The Bangladesh Trade and Tariff Commission has recommended imposing a 30-35 percent regulatory duty on onion imports to ensure a fair price for local famers during the production season.
The commission has made the recommendation in a report prepared for the commerce ministry.
The Tariff Commission's report has estimated local onions' production cost and the price of onion import, said sources at the commerce ministry.
According to the Department of Agricultural Marketing, the production cost of per kilogram of local onion was Tk11.97 this year. The Tariff Commission report estimated the desired price of farmers at Tk20 against this price. It considered February to May the time to protect onion.
Commerce Minister Tipu Munshi on Sunday said, "We did a thorough field survey. In our country, the average cost of onion production is around Tk16 to Tk17 per kilogram. So, we will try to make sure that that farmers can sell onion for Tk20 to Tk25."
The report says the average price of onion imported from India during February-May 2019 was $171 or Tk14,706 per tonne.
If the other import costs are taken into account, it goes up to Tk14.89 per kg, which is lower than the farmers' desired price.
When a 35 percent regulatory duty is imposed on top of that price, the overall cost of per kilogram of imported onion will be Tk22.24. The cost will be Tk19.30 per kg when a 30 percent of duty is imposed.
Therefore, the report concludes that imposing 30-35 duty on imports would ensure a fair price for the local onion producers.
Currently, there is no duty on onion imports.
The Tariff Commission report says Section 18(2) of the Customs Act allows the government to impose a maximum of 50 percent regulatory duty on onion import.
To keep its local onion market stable, India often fixes its export prices. But this the first time Bangladesh is planning to make such interventions.
There has been a longstanding demand for making sure that the import of cheap onions does not hurt the local farmers during the production season.
On September 27 last year, India stopped exporting onions, causing a significant crisis in Bangladesh. Onion prices skyrocketed to Tk250 to Tk260 overnight. The cooking ingredient was then imported from Pakistan, China, Egypt, and Myanmar.
However, the Indian onion started hitting the Bangladeshi market again on Sunday. But the high prices of onion began to fall in the local market before that as the news spread.
According to the Trading Corporation of Bangladesh, local onions are currently being sold at Tk40-50 per kilogram.
Indian has lifted export ban after five months at a time when the local farmers have started reaping seasonal onions. So following an instruction of the commerce ministry, the Tariff Commission prepared a report, taking into the account the prices of domestic and imported onions.
The purpose of the report was to make sure that the local onion market stays stable and the farmers get a fair price at the same time.
The Tariff Commission's report recommends that regulatory duty is maintained every year during the protection season of onion to ensure its supply.
It also suggests regular monitoring of onion production conditions and export prices of exporting countries, including India, so that the supply of a daily essential like an onion is not affected.
Agriculture Secretary Md Nasiruzzaman told The Business Standard "If the farmers get Tk20 per kilogram, they will get benefitted as the market price of onion will be between Tk30-40 when the duty is imposed. This way, consumers will also be protected."
Consumer Association of Bangladesh Chairman Golam Rahman said, "Duty will have to be imposed following the price of imported Indian onions. This will benefit both farmers and consumers."