Spiraling Onion Prices: Govt insists stock enough, but in vain
Repeated assurances of sufficient stock or the promise of importing onions from alternative destinations by top-level government officials could not rein in unbridled onion prices.
Driven by last years' bitter experience when the price per kg of onion shot up to Tk 250 to Tk 300, consumers have begun to stock onions, which creates volatile market conditions.
Yesterday, the local variety of onion was sold at Tk 100 to Tk 110 in the retail market while the imported variety was sold at about Tk 80 and above.
Within a few hours of the announcement of the ban on onion export by India, the country saw an eccentric rise in onion prices. Many seasonal retailers were seen buying onions in bulk to cash in on the sudden price hike.
For instance, Mohsin Mia used to sell seasonal fruits in the capital's Karwan Bazar. He bought 120 kgs of onion. "It's price is getting high so I bought to make some extra profit," he told The Daily Star.
While buying five kg onions at Tk 500 at Jatrabari kitchen market, Akbar Ali, a banker, said he usually buys three kgs for his family. "Since the price is shooting up. I've bought 5-kg before it rises further," he added.
About government's claim of enough stock, he said, "They had said many things last year too but their promises could not stop the market from getting worse."
YEARLY ONION PRODUCTION AND DEMAND
Officials said the total yearly demand for onion in Bangladesh is 25 lakh tonnes and the country's production was 25.57 lakh tonnes last year.
However, since onion is perishable, some 25 percent gets damaged. So, the actual consumable quantity of onion is 19.11 lakh tonnes in the country, they said, adding that the deficit of more than six lakh tonnes is imported to meet the demand. Of the deficit quantity, 90 percent is imported from India, they added.
An official of the Department of Agriculture Extension said last year about 6.45 lakh tonnes of onion were produced in Pabna. "Over 70,000 tonnes are now in stock," he said, adding that farmers have already started cultivating onion bulbs.
"It will hit market about two months later. I don't think there will be any shortage," he said.
In July and August this year, some 1.84 lakh tonnes of onion were imported and there was local stock in major onion growing areas like Faridpur, Pabna, Naogaon and Rajshahi.
Seasonal businessmen are trying to take advantage of the situation, which has created the problem, said Narayan Saha, a wholesaler of Shyambazar. He suggested the authorities monitor the stock at root level.
At a press conference in secretariat yesterday, Commerce Minister Tipu Munshi claimed that the current stock of onion in the markets is five lakh tonnes. So, there should not be any crisis now, the minister said.
Saying that his ministry was not aware about the sudden halt of onion import from India, he once again said there is nothing to be panicked about because of an adequate stock and supply of onions in the local markets.
"We will import onions from alternative markets like Turkey and Egypt like last year to reduce the prices," the minister told the journalists.
"Nevertheless, I talked with Indian High Commissioner in Bangladesh Riva Ganguly Das about the sudden suspension of onion export by India. The Indian High Commissioner assured me that a good number of onion-laden trucks will enter Bangladesh within a day or two," Munshi said at a jam-packed room of journalists while facing a barrage of questions from newsmen.
He suggested the consumers be patient for a month so that an adequate quantity of onion is imported to be sold in the domestic markets.
This year too, some domestic business conglomerates like City Group, Meghna Group and S Alam Group might also be engaged in importing onion in a hurried manner to ensure quick supply in the markets.
The Department of National Consumers Right Protection has fined 107 business to the tune of nearly Tk 10 lakh on Tuesday as they were selling onions at higher prices.
"We can punish the traders. But it is also true that if we go tough on them, they will make the onions vanish from the markets," the commerce minister said.
The state-owned Trading Corporation of Bangladesh has already opened a Letter of Credit to import a few hundred tonnes of onion from alternative countries. Munshi also said the TCB will import one lakh tonnes of onion to address the crisis up to March next year.
The TCB will import the onion through direct purchasing method because the conventional tendering method takes a lot of time. Last year, the TCB imported nearly 12,000 tonnes of onion on its own, he said adding that this year TCB has been empowered to import greater quantities of onion for the local markets. The ministry will also use e-commerce platforms to sell 12,000 tonnes of onion, he said.
Replying to a question, Munshi said Bangladesh asked the Indian government about why onion export to Bangladesh was stopped all of a sudden.
In another development, Finance Minister Mustafa Kamal yesterday said the government was considering a proposal on lowering tax on onion import.
He made the comment while talking to reporters after a meeting of National Purchase Committee.
Recently, the commerce ministry sent a proposal on lifting taxes on onion import to the finance ministry.
PREVIOUS DISCUSSIONS UNDERMINED
India's sudden ban on onion exports has undermined the earlier discussions regarding such restrictions over essential food items, Dhaka said in a letter to Delhi on Tuesday, as price of the spice skyrocketed immediately after Delhi's announcement a day before.
"The latest abrupt announcement of the government of India on September 14, 2020 undermines the discussion that took place in 2019 and 2020 between the two friendly countries on the matter and the understanding shared," said the letter.
The letter issued by the Ministry of Foreign Affairs expressed deep concern at the sudden announcement of the amendment in India's export policy of onion that directly impact the supply chain of the essential food items in Bangladesh market.
It referred the India-Bangladesh commerce secretary level meeting in January this year where the Bangladesh side requested the Indian side to consider not imposing export restrictions on essential food items required by Bangladesh.
The letter also said in case of any event that necessitated such restrictions, India was requested to inform the Bangladesh side ahead of time.
"The matter was also raised by Honourable Prime Minister Sheikh Hasina of Bangladesh during the VVIP visit in October 2019, wherein the Bangladesh side requested Indian side to inform in advance about such measures being taken," said the foreign ministry letter.
The ministry in its letter requested the Indian High Commission in Dhaka to convey the issue to the concerned authorities in India and take necessary measures to resume export of onions to Bangladesh, considering the excellent relationship and understanding between the two countries.