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Onion prices caught in tangles of contradictory claims

  • Published at 09:33 pm September 24th, 2019
Mehedi Hasan/Dhaka Tribune

According to the Bangladesh Tariff Commission and the Ministry of Commerce, Bangladesh needs 26 lakh tons of onion annually, while the Department of Agriculture Extension (DEA) says the country produces 23 lakh tons

The government claim of having adequate supply of onion is sharply at odds with that of business people mentioning short supply of the essential kitchen item, which has left people wondering why the price of per kilogram onion is creeping towards Tk100.

And the price spiral took place immediately after the Indian government raised the minimum export price (MEP) to $850 from $250 to $300 per ton on September 13, which is also a point importers, retailers and the government are citing to explain the soaring price.

According to the Bangladesh Tariff Commission and the Ministry of Commerce, Bangladesh needs 26 lakh tons of onion annually, while the Department of Agriculture Extension (DEA) says the country produces 23 lakh tons. 

It means 88.46% of the demands of onion could be met with local production and the rest, only 11.54%, with imports.

As per Bangladesh Bank (BB) data, in last fiscal year Bangladesh imported 10.07 lakh tons of onion, mostly from India, while the country needs to import only three lakh tons to meet its local demands. 

These mismatches have raised questions about the authenticity of data about the country’s production capacity and demands. 

People involved in the sector have said that it is very difficult to collect accurate data on onion production as there is no such network and mechanism, while the data on demands are also not available. 

Md Mizanur Rahman Khan, deputy director of DEA, has told Dhaka Tribune: “We collect data from the union level, which are then sent to upazila and then to district levels. The district officials compile the data and send them to the Department of Agriculture, and they are finally processed for use." 

On accuracy of data on onion production, Rahman said: "Our calculation is accurate but we do not know about demands in the local market."    

He, however, admitted that in any kind of data collection and compilation, there might remain some errors and they might have some. "We try to minimize this as much as we can," he claimed.   

Meanwhile, consumers and importers have expressed apprehension that manipulators are making use of the data mismatches to make quick money. 

“From recent media reports, I came to know that there is enough supply from domestic production and imports. But the market prices of onion are still high and have continued to rise,” Ahsanul Islam, a consumer  at Karwan Bazaar, told Dhaka Tribune. 

"The traders are blaming the supply shortage, while the government is claiming enough supply. Who should I believe?" Islam asked.      

Meanwhile, experts have also expressed doubt about the demand and supply data and think if the data are true, there should not be supply shortage.  

“There are mismatches. Data provided by several organizations do not reflect the ground reality,” said Anwar Faruque, former secretary of the Ministry of Agriculture.

"I believe that the actual annual local onion production is about 15 lakh tons," he noted. 

How to increase domestic supply

“Since there is confusion about the data on production capacity and demand-supply, the government has to have the real demand-supply picture,” onion importer Mohammad Hafiz told Dhaka Tribune.

"If there is enough supply from local production, we can go tough on imports, while alternative markets should be found out for imports," he suggested. 

According to Regional Spices Research Centre (RSRC), Gazipur, Bangladesh has to increase production by 30% to meet the local demands from domestic source. 

According to Department of Agricultural Extension (DEA), in fiscal year  2018-19, onion was cultivated on 2.16 lakh hectares of land, contributing to the production of 23.30 lakh tons.

“In meeting the current demands domestically, we have to increase production 30% to be able to produce 35 lakh tons of onion annually,” Dr Shailendra Nath Mozujmdar, chief scientific officer of RSRC, said. 

Currently, on an average Bangladesh produces 10 lakh tons by cultivating one hectare.  

Usually onion harvesting starts in December, so the government should take measures including higher import duty or stop imports to give the farmers a chance to get better prices, said Mozujmdar.

“There is nothing to be worried about the onion prices as there are enough supplies in the market. The new onion will hit market by December," Commerce Secretary Md Jafar Uddin told Dhaka Tribune. 

He also blamed the rise of import prices for the sharp rise of onion prices in city’s kitchen markets. 

On the data mismatch, Jafar said they already talked to the agriculture ministry as part of its long-term strategy to have the true picture of demand and supply.