Retail prices of onions dropped slightly on Thursday – just a day after the wholesale market came down a bit, followed by a steep rise that continued for 24 hours. Retailers in Dhaka were selling the key cooking staple for at least Tk10 less per kilogram.
The Ministry of Commerce claimed the spiked onion prices have started to decline due to several measures taken by the government.
The ministry claimed to have strengthened market monitoring and taken immediate measures to import the key cooking staple, which affected the retail market positively.
Besides, the ministry said the government steps include communicating with India through diplomatic channels about a rescinding of the neighbouring country's onion export ban.
It said the commerce ministry had instructed the relevant authorities for the immediate release of already imported onions at ports, with the existing 5% duty cut on import until next March, settling supply chain issues and strengthening market monitoring.
India 'repentant' for the ban without early notification
Foreign Minister Dr AK Abdul Momen on Thursday said the Indian Ministry of External Affairs is "very repentant" for not informing Bangladesh beforehand while imposing a ban on onion export.
"I have heard that the Indian Ministry of External Affairs is very repentant. They did not know about the sudden ban," he said.
He said Bangladesh expects a positive outcome regarding its request to India to withdraw the export ban on onions soon.
Central bank chips in to tame onion prices
The Bangladesh Bank on Thursday instructed banks to open letters of credit (LCs) for onion import with a minimum margin from importers.
It will help reduce importers' initial investment for LC opening, a senior official of the central bank told The Business Standard.
The official said, "Generally importers have to deposit 10% of a product value as a margin while opening an LC. But for importing onions we have instructed banks to take a minimum margin."
He said that the minimum margin could be 1% so that the importers could invest the rest of the money for other purposes.
Last year, people had to face a prolonged crisis over onion price hikes. Panic-stricken customers scrambled to stock the item following a ban imposed by Delhi on export of onions. The panic buying subsequently prompted a steep rise both in price and demand.
The Bangladesh Bank official said,"The country will lack 8 lakh tonnes of onions against demand in the days ahead. So, we have instructed the banks to open LCs easily. It will take ten days to bring onions through this simplified process."
Onion markets on Thursday
Visits to several kitchen markets in the capital on Thursday revealed locally grown onions being sold at Tk90 per kilogram – which was at Tk100-110 even a day earlier. In the meantime, imported onions declined in price to Tk70-75 from Tk80-85 per kg.
However, some retailers were selling the cooking essential at Tk100 on Thursday also.
Onion traders said the fall in wholesale has impacted retail prices. "We can sell onions at a lower price if the wholesale market remains calm," said Aminul Islam, an onion retailer in Dhaka.
The retailer said that he was selling local onions at Tk10 less per kg as he could buy them at a reduced rate at wholesale.
Meanwhile, wholesalers in Dhaka's Shyambazar market said they were selling local onions at Tk75-76 per kg while the imported ones were going for Tk58-60.
Preferring anonymity, an importer of the market said onion prices are less likely to fall further until new imported consignments hit the market.
"Currently local onion wholesalers are selling the item a little less than the actual demand in retail, keeping prices still inflated," he added.
Al Amin came to buy onions in Dhaka's Rampura kitchen market. He said his family consumed two kilograms of onions per week, which now needed to be cut down.
"I told my wife to reduce onions in dishes. In the wake of the spiralling prices, we have had to plan on covering two weeks with two kilograms of onions now," he added.
Retailers also said that the customers were buying less onions.
Dhaka's Badda area grocer Shariful Islam said, "Customers who used to buy two or three kgs of onions at a time now have started buying half a kilogram."
On Monday night, India clamped a ban on onion export with immediate effect. The restriction further intensified the crisis over already rising onion prices in Bangladesh, with the cooking staple reaching almost double the price to Tk120 per kg Tuesday.
The prices slightly fell in wholesale on Wednesday after a steep surge that continued for 24 hours in the wake of the export ban.