The government of India has imposed a ban on exporting onions until March in 2024 in a bid to keep the supply and price of the kitchen item normal in the domestic market. Following the circulation of this news in Bangladesh, the price of onion started soaring so fast in the markets here that the price of the locally grown onions spiked to Tk 180-200 per kg by Saturday from Tk 120 at around 10:00 am on Friday (8 December). The price of the Indian variety was Tk 110 per kg which soared to Tk 160-190 in less than 24 hours.
There is no reason for the supply of onions to decrease so much that there would be a crisis in the market. The crisis in the market was made artificially and consequently the price increased overnight as the top traders hoarded the item to make more profits.
Earlier in August, when India imposed 40 per cent duty on export of onions, the Bangladeshi traders increased the price by Tk 55-70 per kg overnight. Since then the market remains unsettled.
The price of the locally grown and Indian varieties of onions became Tk 120-140 per kg and Tk 100-110 respectively when India fixed export price at US $800 per tonne at the end of October. The Indian government has been trying to keep the onion prices under control by imposing duty and ban on export since the item is a very sensitive product in the politics of that country. Several governments of India were toppled as they could not keep the price of onions under control.
It is said that Indira Gandhi won the elections in 1980, popularly known as ‘onion election’, as the incumbent government could not keep the prices of the item under control. Not only this, soaring of the onion price to Rs. 40-50 in 1998 was one of the catalysts of the BJP’s loss in Delhi and Rajasthan provincial assembly elections. That is why the incumbent BJP government has been trying to keep the prices of onion within control before the forthcoming Lok Sabha elections in 2024.
Besides imposing added duty on export of onion or banning the export completely, the Indian government takes some other steps to control the onion price. One of them is storing a huge amount of onions and selling those at the time of the crisis at a lower price. The Indian government has a fund, Price Stabilisation Fund (PSF), for this purpose.
Under this fund, the Indian government buys 300,000 tonnes of onions from the farmers at fair prices and stores those for critical times. As the production of onions was less this year, the government there bought an additional 200,000 tonnes of the kitchen item and has been selling it at Rs. 25 per kg.
The government in Bangladesh does not seen to be as active as Indian government in controlling onion price. Some activities of slapping fines to hoarders after sudden price hike of onion by Directorate of National Consumer Rights Protection are seen but it makes little impact in the market.
While Indian government has been taking one step after another to curb export in the wake of decrease in onion production, Bangladesh government has washed its hand only by approving the businessmen to import onion.
Let alone forming an own storage system of onions like in India, government has not even overseen if the businessmen imported onion on time after being granted the permission or whether they sold the imported onion at the market at right price. As a result, onion imported from India at a low price this year has been sold at three times the price in the country's market.
Although the government gave businessmen permission to import 13 lac metric tonne onion in June, they imported only 3 lac metric tonne till June. On this issue, Agriculture Minister Abdur Razzaque said, the farmers in Dhaka still have stock of onion. So there would not be any impact in the market even if India impose 40 per cent levy on the export of onions.
Although price has increased now due to imposition of tax, it will decrease soon. Efforts will be made to import onion from Turkey, Egypt and China.”
Failing to import onion on time thus showing the production and stock of onion sufficient and not getting any positive result importing it after the crisis intensifies is nothing new.
The ministers often say that the country has attained food autarky but in reality we see a crisis emerges in the country whenever the neighbouring country stop exporting rice, sugar, onion and so on.
Earlier India stopped export of onion in September in 2019 that led to skyrocketing of onion per kg to around Tk 300. The price surpassed Tk 200 per kg the next year too.
In reality, there is an ambiguity over the demand and volume of production of onion in the country. According to agriculture extension department, country's production of onion was more than 3.4 million tonnes this year.
The demand of onion in the country ranges between 2.6 million to 2.8 million tonnes. This scenario indicates that there should be enough stock of onion in the country.
Other than agriculture minister, commerce minister too said there is no shortage of onion in the country. If they were true, there should not have any need of onion import in the country. Why then the government approved import of onion?
In our country, there is no reliable account of the annual demand of onion, how much of that can be meet by own production and how much needs import. Hoarders take chance of this situation and increase the price by creating an artificial scarcity in the market whenever they can.
International Food Policy Research Institute (IFPRI) published a research on this crisis a decade ago which is still relevant.
IFPRI report said crisis in onion import from India is not the sole factor behind the scarcity of the product in Bangladesh market, another factor is to blame is that businessmen stock extra onion to gain more profit taking the chance of situation.
IFPRI suggested Bangladesh decrease its sole dependency on India and take initiative to import onion from alternative sources such as China, Egypt, Myanmar, Pakistan, Turkey, Vietnam and so on; increase monitoring on onion hoarding during September to December as crisis usually deepens in this period; government’s timely initiative to import onion as per need; remove incongruity between the data of Bangladesh Bureau of Statistics and agriculture extension department on onion production and demand and increase the production of onion to decrease reliance on import.
Had the government taken initiative to increase the production of onion without getting bogged down in information gap, bought onion at fair price from the farmers and stock it to sell at crisis period, taken the initiative to search for alternative sources of import other than India and taken initiative to import onion on time, the ongoing anarchy over the price of onion could have been averted.
Even when the onion market became unstable as soon as India imposed levy on onion export in August, the government did not take any effective initiative to increase the supply of onion in the market and dismantle the unholy syndicate in market which in tantamount to patronise the syndicates that rob people.
* Kallol Mustafa is a writer on power, energy, environment and development economy.
** This op-ed has been rewritten in English by Shameem Reza and Galib Ashraf