On September 30, a Dhaka housewife on a shopping expedition already found the situation around a rise in the price of onions "crazy", speaking to an international news agency.
"I went to buy 5 kilograms of onions for our five-member family but ended up buying only 3 kilograms due to higher prices. They (traders) are selling old stock nearly at double the price. This is crazy," said Afroza Mimi, the day after India banned all exports of onions as local prices jumped to 4,500 rupees ($63.30) per 100 kg, their highest in nearly six years, due to the delay in summer-sown crop arrivals triggered by longer, heavier rains than usual.
One can scarcely imagine what Ms Mimi makes of the situation today, in the third week of November. By now she would have seen one kilo of the vegetable, which usually costs Tk 30 soar to up to Tk 260, a truly eye-watering rise that defies all precedents, market fundamentals and state control. And she and millions, tens of millions of others like her could only watch helplessly.
India exported 2.2 million tonnes of fresh onions in the 2018/19 fiscal year ended March 31, according to data from India's Agricultural and Processed Food Products Export Development Authority. That's more than half of all imports by Asian countries, traders estimate. Globally, it is the 4th-largest exporter of onions
Onion prices in Sri Lanka rose by 50% in the first week, to 280-300 Sri Lankan rupees ($1.7) per kilogram. Malaysia, the second-biggest buyer of Indian onions, expects the ban to be temporary and sees no reason to panic, said Sim Tze Tzin, deputy minister of agriculture.
But even India had started importing onions from Egypt in an effort to calm prices. And there wouldn't be any meaningful drop in prices before summer-sown crops started to hit the market, said Ajit Shah, president of the Mumbai-based Onion Exporters' Association, in remarks to Reuters. That was not expected until mid-November, meaning the export ban wasn't going away in the near term.
The crystal onion
Somewhat mystifyingly however, Bangladesh Commerce Minister Tipu Munshi on October 14 said that onion prices will become normal in the local market at the end of October as India will withdraw ban on exporting onion. He came up with the remarks while briefing to media at the Secretariat.
He said, "India is likely to withdraw exporting ban on onions at the end of October. So, it is expected that the market will become under control once onions from India will start to come."
He also threatened to go tough if any businessman was found guilty of hoarding onions.
In Guwahati on October 25 Munshi said that he had spoken to Indian Commerce and Industry Minister Piyush Goyal on the issue.
"He assured me that India will try to lift the ban after the Maharashtra assembly elections. We are waiting for that," he said, while addressing the India-Bangladesh Stakeholders' Meet in the capitalof the state of Assam.
Imported onions were selling at Tk 90 to Tk 100 a kg at kitchen markets in Dhaka city at the time, data from state-run Trading Corporation of Bangladesh showed. It was Tk 45-55 a kg in the middle of September. Munshi urged the Indian government to take a humanitarian look into the issue as people in Bangladesh are impacted due to high prices of the key cooking ingredient and sought lifting of the ban at the earliest.
"We are short of six lakh tonnes of onion. Out of this, 80 percent comes from India. After the ban on the onion export from India, prices have gone up drastically and people are asking when it will come down."
Munshi said most of the countries in South Asia depend on India for food security and for the import of essential commodities from the country. "We understand that Indian authorities are well aware of this and always analyse this from a humanitarian perspective," he said.
Munshi said most of the countries in South Asia depend on India for food security and for the imports of essential commodities from the country.
It is difficult to say what sort of impression this sort of pleading on the rookie minister's behalf would have left on the Indian hosts, but the important thing is that it would've been unlikely to have helped much. There was nothing to view here "from a humanitarian perspective", it was a straightforward measure dictated by market conditions. India's onion traders, who obviously would like to export, themselves would ensure their government lifted the restriction as and when it was viable. Beyond that you cannot expect the Indians to export their onions when they are struggling to meet demand in their own country.
Mentioning that 7,000-8,000 tonnes of onion will be brought from Egypt by the first week of November, Tipu Munshi on October 27, now sounding resigned, said there is no scope for its price to come down until the consignments arrive.
"The shipment of onions is expected to enter the country within the first week of November. There's no scope for the onion price to come down until then," he said.
Talking to reporters after attending the launch event of Business Confidence Survey 2019 arranged by Business Initiative Leading Development (BUILD) at a city hotel, the minister further said, "Hopefully, there'll be a positive impact on the market when the new consignments of onion arrive."
