2.5 lakh tonnes of onion imports needed to stabilise market: Report

Bangladesh needs to import an additional 2.5 lakh tonnes of onions to maintain a normal supply until next March, even though early varieties of the bulb have started arriving in the market, according to a Trade and Tariff Commission report.

To meet this demand, it is recommended that the authorities seek cooperation from large corporate groups to expedite imports from alternative countries other than India.

In the report, a copy of which The Business Standard obtained from a source, various steps to resolve the instability in the current onion market are highlighted.

According to the report, India has banned the export of onions until 31 March to keep their local market cool. Potential alternative import sources for Bangladesh at this time include Myanmar, Egypt, Turkey, China, Pakistan, Afghanistan, the Netherlands, and Malaysia.

Commercial counsellors posted in those countries have been recommended to take steps to assist Bangladeshi importers in bringing in onions from these sources.

Md Mahbubul Alam, president of the Federation of Bangladesh Chambers of Commerce and Industry (FBCCI), has also called for onion imports from alternative countries to maintain a normal supply chain.

Speaking to the media, he assured government authorities that the country's apex trade body will provide all kinds of support in this regard.

Meanwhile, the government has ordered the authorities concerned to step up the field-level monitoring over the onion prices and bring those who are trying to make extra profits under the laws, adds UNB.

Cabinet Secretary Md Mahbub Hossain on Monday said this at the Secretariat while briefing reporters about the cabinet meeting.

The directive didn't come from the cabinet meeting rather it was issued separately, he said replying to a question.

The Cabinet meeting was chaired by Prime Minister Sheikh Hasina at her office in the city.

"You can see that there is close monitoring now at the field level. Today it is leaving an impact to some extent. The trend [onion price-hike] that was there on Monday is not there today," Mahbub Hossain.

The prices of onion have jumped in Bangladesh in the wake of India's extension of the onion export ban on Friday.

"The instruction from the government is to intensify monitoring at the field level. To increase vigilance on those who are involved in these activities (making extra profit by hoarding) and try to bring those who are trying to make extra profit under the law. After receiving the instructions, our teams are working on the field," said the Cabinet secretary replying to another query.

According to the tariff commission, the main harvesting season for onions is typically from March to April, with the primary production season still about 3.5 months away. Although onion production has begun, considering the existing stock, there is a need to import 2.5 lakh tonnes until the main production season.

In 2019, when onion prices rose to Tk250 following India's export ban, major consumer goods companies imported onions from various countries and marketed them at a nominal profit. The commission similarly advised them to collaborate on importing onions.

For this reason, the suggestion to withdraw the total 10% duty, along with the 5% customs duty imposed on onion imports, has been made.

However, according to the commission's observation, the annual demand for onions in the country is 27-28 lakh tonnes, whereas local production in the fiscal 2022-23 is 33.9 lakh tonnes. Excluding 25% post-harvest losses, the original production stands at 25.49 lakh tonnes.

During the period from July to November 2023, according to the Bangladesh Bank, 5.85 lakh tonnes of onions were imported, which is 2.56 lakh tonnes more than the same period last year.

Altogether, 30.75 lakh tonnes of onions have been added to the supply line, exceeding the demand. Despite this surplus, there is a trend of increasing prices in the local market. For this reason, the commission has also emphasised the need to review local production and demand information.

India announced a ban on onion exports starting on 7 December. Due to low onion production caused by floods in the country, prices have risen unusually.

Following the announcement, onion prices in Bangladesh almost doubled overnight. Local onions, previously selling at Tk120-130, jumped to Tk200-220, and imported onions skyrocketed from Tk110 to 190-200.

Despite market surveillance by the Directorate of National Consumers Rights Protection, prices are not decreasing, according to the report. The commission attributes the price increase to the fact that onion stocks have hit rock bottom.

Senior Commerce Secretary Tapan Kanti Ghosh told The Business Standard, "Letters of Credit were opened for the import of 52,000 tonnes before the export ban was announced. We are taking the necessary measures for this onion to come into the country. At the same time, efforts are being made to increase onion imports from alternative countries.

"When two or four businessmen cause a problem, action can be taken against them. But when everyone across the country creates this kind of onion unrest situation, there is not much scope to take action against them."

He mentioned that early varieties of onions and spring onions have started to arrive on the market. As many as six lakh tonnes of onions will enter the supply chain before the main season.

New onions were observed selling at Tk150-160 per kg in Dhaka markets.

Meanwhile, the commission, in its report recommendations, suggests that if onions are imported from alternative countries, there is also a recommendation to re-determine the bank interest rate and LC margins.

Additionally, Chattogram Deputy Commissioner Abul Bashar Mohammed Fakhruzzaman has urged traders not to sell onions at more than the reasonable price of Tk120-125.

The deputy commissioner made this request during a discussion with the importers in the district.

To stabilise the onion market, the Habiganj district administration has imposed a restriction on purchasing more than one kg of onions at a time.

Deputy Commissioner Debi Chanda issued these instructions during a meeting with traders on Sunday. In the meeting, businessmen were asked to sell the onions stocked earlier at a wholesale price of Tk120 and a retail price of Tk125 per kg.

The deputy commissioner, while informing about the decision of the meeting, stated that no more than two sacks of onions can be sold wholesale, and retail sales are limited to not more than one kg per buyer. The deputy commissioner also mentioned that they would monitor the market from Monday onward to ensure the implementation of these directives.