Falling prices panic onion importers

The resumption of onion exports by neighbouring India has brought about uncertainty for local importers over fair prices. 

They said the plummeting prices of the bulb following the lifting of India's ban on 1 January has already forced them to incur losses, and it will multiply once Indian onions hit the market. 

India in mid-September last year banned onion exports, and the importers had been salvaging the commodity market for around three and a half months.

Chattogram's Khatunganj Hamid Ullah Market Traders' Welfare Association General Secretary Mohammad Idris said apart from regular importers, many seasonal businessmen have invested in onion imports from alternative sources to India.

Idris said currently the local market has imported bulbs from around ten countries. "Now if low-cost Indian onions arrive on the market, the importers from alternative locations will be met with a huge loss," he fears.   

At present, 24,000 tonnes of onions imported from alternative countries worth Tk90 crore are waiting to be unloaded at Chattogram Port. Additionally, there were hundreds of import permissions issued by Chattogram Port's plant quarantine centre to bring in more onions from the alternatives.     

When India's onion exports were banned, subsequently, importers raced to bring in the cooking ingredient from alternative sources.

According to the plant quarantine centre, more than 1.11 lakh tonnes of onions arrived from 11 countries by sea at the port since India's export ban, till 31 December. The countries include: China, Myanmar, Pakistan, Egypt, the UAE, Turkey, New Zealand, the Netherlands, Ukraine, and Malaysia. 

Though the importers who brought in the item in the last week of September and early October made a handsome profit, many of them had to sell the item for less than the import rates due to a highly volatile local market.    

For instance, Chattogram-based importer Nurul Alam said he brought in 145 tonnes of onions from China in October at Tk42 per kilogramme. But he had to sell them for Tk10 per kilogramme since most of the consignment had rotted and market supply rose at that time.  

Nurul Amin said he incurred a Tk50 lakh loss from that import.  

Fruit importer Ramij Uddin, too, imported the bulb from Pakistan. Though the import rate was Tk45 per kilogramme, he had to sell them for Tk20 per kilogramme. The businessman subsequently wrapped up onion trade after incurring a loss of around Tk1 crore. 

Recurring trend to 'facilitate' Indian exporters?     

Balay Kumar Poddar, a Khatunganj trader, said Bangladesh's market becomes volatile when India slaps an export ban on onions at a particular time every year. But the country lifts the ban when local onions hit the market. 

"After lifting the ban, they even lower the export rates and flood the Bangladeshi market forcing local farmers to sell their onions for less than their production cost," he claimed.   

"As a result, onion production in Bangladesh is declining," he argued, adding, "At the end of the onion harvesting season in Bangladesh, Indian exporters make an extra buck by intensifying the supply crisis."

Mahbubul Alam, president of the Chittagong Chamber of Commerce and Industry, said, "The onion market hits its lowest point during the harvesting season. Like the previous year, India has resumed onion exports during our peak season this year too." 

He said local onion growers, as well as importers, bear the brunt every year due to the neighbouring country's decisions. 

At Khatunganj's wholesale market, onions are currently at Tk20-50 per kilogramme, which was at Tk25-65 even last week. The price of the item came down to Tk5-20 per kilogramme in the last three days.

Meanwhile, locally produced onions have been arriving on the market in the last two weeks. Local onions are now Tk30-32 per kilogramme while they were Tk40-45 last week.

The commerce ministry has sent a letter to the National Board of Revenue (NBR), recommending a new tax on onion imports.

Sources concerned said the ministry made the recommendation as onion harvest is nearing and the country's stock of onion is satisfactory. However, the letter did not mention how much tax should be imposed.

However, in the budget for the current financial year (2020-21), 5% duty was levied on onion imports. The letter gives an indication of the reinstatement of the previous duty.

The 5% duty on onion imports was charged as an attempt to protect the local onion farmers.

But on 14 September of the last year, an extreme instability was created in the country's onion market after India stopped export, increasing the local onion's price to Tk120 in retail markets.

To tackle the situation, the government at that time decided to withdraw onion tax in a bid to control the market as well as to reduce import cost from alternative countries.

Within a week of India's stopping onion export, NBR withdrew onion import tax.

It has been learnt that the commerce ministry has recommended duty free exemption for the LCs already opened for onion import.

Sources said the commerce ministry had earlier requested for reducing the import duty on onion considering the country's lean period (September-March) and volatile market situation.