Prices of potatoes and onions have decreased in local markets over the past month after the interim government reduced tariffs on the import of these vegetables on 5 September.
Potato prices fell by 1.70 per cent per kg, while imported onion prices decreased by 11.63 per cent during this period, according to a report from the Bangladesh Trade and Tariff Commission released recently.
The report said prices of potatoes and onions fell slightly at local markets over the last month despite a rise in global prices. A reduction in import tariff contributed to the fall of local prices, according to the Commission.
People have felt the pressure of a high inflation for long. Food inflation was at 11.36 per cent in August and the figure was higher in July. Prices of rice, eggs, sugar, various fruits, edible and fuel oil are still high. As demand for most of these goods are met by import, market experts suggested that prices of several more essentials may drop once import tariff is reduced, bringing a relief to customers.
As the prices of onions and potatoes has been on the rise for long, the government moved to reduce import tariff of these two products at the beginning of September. A statutory regulatory order (SRO) was issued on 5 September, reducing duties to 15 per cent from 25 per cent and lifting a 3 per cent regulatory duty on the import of potatoes, as well as withdrawing a 5 per cent regulatory duty on the import of onions.
Price of potatoes decreased to Tk 54-56 a kg on Tuesday from Tk 55-60 a kg a month ago while prices of imported onions fell to Tk 90-100 a kg on Tuesday from Tk 110-115 a kg a month ago at wholesale markets. Local varieties of onions were sold for Tk 110-120 a kg on Tuesday, which was Tk 105-110 a kg a month ago.
The Tariff Commission analysed the data of the sate-owned marketing commonly Reading Corporation of Bangladesh (TCB) and Department of Agricultural Marketing (DAM) and said prices of potatoes fell by 1.79 per cent, local varieties of onions by 6.52 per cent and imported onions by 11.63 per cent over the past month after reducing import duty.
Local prices fall despite rise in global price
An analysis of global prices of onions and potatoes showed these two products saw a rise in global prices recently. Analysis of data from global market data providing platform Refinitiv and India’s Mandi Bazar showed onion prices rose by 25.40 per cent and potato prices by 20-13 per cent at international markets. The uptrend in onion prices, however, slowed over the last week. That means local markets of onions and potatoes do not follow the global markets.
India is one of the major destinations for Bangladesh to import onions. India set a minimum export price for onions at USD 550 per tonne and imposed an export tariff of 40 per cent on it in last May following a rise in onion prices at local markets. Traders from Bangladesh then looked to alternative destinations like Pakistan, China, Egypt and Turkey to import onions. India lifted the minimum export price and cut import duty to 20 per cent on 13 September, thus, cost of importing onions from India decreased slightly.
According to wholesale onion traders, prices of local varieties of onions fluctuate with the price of imported onions. If prices of imported onions decrease local farmers reduce prices to maintain control over the market, while if imported onion prices increases local varieties of onions is also sold at a higher price. As a result, prices of local varieties of onions will fall as much cost of onion import decreases.
Demand for tariff cuts on more products
Prices of other essentials are still high. Eggs were sold for Tk 160-165 per dozen. Price of all varieties of rice rose by Tk 2-6 per kg over the last month. According to TCB, sugar remains stable at a higher price of Tk 126-135 a kg over a year. Scenario is also similar for edible oil.
Market experts advised reducing duty on the import of rice, egg, sugar, fruits, edible oil and fuel oil.
Market expert and former president of Consumer Association of Bangladesh (CAB) Golam Rahman said goods supply increases once import duty decreases.
Besides, traders who stock products also release them, which contributes to the price decline. This was the case for onions and potatoes. If the import duty on essential items with higher prices is reduced, customers might receive some relief, he added.