India’s squeeze on exporters doubles price of onions in Bangladesh

Onion prices at retail level have doubled in the space of just 10 days, following India’s withdrawal of incentives on onion export for its farmers. Consumers though smelt a local conspiracy amid old suspicions of ‘syndicates’ - powerful networks with presence throughout a supply chain, who work to manipulate the market.

A look back through the timeline of events however, supports the view that the price movements here are indeed the consequence of policy measures in our neighbouring state.  

On June 11, the Indian government withdrew the incentive for the Indian exporters of onions, with the intention of shoring up the Indian market and bringing prices down after they skyrocketed.

It used to allow exporters to get a 10 percent incentive on the free on board (FOB) prices realised from overseas importers. The incentive scheme was anyway set to expire on June 30 but was brought forward.

In Benapole land port, the import of Indian onions reduced three-fold in June.

Consequently, the price shot up in the big markets of Benapole, Sharsha, Navaron, Bag Anchra and Goga area.

Here, each kg of Indian onion is being sold at Tk 28-32 which was sold at only Tk 14 before.

Besides, customers are buying each kg of local onion at TK 38-42 which they used to buy at Tk 22 before.  Price of the local variety has always been higher than of the Indian imported onion.

Citing that dishonest traders and importers are in cahoots raising the onion price, customers here urged the authority to monitor local markets.

Inspector of the land port Nazrul Islam said in last 10 days of the previous month, 1770 metric tonnes of onions were imported through Benapole land port. But in first nine days of the running month, only 459 metric tonnes of onions were imported here.

According to the Commerce Ministry, annual demand for onions in Bangladesh ranges between 2.2 and 2.5 million tonnes. Although the country’s own annual production of onions has risen, so has the imported amount gradually over the last decade.

Commerce Ministry figures show the amount imported was hardly 0.4 million tonnes in FY' 09, but had touched upto 1.1 million tonnes in recent years.

Currently, each tonne of onion is being imported at the cost of  USD 150-200.

However, import of onions remained unchanged in other land ports of the country.