The price of onion in local market is likely to cool down as the Indian government on Friday slashed the minimum export price of onions at $400 per tonne from $700.
Though India’s move brings a caushion for consumers, local producers have been left facing a real challenge of price competition again, according to analysts and farmers.
On Friday, local onion was sold at Tk70 and imported ones at Tk40 per kg in different kitchen markets of the capital.
The prices of both variety of onions soared in August, following the hike of India’s minimum export price (MEP) to $700 from $400 per tonne.
The MEP of all varieties of onions is revised from $700 FOB (freight on board) per tonne to $400 per tonne, according to the Directorate General of Foreign Trade, India.
The move of scraping MEP is aimed at boosting overseas shipments after wholesale prices went down to Rs10 per kg.
“On Onion – the decision was taken today to reduce the Minimum Export Price (MEP) of onion from $700 to $400 per tonne,” Indian Commerce Minsiter Nirmala Sitharaman tweeted.
According to the National Horticultural Research and Development Foundation (NHRDF) data, wholesale prices of onions are ranging at between Rs10-Rs14 per kg in the Asia’s biggest wholesale market for onion, Lasalgaon in Maharashtra, much lower than its peak of Rs57 a kg in August.
“At the current price, we are getting some profits selling our products but if the prices go down drastically in Bangladesh market due to the price slashing by the Indian government it will minimise our profits,” Shamsuddin Mollah, an onion cultivator in Pabna told the Dhaka Tribune.
Even to some extent, the lowering prices may bring losses to the farmers, he added.
“The price cut will give a cushion to the consumers but it will reduce profits of local producers,” Khondaker Golam Moazzem, additional research director of Centre for Policy Dialogue (CPD) told the Dhaka Tribune.
The ultimate benefits will go to the consumers and the farmers will be the losers if they cannot meet their production cost with the current market price, he added.
The CPD official suggested that the Ministry of Commerce should look into how the price could be adjusted to protect the local producers.
“Price cut by the Indian government will not affect Bangladesh market as the present supply chain is stable, Senior Commerce Secretary Hedayetullah Al Mamoon told the Dhaka Tribune over phone yesterday.
The government will look into the issue and take necessary steps to protect local producers, he added.
