Decision to import onion alarms traders in Bangladesh. Will it push prices down?

Merchants say suppliers are seeking help to sell their products as quickly as possible before a possible fall in prices

The government’s decision to allow import of onions starting on Monday has triggered an alarm in the market, with merchants saying suppliers are seeking help to sell their products as quickly as possible before a possible fall in prices.

Prices of the kitchen staple rose throughout May and reached Tk 80 per kg, twice as much the cost one month earlier. As the commerce ministry threatened to resume imports, the prices decreased slightly.

The prices rose again to cross Tk 100 within a day as the agriculture ministry refused to allow import of onions, citing the local farmers’ interests and saying domestic production was enough to meet the demand.

Many middle-men then started hoarding onions instead of selling the produce bought from the farmers, with the hope of making extra profits through further price rises.

But the agriculture ministry bowed down to the demand for imports on Sunday evening. It said in a notice that it decided to allow imports to safeguard the interests of consumers and ease sufferings of low-income people as the prices have increased abnormally.

When the suppliers started to call requesting to sell their onions at night, the merchants did not give much hope because they believe demand will fall dramatically as people will wait for the prices to cool down.

“I sold onions at Tk 80-85 a kg throughout the day. Prices have increased because the farmers are selling at a maximum rate of Tk 4,000 per maund [Tk 107 per kg],” said Mazed, a merchant of Dhaka’s Shyambazar who gave a single name.

“Now, after the news of import spread, the suppliers are calling from different corners of the country, requesting us to help them sell their onions. But we won’t get customers tomorrow [Monday]. If we buy at Tk 70 now, the price may fall to Tk 50 tomorrow.”

He blamed “greedy” farmers and traders for the price rises. “We’re never happy with a little profit. This is what we practise in our country. The market will automatically cool down and prices will fall to Tk 40-50 if Indian onions enter the market.”

Nurul Huda, a merchant of Mirpur in the capital, said a fall in prices will depend on the farmers. “If they sell at lower rates, prices will naturally fall.”

Moti Mia, a trader who supplies onions to Dhaka from Faridpur and Rajbari, said he bought the kitchen staple at Tk 87.5 to Tk 92.5 per kg on Sunday. “The same thing will happen to me as others if onions are brought from outside the country.”

Traders in the wholesale market of Khatunganj in Chattogram said the decision to allow import started to affect the demand.

“Sales will fall on Monday. But prices will decrease gradually after onions arrive from India,” said Mohammad Idris, a leader of the local merchants’ association.

Agriculture Minister Abdur Razzaque had said onion prices should not cross Tk 45 a kg at this time of the year with adequate supply from the local farmers.

He blamed a syndicate of traders for the price hike and said the government started monitoring the market. But there was no visible progress in stopping the so-called syndicate.

Mofassel Mia, the worker of a wholesale store in Mirpur, said onion prices rose from Tk 95 to Tk 100 within hours.

Asked why, he said: “We don’t know that. Our business is with the suppliers who collect onions from the village markets. We sell at the rates they fix.”

“We’ll get Tk 2 per kg as commission no matter what the price is, even if it rises to Tk 200. We don’t have a syndicate.”