Tariff Commission suggests looking for alternative onion exporters

HIGHLIGHTS - 

• Onion prices may skyrocket this year–like in 2019 
• India suspended onion exports through land ports Monday  
• The one-day suspension edged up wholesale onion prices by Tk5 per kg 
• Bangladesh will have to import 6 lakh tonnes of onion in next six months
• Tariff Commission recommends finding alternatives to Indian market  
   

The Bangladesh Trade and Tariff Commission has recommended that the government find alternatives to India, the biggest onion exporter to Bangladesh.

In a report, the commission suggested that the commerce ministry consider importing onions from Myanmar, Egypt, China, Pakistan, Afghanistan, the Netherlands, or Malaysia.

Amid the growing concern over onion prices, India suspended onion exports through the Bhomra and Hili land ports on Monday, which raised the wholesale prices of the bulb by Tk5 per kilogram on the local market.

The Tariff Commission, in its report, said India grows onions in three seasons. Of the yields, the autumnal harvest supplies 20% of the Indian market's onions. But this year's flooding ruined most of the seasonal harvest, resulting in a hike in onion prices on the Indian market. This has affected prices of the cooking essential in Bangladesh, too.

Bangladesh normally imports 95% of its onions from neighbouring India. If the country bans exports of the bulb, this would further destabilise the rising onion prices on the local market.

India, in September last year, banned onion exports to meet its demand. The restriction fuelled onion prices in Bangladesh, almost overnight, and the cooking essential skyrocketed to Tk250 per kilogram.

The Tariff Commission said locally-grown onions met most of the market demand as imports were suspended in April followed by the novel coronavirus pandemic.

Onion imports this year fell short by 35% and 38%, respectively, compared to year-on-year imports in 2019 and 2018. The lack of imports prompted the crisis as local onions could meet around 65-70% of the demand. Major onion-growing districts – like Pabna, Faridpur, Rajbari, Rajshahi, Kushtia, and Manikganj – have 5.25 lakh tonnes of the bulb in stocks.

The Tariff Commission says there are still six months until local onion harvesting. This period will require around 11 lakh tonnes of onion and most of it will have to be met by imports.

In other words, around six lakh tonnes of onions will have to be imported before March with existing 5.25 lakh tonnes in stocks to meet the local demand.

On condition of anonymity, a commerce ministry official said they have instructed the traders for onion imports. If both the government and the private sector do not take immediate measures to import onions, a 2019-like situation may reoccur.

While contacted, Tariff Commission member (Trade Policy) Shah Md. Abu Raihan Alberuni told The Business Standard that India could impose restrictions on onion exports anytime. Therefore, onion imports from China, Turkey, Egypt, Myanmar, and other countries should start immediately.

He said the commerce ministry has already instructed traders to import onions from alternatives sources. At the same time, state-owned trading corporations are also preparing for imports.

The Tariff Commission also recommended: strengthening the monitoring of storage and distribution in producing-hubs, importing onions through G2G (government to government) and G2B (government to business) by the Trading Corporation of Bangladesh (TCB), re-fixing bank interest rates and LC margins, and expanding TCB sales.

Onion prices have been climbing up for more than two weeks on the local market at a time when prices of the bulb are also on the rise in neighbouring India.

Imported onions have doubled to Tk50-55 per kilogramme from Tk25-30, while locally-grown onions have reached at Tk60-65. However, the prices were hovering around Tk40-45 just two weeks ago.

Meanwhile, Bangladeshi businessmen at land ports said India is likely to fix a minimum onion export price.

General Secretary of Bhomra Land Port C&F Agents Association Mostafizur Rahman Nasim said India on Monday suddenly barred onion-laden trucks entering Bangladesh.

He said the Indian trade pricing regulatory authority is likely to raise the onion export price to $500-700 per tonne.

The export suspension edged up wholesale onion prices further on the local market. Each kilogramme of imported onions was priced at Tk40-45 and local onions were at Tk50-55 on the wholesale market on Monday afternoon. The prices were at least Tk5 less per kilogramme just in the morning.

Dhaka's Shyambazar onion importer Sankar Ghosh said some unscrupulous traders abruptly raised the prices upon hearing the export suspension news – which he said might drop even on Tuesday.