Onion export ban was abrupt: Minister

Commerce Minister Tipu Munshi Wednesday said India's onion ban was abrupt.

While talking to the press at his office, he said India had raised onion export prices prior to the export ban last year.

"I thought they would do the same [raise the export prices] this time, too, and would not ban export. But their abrupt ban has put me in a tight spot," he added.

This is a rerun of a similar step India had taken last year leading to a sudden supply crunch and abnormal price hike of the major kitchen ingredient in Bangladesh. 

The onion export ban issue was raised by Prime Minister Sheikh Hasina at a business forum during her New Delhi visit in October last year.

She said that India's sudden decision to stop onion exports had led to a bit of difficulty for her countrymen. "In future, if you are taking such a decision, prior information would help," the prime minister was quoted as saying by Indian media at that time.

But the request went unheeded as India imposed the export ban on Monday night abruptly with immediate effect.

The restriction fuelled onion prices in the local market overnight.

Price of the cooking staple almost doubled to reach Tk120 per kg Tuesday.   

Now onions would be brought in from Egypt, Turkey, and Myanmar, said the commerce minister.

He noted that the onion price crisis may prevail for the next one month.

"If I could pressurise traders a bit in the meantime, and if consumers buy less, then there would be no problem," added the minister.

Bangladesh currently has five lakh tonnes of onion in its stock and 44,000 tonnes of bulb were imported until September 15. This supply would meet the next three months' demand as the country consumes two lakh tonnes of onions per month.

The country imported one lakh tonne of onions on average – half of its monthly demand – from India in the last few months. Wholesalers at major onion hubs raised the prices as India suddenly slapped the export ban. In the meantime, retailers are selling the cooking essential willy-nilly across the country.        

The commerce minister told the press that though they were monitoring the major wholesale markets in both Dhaka and Chattogram, it was not possible to oversee millions of onion traders countrywide. Therefore, he suggested consumers buy cautiously.

He said, "There is no need to buy more than what you need. If all scramble to stock onions, buying 10 kilogrammes at a time while each of them needs two kilogrammes, I cannot guarantee to keep the market stable. People need to be reasonable."

Tipu said the Indian market had been heating up since the last 15 days. Therefore, the government initiated imports from alternative sources and opened market sales beforehand. Onion sales by the state-owned trading corporation will continue until next March when the local produce will arrive in the market.

The minister said they would utilise experiences they had gathered last year to tackle onion price hikes, and the supply chain was expected to normalise in a month.    

"We are regularly communicating with the Indian high commissioner to Bangladesh so that onion-laden trucks from India could enter Bangladesh smoothly," said Tipu. The minister said Bangladesh has also initiated diplomatic measures to withdraw India's export ban.              

"Besides, efforts are on to complain against India to the World Trade Organisation for their abrupt decision," he added.

Wholesale prices slightly drop in Dhaka

Though wholesale onion prices slightly dropped in Dhaka, retail markets were still volatile Wednesday.  

In Dhaka's Shyambazar wholesale market, the price of local onions dropped by Tk20 to Tk75 per kg. In the meantime, imported onion prices fell by Tk15-20 to reach Tk55-60 per kg. 

In the meantime, the retail price of local onions was Tk100-110 per kg, which was Tk100-120 Tuesday. Imported onion prices were Tk80-85, almost unchanged from Tuesday.   

Syambazar onion importer and wholesaler Mohammad Majedur Rahman said there is certainly a supply crunch that raised the prices.

"But India's export ban mostly panicked the market, edging up the prices. Then it dropped within 24 hours as we heard imported onions will reach the market soon," he added.

In Ctg, onion prices fell overnight as it rose

Onion prices fell by around Tk20 per kg almost overnight in Chattogram wholesale market as few buyers turned up to the commodity wholesale hub Wednesday.

Though onions shot up to Tk70-80 per kg Tuesday at the market, the key cooking staple came down to Tk60 per kg Wednesday.

