Tears for onions

Onion matters. It is something that you must have in your kitchen. Its price hike or shortage means hiccups in Bangladesh, in India, in the Philippines, and in Poland. 

It is politically charged in this subcontinent, where onions are more of a spice than vegetable. Onion varieties grown here are more pungent than those in the Netherlands, Turkey or China.

Unstable onion prices became decisive factors in India's 1980 central election and two state elections there in 1998. That was why rising prices and lower yield of this irreplaceable kitchen ingredient alerted India this time too ahead of state elections prompting the authorities to curb its export.

The fallout of India's decision is that Bangladesh consumers become immediate victims as it relies mostly on India for nearly a fifth of its onion consumption.

On 7 December, India announced an onion export ban until March next year. Within hours, onion prices climbed by Tk80-Tk90 per kg in Bangladesh – reaching well over Tk220.

The commerce ministry estimates that annual demand for onion is 28 lakh tonnes. The agricultural ministry says annual production of local onion is 34 lakh tonnes, which comes to 25 lakh tonnes after 25% post-harvest loss is deducted. 

Bangladesh imported more than 7 lakh tonnes of onions from June to December in the first week. The Trade and Tariff Commission calculates that altogether 30.75 lakh tonnes of onions have been added to the supply line which should exceed the projected demand.

Commerce Secretary Tapan Kanti Ghosh says there is no shortage of onions.  Local production was good and imports were sufficient.

If all the figures and claims are correct, then onion should be surplus, there should not be any shortage even if India stops export.

Yet, onion prices soared, as it did in 2019 when onion hit Tk250 per kg after Indian export curbs.

Every time authorities are 'clueless' about why onion spirals almost out of reach of the kitchen when the spice is 'abundant' in supply, both from local farmers and ports.  

In August, the ministry approved onion imports from nine alternative sources other than India.

Already, some onions have shipped from China and Pakistan, and some more may come from Turkey and the Netherlands.

India in October had slapped a minimum export price of $800 per tonne for onion.

So, the Indian export ban was not something out of the blues.

Then why didn't the traders procure onion from other sources?

Did they have no inkling of an impending onion shortage around this time of the year?  Or is it that our official estimates of demand, local production and import needs are unreliable?

The tariff commission now says Bangladesh needs to import an additional 2.5 lakh tonnes of onion to maintain a normal supply until next March, even though early varieties of the bulb have started arriving in the market.

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 cool the market.

Meanwhile, it has been too late as consumers have already paid a high price for the kitchen ingredient they need every day for all curries-- egg, fish, meat and vegetable as well as for the popular tomato-cucumber salad.

Both the tariff commission and the apex trade body are supposed to have prior data of market and local stock to help the government and importers to prepare beforehand.

But apparently they believe in the fire engine approach, they only step in when the crisis has already created chaos and unhappiness.

An annual ritual?

Market regulators also intervened only after onion all of a sudden joined the price rally with other commodities like sugar and soybean oil.

Given the estimated daily consumption of around 7,600 tonnes, the abrupt Tk80-90 jump within a day translates to Tk60 crore in additional expenses for consumers, which went to all those in onion supply chain-- from the vendor right at your lane to the wholesaler at Dhaka's Kawran Bazar, and the importers at Chattogram's Khatunganj.

The upward move of the price curve continued throughout the week, albeit, at a less drastic rate.

However, authorities assert that onions currently being sold in the market are either locally produced or shipped before India's latest export ban.

Then why did onion prices almost double overnight?

AHM Shafiquzzaman, director general of the Directorate of National Consumers' Right Protection (DNCRP) finds no "no justifiable reason" for an overnight price surge and excessive profit margins.

Onion as a topic appeared in last week's cabinet meeting too, with cabinet secretary Mahbub Hossain assuring of intensified monitoring at field levels to prevent hoarding and price gouging.

Deputy Commissioners seemed to have swung into action, with the Habiganj DC capping onion price at Tk125 and ordering retailers not to sell more than a kilogram to a single buyer.  

Meanwhile, freshly harvested local onions, known as "Murikata," appeared in the kitchen market. Selling at Tk120 per kg, these spring onions are not cheap as well. 

The consumer rights protection agency chief said this early variety local onion should not cost more than Tk35 per kg at the growers' level, though consumers are paying much higher as traders are taking advantage of the situation.

Does market drive work?

As usual, the rights agency started raids and imposed fines, something traders will conveniently pass on to consumers.

Shafiquzzaman explained why market raids fail to create a long-lasting appeal. "We act only when the damage is done. We alone cannot fix it unless other government agencies step in," he told a television channel.

His agency can at best impose some penalty on traders, but anti-hoarding laws and safe food laws have provisions for stern punishment which is handled by separate agencies.

He urged for "consumers' syndicate" to break the so-called "traders' cartel," citing how it worked in bringing down beef price to Tk650 per kg from Tk750-Tk800 level.  

Dr Muhammad Shahadat Hossain Siddiquee, professor of Economics at Dhaka University, referred to the absence of market data as one of reasons for sudden price hike of commodities, sometimes it is the egg, or potato, or chicken, and now it is onion.

"No one knows which importer is importing what amount, how much he stored and how much was released in the market. There is no example that somebody got punished for hoarding or manipulating prices," he said, explaining why such malpractices continue.

The local murikata onion may offer some more cushion.

Other steps are expected to cool the market until the next harvest. By this time, traders will make windfalls at the cost of consumers' pains, some traders may even see their onion stocks rot hidden away in warehouses.

There is every chance that the onion saga will repeat if all the factors remain the same-- unreliable market data, unreliable estimates of local production and demand, and the coup de gráce, export ban of India.

Official data shows Bangladesh suffers only a 15% deficit in its onion consumption. Two decades ago, local production covered only two to three months' consumption of onions. Extensive drives and price incentives helped onion productions grow rapidly, now meeting roughly nine months' need.

Onion farmers expect a good harvest this season. Agriculture extension officials are hopeful of meeting the production gap by introducing improved varieties and incorporating onion into regular cropping patterns.

So long as this deficit in onion remains, Bangladesh needs to take proactive steps and regulate the kitchen market effectively to make sure that onions come from the right place at the right time before prices soar.