Lessons from the onion crisis

In Bangladesh, there is a tendency for businessmen to increase the price of essential items by staging a dramatic shortage in supply in the market using an unethical practice called 'artificial market'. This happens every year during

Ramadan. Suddenly this year, the Indian Modi Government declared a ban on onion export to Bangladesh which resulted in the spiraling price problem. Government data shows that the demand for onions across the country is 24 lakh tonnes per year, with local ones meeting the need of 16 lakh tonnes. The only way to meet the shortfall of 8 lakh tonnes is to import onions from other countries, especially from India.  

The price of locally grown onions was around Tk50 per kg in September 2019. However, a well known English news daily reported that locally grown onions were being sold for Tk260 per kg in Dhaka's Nazirabad area in the middle of November the same year. This was a 500% rise in the price of onions, something that has never happened before in Bangladesh. 

The Indian Modi government's decision to stop the export of onions to Bangladesh due to excess rainfall in crop growing areas in India was the start of the problem. However, the problem became worse when some unscrupulous Bangladeshi onion farmers started to hoard onions in different places to make an undue profit by staging a shortage in supply. Another English daily quoted Palash Mahmud, the executive director of the Conscious Consumer's Society, as saying, "Despite the fact that onions are being brought in from Myanmar, the supply from that country is not as high as the imports that normally come from India, thus leading to the skyrocketing price." 

This also shows that the supply coming from Egypt was not sufficient. It was a temporary solution taken by the Bangladeshi Government to reduce the price of onions. 

The Bangladesh government delayed in importing onions from Turkey, Myanmar, Afghanistan, Pakistan and UAE and lately from Egypt by air. The problem of the 'artificial market' could have been temporarily resolved had the Ministry of Commerce taken the decision a little earlier. When imported onions enter the market, the price automatically goes down because the supply has increased. 

Last but not least, the government's timely action of assigning police and the Rapid Action Battalion under a magistrate to fine and jail corrupt onion traders and middle-men had a positive impact. 

A well known English newspaper quoted Golam Rahman, president of the Consumers Association of Bangladesh, as saying that there is no logical reason for the increase in the price of onions. Sadly, instead of being sold in the market, tons of hoarded onions rotted away at the places where they had been stashed.  This clearly shows that the supply scarcity of locally grown onions was a planned drama. 

As it is across South Asia, many regularly consumed Bangladeshi food items are cooked with onions. Regular Bangladeshi meals, for example chicken curry, fish curry, omelet, lentils and mashed potatoes are cooked with onions. It is sad but true that Bangladeshi traders robbed their own countrymen in a way that is unethical, illegal and unacceptable.           

Bangladesh should also try to produce more onions locally to reduce the shortage of onions across the country. The reason they cannot do so on a large scale is that onion farmers sell the onion plants at a high price before the onions mature. 

The government can provide subsidies to onion farmers so that they can get some financial support as an incentive to sell onions when the plant has matured. The commerce ministry should make a list of Bangladeshi onion traders to identify whom to convince to sell more onions when there is a shortage. 

This will take time, but the yield will benefit the country in the long run. In this way Bangladesh can become more self-reliant and will not need to pay high prices for onions imported from India or any other country. 

Based on a study, the International Food Policy Research Institute recommended that the government should monitor the supply of onions to make sure there is no hoarding, particularly between September and December when onion production reaches a peak.