Onion price spirals despite adequate stock

Prices of onions have been spiralling in the country's retail and wholesale markets for the last couple of days as the government halted the import of the essential cooking ingredient on 6 May to protect the local farmers.

Despite an adequate stock, onion suppliers are blamed to bag higher profits with the artificial price hike – up to Tk15 a kg – capitalising on the import halt, while the majority of farmers do not get the benefits.

"A large portion of demand for onions is met with imports. As onion import has now been kept suspended, the prices have been increased in mokams [warehouses supplying onions to wholesalers and retailers], although the country has now adequate stock of the item," said Balay Kumar Poddar, a wholesaler from Chattogram's Khatunganj, the largest wholesale hub for the essential commodities.

About 40-45 trucks of onions used to come to Khatunganj per day, and a sudden decrease of which led to the price hike, he told The Business Standard and hinted that the prices might continue to increase until the resumption of the import.

Apart from onion, prices of eggs, lentil, garlic and several other commodities increased over the past week, creating a burden for consumers also hit hard by constantly growing inflation.

Mohammad Shamsur Ahmed, a capital's Shyambazar-based wholesaler, said there is no onion crisis in the country now. "Consumers are buying onions more fearing further price hikes. This has increased the demand," he said.

The Department of Agricultural Extension suspended onion imports on 6 May, fearing that continued imports amid the local onions hitting the market would cause a drastic price fall that might make farmers losers.

A kg onion was then selling at Tk22-25 in wholesale markets which jumped to Tk35-38 on Friday, up by 50-60%. In retail markets, it is now selling at Tk40-45 per kg. Local varieties of onions are the majority in markets now, selling at Tk45 per kg in retail, while Indian varieties, selling at Tk40 per kg, were on the decline in amount. 

According to the Ministry of Agriculture, Bangladesh consumes some 26-27 lakh tonnes of onions annually, of which the country produces some 22-23 lakh tonnes (excluding wastage and preservation for further cultivation) while the rest come from neighbours, usually India.

Do farmers benefit from price hikes?

Meherpur farmer Abdul Jabbar cultivated onions on 4 bighas of land at Tk1,20,000, but he sold onions worth only Tk54,400 – per kg at Tk17. "I did not get a fair price at all. When I harvested onions in early March, the market price was very low."

Another farmer Abdul Khaleq, from Rajshahi's Paba, who harvested onions late last month, preserved half of his grown onions to sell later with the hope of getting a fair price. He sold the remaining half at Tk18-20 per kg.

Talking to The Business Standard, farmers from different districts said they had to cost over Tk20 to grow a kg of onion. Those who sold their onion in late February and early March – the beginning of the onion harvesting season – could not even bag production costs, and those who preserved or harvested onion late could make a little profit. Currently, they are selling onions at Tk25-26 per kg on average.

However, none of them could make profits proportionate to the end price hikes.

"Farmers have been harvesting onions since March and the majority of them have been forced to sell a portion immediately as they had debts to fertiliser sellers. As a result, they could not make profits," said M Hamidur Rahman, former director-general of the Department of Agricultural Extension.

But those who could preserve onions for a short time got a better price, he told The Business Standard. He believes the farmers would benefit from the import halt. "However, middlemen are taking advantage, which the government should address first."

The government policy should be suspending imports on time – with the beginning of local onion harvesting, Hamidur suggested.

Egg, lentil, garlic prices also soar

On Friday, in the capital's Karwan Bazar and Moghbazar, a dozen of eggs was found selling at Tk120 which was Tk100 just a week ago, up by Tk20. Lentils sold at Tk130 per kg with a Tk10 jump. Besides, the price of local garlic doubled to Tk80-90 per kg over the past week.

Apart from the grocery items, prices of some vegetables including tomato, brinjal, and gourd increased by Tk5-15 a kg. Soybean and palm oil were selling Tk220-250 and Tk195-200 respectively. Milk price also increased by Tk10 to Tk80  per kg, while the beef was seen selling at a previously-increased price of Tk700 per kg.

"If the prices of all the daily necessities go up, what will we eat? We are not able to increase our income. So, we have to eat less now," said a consumer Hannan Shikder who came to Karwan Bazar to buy daily groceries. The government should strengthen market monitoring, he added.

Our Meherpur and Rajshahi correspondents contributed to the report.