The government is concerned that the current crisis of onion in India may spark a hoarding spree among local traders to smuggle out locally grown onions to the neighbouring country.
Officials at the Ministry of Commerce said they suspected that the local traders might be looking to take advantage of the crisis in India and make windfall profit by smuggling local onions since its production cost here is less than its current price in India.
The Border Guard Bangladesh has already been alerted to look out for smuggling activities along the border and prevent local onions from being smuggled out of the country, the ministry officials said.
India is experiencing a record hike in onion price since the recent events of heavy rainfall and flood caused heavy damage to the country’s onion production.
Aiming to tackle the crisis in the local market, the Indian government increased the minimum export price (MEP) of onion to $700 per tonne from $450 on Thursday to curb the export.
Talking to the Dhaka Tribune yesterday, Commerce Secretary Hedayetullah Al Mamoon said the ministry had been monitoring the market to prevent hoarding since the Indian MEP came into effect.
He also met with the local onion traders, the same day as the Indian MEP was imposed, and warned them of dire consequences in case of supply shortage, he said.
The price hike in India has caused an increase of onion price in Bangladesh as well, despite the country being sufficiently stocked; onions were sold at Tk80 per kg yesterday, sources said.
Bangladesh has produced around 1.93 million tonnes of onion this year, which largely covers the country’s annual demand of around 2.2 million tonnes. Letters of credit until July to import 345,000 tonnes of onion from India have been settled, and letters of credit for 385,000 tonnes more are awaiting settlement.
Last year, the government imported around 550,000 tonnes of onion from India.
The last time onion price leaped out of control in Bangladesh was in 2013; onions were sold at Tk110 per kg in December that year for similar reasons as now.
The ministry is further concerned that local traders may also hoard onions in anticipation of making extra money ahead of Eid-ul-Azha next month.
“This may further increase the price in local market, so we are closely monitoring the situation,” an official said.