Bangladesh may resume onion imports to cool down prices. But is it too late?

Minister threatened resumption of onion imports to control prices. Ten days later, government still watching market as prices continue to skyrocket

With “adequate” domestic production, the government had no intent to allow onion imports again, but officials feel a change of plan is required as prices have doubled in just a month. 

The commerce and agriculture ministries have threatened time and again to resume imports for the past 10 days, but the prices have continued to skyrocket with the government “still watching the volatile market”. 

The price of locally produced onions was Tk 30 a kg a month ago before starting to rise. It stood at Tk 50 when the government first revealed its plans to allow imports. Now the price is Tk 80 in the large markets and Tk 90 at local grocery shops in Dhaka.

In a week, the price has increased by Tk 15-25. At this cost, more than 5 kg of onions can be bought in India, where the produce is sold at Rs 5-12 per kg. 

If imports from India are allowed, consumers in Bangladesh will be able to buy onions at Tk 30 a kg, some traders estimate. 

Government accounts of production and storage, however, do not show any reasons behind the price hike. 

Domestic production has been more than the demand, but a third of the produce rot, forcing the government to import.

After India stopped onion exports in 2019-20, Bangladesh imported onions from Myanmar, Turkey, China and Egypt as prices shot up to Tk 200 a kg. 

That experience led the government to focus on increasing domestic production which rose by 1 million tonnes in two years. 

As the government retained the halt on imports to keep the prices from falling during harvest season, prices started to jump after Eid-ul-Fitr. 

Amid the threats of resumption of imports, prices have somewhat fallen in the onion hubs outside Dhaka as wholesalers cut purchases, fearing a fall in prices. 

‘NO REASON FOR A PRICE RISE’ 

Abdul Mazed, a wholesaler at Moulvibazar in Dhaka, said a price rise could be possible by the end of the season if onion stocks dwindled, but there is no reason for a hike now in the midst of the season.

“A section of the businesses have stockpiled onions and started raising the prices. The farmers who built storages are also taking advantage of the situation.” 

He believes prices will fall soon if imports are allowed. 

Md Abdul Hannan, editor of Bhokta Kantho, the mouthpiece of the Consumers Association of Bangladesh, said new investors in the onion wholesale market created the situation. “They started buying from the farmers just after the harvest. It raised demand, and the price.” 

“Farmers are also selling all the onions they have to get the increased prices. When they run out of onions by the end of the season in June-July, the situation will be worrying.”

IMPORT 

According to the government, the annual demand for onion in Bangladesh is 2.6-2.8 million tonnes. The agriculture ministry said production has increased to 3.4 million this year, but 35 percent of the produce rots. This means imports of several hundred thousand tonnes are needed to meet the demand. 

But still, such price hikes due to a decision to stop imports are unprecedented. Farmers, traders and government officials are blaming illegal stockpiling for the price rises.

The production cost this season was around Tk 28 and the price was Tk 30-40 per kg on Apr 10. When the price increased to Tk 60, Commerce Minister Tipu Munshi on May 10 said the government would allow imports if the price rise continued. 

The price rise has indeed continued, hitting up to Tk 90 a kg, but there has been no final decision on imports. 

After a meeting four days later, Agriculture Secretary Wahida Akter said they were monitoring the situation. 

On Friday, Tipu Munshi said they were still monitoring the market and would make arrangements for imports if the prices did not fall in two days. 

[Additional reporting by Pabna, Rajbari and Faridpur correspondents]