Retailers thronged the market to buy onions Tuesday followed by India's export ban of the bulb the previous night – leading to a panic buying and doubling the prices in just 24 hours. But the demand had now dropped, and the wholesalers were unwilling to hold on to their goods and reduced their prices.

"The number of buyers dropped by 90% Wednesday compared to the previous day. No onion-laden truck entered Khatunganj till afternoon," Chattogram Hamid Ullah Market Traders' Association General Secretary Mohammad Idris told The Business Standard.

How onions vanished from retail markets overnight

Retailers in Chattogram claimed there were plenty of onions in the wholesale market even Tuesday. But leaders of the association of wholesalers and traders hid those to create a fake crisis by market syndication.   

Chattogram onion retailer Abu Sayed said he phoned Khatunganj wholesalers Wednesday morning, but the traders said they had no onion in stock.

"I saw plenty of onion stocks Tuesday. How did those vanish overnight?" he questioned. 

Customers – who are bearing the brunt of the highly volatile market – said retailers were also hoarding the cooking essential.      

"After hearing about the hikes, I went to the market and found that many retailers did not have enough onion for sale. They moved the bulbs elsewhere so that they could make a quick buck when the prices spiralled further," said Nurul Amin, a dweller of Chattogram's Mirsharai area.

However, an onion retailer of the area defended the allegation, and said they already had sold the stocks they had. The retailer said they were in limbo whether they would buy onions at hiked prices.

"If the market falls, we will be in trouble with the stock bought at higher prices," he added.    

Current stock and import scenario 

According to the commerce ministry, Bangladesh eats away 25 lakh tonnes of onions per year. Local production meets 65-70% of the demand while the rest is imported. Again, India alone accounts for 95% of the Bangladeshi onion import.   

In the meantime, the agriculture ministry says the country has produced 25.57 lakh tonnes of bulb this year.

If the processing loss of the produced onion is estimated at 25%, the net production stands at 19.11 lakh tonnes — which means the country still needs six lakh tonnes of onion to be imported to meet the local demand.      

The country will require 11 lakh tonnes of the cooking essential until the next harvesting season in March. The commerce ministry said the major onion producing districts have five lakh tonnes of onion in stocks.  

Commerce Secretary Md Jafar Uddin said letters of credit (LCs) were opened until last August to import 76,000 tonnes of onion while 44,000 tonnes were brought in till September 15.

Bangladesh imported more than 1.8 lakh tonnes of onion in the last July-August period. The country imported 10.91 lakh tonnes of red bulbs in the 2018-19 fiscal year.        

More traders apply for onion import by sea 

Applications for onion import by sea are on the rise since neighbouring India suspended export. From Tuesday morning, importers started filing applications with the plant quarantine station of Chattogram port for bringing in the cooking essential from abroad. 

They will bring in onions from China, Myanmar, Egypt, Turkey, and Pakistan.    

"On Tuesday alone, 21 importers were allowed to import 10,742 tonnes of onions by sea," Asaduzzaman Bulbul, deputy director of the plant quarantine station, told The Business Standard.  

He said the port released 1,082 tonnes of onion in the last three months.

Kamal assures import duty exemption 

In another development, Finance Minister AHM Mustafa Kamal Wednesday assured onion importers of the existing 5% duty exemption.

"None of us including the premier wants people's woes to grow," he told the press. He said the government does not expect revenue collection from essentials.      

"If the price of any essential spirals due to the import duty, the responsibility goes to the finance ministry. Therefore, the onion crisis will be tackled in a way we managed it previously," he added.

The government imposed 5% import duty on onions in the 2020-21 fiscal year to protect the interests of local onion growers. In the wake of price hikes, the commerce ministry on September 7 asked the revenue board to withdraw the duty on import.

However, the revenue board responded negatively, saying local farmers would be affected if the duty was waived, and the existing 5% import duty would not affect the retail prices substantially.        

Tipu Wednesday said they had written to the revenue board again seeking withdrawal of the import duty until March.