur, especially in Bahadurbazar and Railbazarhat, witnessed a frenzy of onion buying as consumers are allegedly stocking up on the essential vegetable fearing further increase in prices. It was selling at Tk 180-Tk 200 from Tk 90-100 a day earlier, said traders.
Majedur Rahman, an onion trader in Dinajpur's Bahadurbazar, said that the ban extension has led to the increase.
On October 28, India introduced a minimum export price of $800 per tonne on onion exports, a rate that rendered import largely impossible.