Onion ordeal: 'Game changer' cold storage plan crawls for 2 years

The spectre of unprecedented onion price escalation following India's export ban in 2019 unleashed a chaos like never before unsettling not only all household kitchens in the country, but the commodity market as a whole. The pungent bulb's price shot up an eye watering 500% – overwhelming the government's policy interventions.

Interestingly, Bangladesh spent $170 million on onion imports in 2020 and the post-harvest loss was 7.82 lakh tonnes worth around $200 million according to Industry insiders and stakeholders who analysed the post-harvest loss of onion to provide a comparative picture of production and import in 2020.

The commerce ministry came up with a viable solution out of the crisis but fell short of prompt initiatives to implement it.

The idea of setting up cold storages for onions was being considered seriously by the government and the commerce ministry decided to set up a cold storage in Faridpur, an important onion producing hub, to ensure the supply of the staple spice and reduce import dependency.

Trading Corporation of Bangladesh (TCB) was picked to be the implementing agency and was tasked with preparing a feasibility report following a ministry meeting in October 2020.

Two years after the decision, the project is still at the feasibility study level, which the TCB recently sent to the ministry along with their recommendations. As it stands, the project awaits approval from the ministry to prepare the Development Project Proposal (DPP).

The study came up with the obvious – cold storages can be set up in Faridpur and Pabna, two major hubs of onion production.

"We have completed the feasibility study and informed the ministry. We will start on the DPP onion cold storage project after final nod from the ministry," said TCB Chairman Brigadier General Md Ariful Hassan.

He, however, did not comment on the reasons behind the delay in preparing the study.

Industry insiders and stakeholders deemed the cold storage solution to be a game changer as several lakh tonnes of onions go to waste every year only due to lack of storage facility. The post-harvest loss, which goes as high as 40% according to the UN's Food and Agriculture Organisation, in turn compels the need to import to meet the deficit.

Much of the shortage is met by imports from India and if India suspends export due to its local conditions or the market crunch is worse, the deficit is met through importing from other countries including Pakistan, Myanmar and Egypt.

Insiders say, through the establishment of a cold storage management for onions, import dependence will be reduced altogether. In other words, cold storage can be just what the onion economy needed.

Bangladesh Trade Facilitation project, which is funded by the US Government's Department of Agriculture, is implementing various initiatives to make private sector entrepreneurs interested in investing in various sectors by highlighting business opportunities.

For onion import, Bangladesh is mainly dependent on India, the world's second-largest producer. As a result, any volatility in India's onion market is sharply reflected here. In 2019, India banned exports after extended Monsoon downpours delayed harvests and supplies shrivelled, causing onion price to reach Tk300 a kg in Bangladesh.

According to the commerce ministry, the annual demand for onion in the country is more than 25 lakh tonnes. Onion production in fiscal year 2020-21 was more than 33 lakh tonnes.

Bangladesh Trade and Tariff Commission says Bangladesh has to import 6-7 lakh tonnes of onion every year due to the post-harvest loss of onion.

BINA working on irradiation tech to extend onion shelf-life

Meanwhile, Bangladesh Institute of Nuclear Agriculture (BINA) is working on setting up the Bangabandhu Gamma Irradiation Center to extend the shelf life of onions.

Irradiation technology is used to reduce post-harvest damage to crops as well as disinfection. Using this technology, it is possible to increase the shelf life of onions up to 3-4 months.

Bina started the project in 2021 and after approval from the Ministry of Agriculture, the project proposal is now at the Planning Commission.

"If the project is implemented, radiation technology can be used for one lakh tonnes of products annually. However, even if it is implemented, there is no option to develop a storage system in the next step to reduce the post-harvest loss," Dr Mirza Mofazzal Islam, director general, BINA, told TBS,

The Gamma Irradiation Center will be constructed at Bhabanipur area of Gazipur at a cost of Tk150 crores.

Private sector's initiative

Initiative from the private sector to build cold storage came long before the government's initiative.

Fazlur Rahman of Rajshahi invested in cold storage business in 2004. He opted to set up a cold storage ideal for onion instead of the traditional cold storage for potatoes. In the end, the Rajshahi entrepreneur was forced to discontinue the onion storage after failing to popularise the 3,000 tonne capacity storage, that he made at a cost of Tk15 crore.

Due to lack of awareness on storing onions in cold storage, no one came to store onions. Then Fazlur Rahman himself bought onions from the market and stored them. But in two years he incurred huge losses due to the sudden fall in prices. Eventually the onion cold storage was closed down.

"There was no technological weakness. It was equipped to store onions for 7-8 months. The process loss was also below 5%," said Fazlur Rahman.

Officials of Bangladesh Trade Facilitation project say that market management needs to be developed to maintain stability in the onion market. As there is no storage system, producers and wholesalers have to quickly sell these onions because of its highly perishable nature.

For this reason, emphasis should be placed on temperature-controlled logistics (TCL) support instead of storing onions in the traditional way. It is possible to reduce post-harvest losses of onion if TCL is developed across the country, they said.

Recently entrepreneurs have shown interest in this sector and five business organisations of the country have already started working on setting up cold storage systems.

Speaking with TBS, Saad El Jai, senior economist at international economic development consultancy firm LixCap, Bangladesh Trade Facilitation project, said, "Bangladeshi farmers have been disgruntled that they must immediately sell their products due to the lack of storage capacity."

El Jai also highlighted that Bangladeshi farmers are at the mercy of market seasonality because they can't maintain the safety and quality of their produce for as long as they need, or move them to where there is more demand, without a cold chain.

Michael J Parr, Project Director of USDA Bangladesh Trade Facilitation Project told TBS that an efficient cold chain is needed to diversify and increase Bangladesh's agricultural exports.

"It is also key to reduce wastage and keep prices stable for domestic consumers," he noted.