The instability of the onion market has reached a record high, as a customer can now buy 20 kilograms (half of a maund) of paddy for the price of one kilogram of onions.
The crisis has deepened since neighbouring India slapped an export ban on the cooking ingredient, and the instability shows no sign of slowing down.
People with limited income are facing the wrath of the volatile market as onion prices surged almost every hour in Dhaka on Friday.
City resident Osman Gani came to the Karwan Bazar wholesale market in the morning to buy onion at a convenient price. He became upset as he found the wholesale price reaching Tk1,100 per five kilograms.
Osman left the market after buying low-quality onions for Tk200 per kilogram.
The already high wholesale prices soared further in the afternoon – the price of five kilograms of onion jumped to Tk1,200. Meantime, five kilograms of onion imported from Myanmar soared to Tk1,000 which had been sold at Tk900 in the morning.
When asked about the price hike trader Ashraful said, "Just take a look around. Traders are sitting idle on the spots where onions are supposed to be stored."
'Crooked traders destabilising market'
As per data of the Department of Agricultural Extension and the Bangladesh Tariff Commission, as much as 23.30 lakh tonnes of onion were grown in the 2018-19 fiscal year. Some 30 percent of that – nearly 7 lakh tonnes – was damaged in the drying and preservation process at the local level.
The net production stood at nearly 16 lakh tonnes after deducting the losses. Bangladesh also imported around 10 lakh tonnes of onion in the last fiscal year.
It means the supply of onion, factoring in the local production and import, was 26.38 lakh tonnes against the country's highest possible demand of 24 lakh tonnes. This calculation estimates a surplus of 2.38 lakh tonnes of onion.
But the data made little sense when the onion market began surging, following an export ban by neighbouring India.
The Bangladesh Competition Commission says traders had at least 3 lakh tonnes of onion in their stocks when India banned onion export on September 29. The ban increased the price of onion to Tk120 overnight from the previous Tk45-55 per kilogram.
Chairperson of the Bangladesh Competition Commission Mofizul Islam claimed that market manipulation obviously took place.
"Some crooked traders did it and we are collecting information on their whereabouts. None will be spared," he added.
'Prices up due to low supply'
Bangladeshi traders have been importing onions from Myanmar, Egypt and China since India stopped the export. Traders claimed the imports are too low to meet the demand.
On average, as much as 1 thousand to 1.5 thousand tonnes of onion were imported per day before the ban, which has since dropped drastically.
S Alam Group announced an import of 50,000 tonnes of onion from Egypt amid the growing market instability. However, their consignment will reach Chattogram at the end of this month or in the first week of December.
Shyambazar Onion Traders Association's General Secretary Md Majed claimed that the crisis is real.
"Certainly, we have a shortage of local onion. Overall, there is a crisis in supply which destabilised the market," he told The Business Standard.
Majed said onion sale at Shyambazar has fallen drastically due to the short supply.
On November 8, traders of the wholesale market decided that imported onion from Myanmar will be sold for Tk80-85, while onion from Egypt, Turkey and China will be sold for Tk50-55 per kilogram at the wholesale market.
Shyambazar traders could not stick to the decision as the Chattogram port suspended unloading due to cyclone Bulbul. They exploited the three-day suspension by raising the onion prices again.
Khatunganj Hamidullah Market is the onion wholesale hub in the port city. Traders there said onion supply to the market dropped to 30 percent at present. General Secretary of the onion traders' association of the market Mohammad Idris said the crisis may linger for some time.
Imported onions vanished!
Visiting some retail and wholesale markets in Dhaka on Friday, no imported onion was found.
Both wholesalers and retailers were selling onions claiming those are locally grown. Retailers at Rampura were charging Tk130-140 per kilogram, while Moghbazar retailers were asking for Tk240-250 for the same amount.
A few traders said they had imported onions and those were being sold at Tk220-230.
A 10 percent gap
According to the Department of Agricultural Extension and the Bangladesh Tariff Commission, local production meets 90 percent demand for onion in Bangladesh.
Import fills up the rest of the 10 percent. Besides, the country has been witnessing a gradual growth in onion production in the past ten years – narrowing down the supply-demand gap.
However, onion prices go up every year using the 10 percent supply-demand gap as an excuse. Besides, Bangladeshi traders raise onion prices when the Indian market prices go up.
In the 2009-10 fiscal year, the local production was 14.23 lakh tonnes against the demand of 18-19 lakh tonnes. As much as 23.30 lakh tonnes of red onion was grown in the 2018-19 fiscal year.
However, the production hardly benefited the onion farmers. Last season, they sold the cooking ingredient at Tk10-12 per kilogram while the production cost was Tk17.50. Onion imports from India at Tk4-5 per kilogram during the peak season also affected the local farmers in the 2018-19 fiscal year.
President of the Consumers Association of Bangladesh Ghulam Rahman told The Business Standard, "The crisis is undeniable. But the government should investigate whether the shortage is extreme enough to pump the price up to Tk250."
He believes the local market will not be stable until new onions arrive in the next season.
Ghulam Rahman also emphasised two factors – saving the farmers at least during the peak season and enhancing the onion storage capacity.
'Seasonal Tax' proposal
The Bangladesh Competition Commission has recently held a meeting with representatives of the Ministry of Agriculture, the Trading Corporation of Bangladesh, the National Board of Revenue, and the Bangladesh Tariff Commission.
The Competition Commission officials said they are trying to identify the people responsible for the onion price syndication.
The commission recommended that the National Board of Revenue impose "seasonal tax" on onion import in the peak season, so that the local onion growers can get fair prices.
In the last season, the Tariff Commission sent a proposal to the commerce ministry recommending a "seasonal ban". The Ministry of Commerce did not consider the recommendation.