Onions, the most consumed spice in the country, are a quintessential ingredient in many popular Bangladeshi delicacies, especially ones involving meat
Every year as the second most celebrated Muslim festival, Eid-ul-Adha (Feast of Sacrifice), approaches, cost of two of the most essential elements of the festival- cows and onions- most certainly skyrocket in Bangladesh regardless of their flow in the market.
Onions, the most consumed spice in the country, are a quintessential ingredient in many popular Bangladeshi delicacies, especially ones involving meat. The demand for it is always high—but it multiplies twofold during festivals like Eid-ul-Adha, as does its price.
The Bangladeshi grocery market, known for being perennially unstable, predominantly offers two varieties of onions- homegrown and Indian - with the price of the former variety being comparatively higher than the latter.
Like every year, both the homegrown and imported onions have seen a sudden surge in prices ahead of Eid and marked a big rise in wholesale and retail markets of Dhaka over the last few days. The hike would be understandable if the supply of onions in the market were intermittent or halted like last season, when the production of onions in India went down due to a severe drought, which in turn increased the prices both in India and in Bangladesh. The prices saw yet another increase after torrential rain caused floods in several states of India last year, further pushing the onion price to Tk120-130 per kg in most markets throughout Bangladesh.
The fluctuating onion prices in the Indian market and the resulting minimum export price (MEP) usually affects onion prices in Bangladesh due to the short supply of local production and the higher import costs of Indian onions.
Nevertheless, in February the Indian government completely removed the minimum export price (MEP) on onions and as of 2016, the Bangladeshi government withdrew all taxes on onion import aiming to keep prices stable in the local market, according to sources at Benapole Customs House, which eventually should have brought the price down.
But defying the rule of economics, the price just kept increasing for most of the year. Compared to January, 2017, the price of onions has increased by at least Tk20 to Tk25 in January this year.
“Each ton of onion is being imported at a cost of $205 (Tk17, 200). So the import cost of each kg is Tk18 and on top of that, transport costing is Tk2 per kg,” Rafiqul Islam Royal, owner of Royal Enterprise, a Benapole-based clearing and forwarding agent, said, “Adding to that, the price is being hiked in the local market because of the shortage.”
Benapole port authorities said that 4,738 tons of onions were imported into the country from India through the land port in the last six days (until August 13). Yet, the Indian onion is being sold in local markets at Tk35 per kg while the local variety is being sold at Tk55-60 per kg.
Behind this fake crisis-driven price hike is a money-grubbing syndicate, according to Shaheen Reza, an onion importer, who controls the commodity price in the local market. Despite all the endeavors by both governments, consumers from this side of the border failed to reap the benefits of the adjustments because of this syndicate, since some unscrupulous businessmen known for increasing the onion price, cash in on the situation.
“We sell onion to the wholesalers after keeping a minimum profit, but they sell these to others keeping a huge margin," he said, adding that the authorities should ensure a strong market.
Market sources also blamed lax monitoring for the sudden surge in onion prices.
According to the sources from the Commerce Ministry, Bangladesh has an annual demand of 2,200,000 to 2,500,000 metric tons of onions. Last season, the country produced 1,750,000 metric tons of onions, while the deficit of around 700,000 metric tons is usually covered through imports.
A study conducted by International Food Policy Research Institute (IFPRI), predicted that the demand for onions is expected to increase by 51 percent this decade—from 1.23 million metric tons in 2010 to 1.86 million metric tons in 2020—under the business-as-usual scenario, while under an optimistic income growth scenario, it’s expected to increase by 69 percent to 2.08 million metric tons.
Under the circumstances, it is now imperative for Bangladesh to decrease dependency on India for onion import and vulnerability to climate-induced losses by importing onions from alternative sources. However, a careful assessment of the impacts of onion imports on prices to avoid reducing prices - so much so that they become a disincentive for Bangladeshi farmers to produce onion - is also a prerequisite.
The IFPRI study recommended that the government ensure a structured and regulated flow of the locally produced onions by being vigilant against speculative storage between September and December, when Bangladesh is most dependent on onion imports. They also suggested that in order to mitigate the dependency on onion imports, steps must be taken to increase domestic production.