He said the landing cost of onions imported from Myanmar jumped to Tk 70 per kg, which was Tk 42 about 15 days ago. Mentioning that they had to depend on the onion import from India to meet the deficit of 7-8 lakh tonnes in the country, Tipu Munshi said they are thinking of increasing the local production to prevent such a crisis in the future.
His ministry meanwhile, said the overheated onion market is expected to cool down "within the next couple of days" when big consignments of onions arrive from a number of countries. It said some big importers are importing onions in huge consignments from Egypt and Turkey at the request of the Commerce Ministry.
The country was still waiting for those 'big consignments' three weeks later, when on November 19, Tipu Munshi announced a new schedule for the arrival of cargo planes carrying urgently procured 50,000 tonnes of onions from China, Egypt and Turkey.
He said the consignment would arrive at Hazrat Shahjalal International Airport (HSIA) in Dhaka on Wednesday, November 20. According to the announcement made earlier, the onions were scheduled to arrive in Dhaka on November 19.
The 24-hour delay was caused by inconvenience during the loading of onions to cargo planes at the source country, Munshi told reporters at a press briefing at his ministry on Tuesday.
"Starting from tomorrow, 2,500 tonnes of onions will arrive every day. Trading Corporation of Bangladesh (TCB) hired a cargo plane to bring the onion consignments," he added. The commerce minister said TCB would sell onions imported through cargo plane at subsidized tariff rate.
"After the arrival of cargo plane tomorrow, TCB would deploy four to five hundred trucks to distribute onions across the country to keep the prices stable," Munshi said, hoping that it would bring back normalcy in onions supply and price.
Beyond the crisis
We shall wait and see if the commerce minister's words prove correct this time. The truth is that although India's export ban has affected a swathe of countries across Asia, nowhere has the situation gone so completely out of control as in Bangladesh. On September 13, India had set the minimum export price of onion at $850 a tonne to curb its shipments and help bring down soaring prices in the domestic market. The authorities in Bangladesh should have been looking to make their move then to enlist other sources of import. Just over two weeks later, Delhi announced the ban on export of onions altogether with immediate effect, after extended Monsoon downpours delayed harvests and supplies dwindled. Sitting on their haunches then caused them to panic and fumble the response once the crisis hit with the Indian ban.
While some invariably hold the supply constraint as the causal factor for the price hike, buttressed by inadequate storage and transportation facilities and improper distribution system, the spectre of syndicates in Bangladeshi business hangs heavy on the public's perception, and there are enough examples from the past, plus the abnormal behaviour of the market, to suggest a role for them in the current crisis too. A syndicate's primary notable quality is that the groups within it work together to conduct some type of business in order to pursue and promote their collective interests, according to the Corporate Finance Institute. Such collective interest may also find expression in the form of hoarding, the illegal stockpiling of goods in large quantities to trigger an artificial price rise.
According to the Conscious Consumer Society (CCS), a consumer rights organization, a syndicate of traders has pocketed around Tk 3,180 crore in the last four months by manipulating the onion market and prices. They also demanded that authorities set a fixed rate for the essential cooking ingredient to bring stability to the market and ensure prices do not increase any further.
Executive Director Palash Mahmud said onion prices in retail markets had gone up in recent times to as high as Tk150 per kg, the highest it ever reached in the history of the country. "Onion are now selling by the hali (four pieces)," he said, adding, "It is now beyond consumer's capacity to purchase."
A research report by the consumer rights organization showed that the volatile onion market resulted in consumers losing Tk397.67 crore in July this year, Tk491.43 crore in August, Tk825.26 crore in September and Tk1,465 crore in October. The report also said onion prices increased by at least 400% in the past four months (from July to October,) enabling the onion syndicate to bag an additional Tk50 crore from consumers.
Palash Mahmud said a syndicate of 13 individuals related to this was identified recently, but no action was taken against them yet. Even the prime minister acknowledged the role of syndicate behind the price hikes.
The organization presented four demands at the briefing, which included setting a maximum price for onion, creating a cell at the Department of Consumer Rights to ensure fair value of products and services, and conducting a drive against the syndicate similar to the recent casino raids. The production of local onion is 1.6 million tons against the country's annual demand for 2.4 million tons and the rest of which is imported. If a country stopped onion export, there was no reason for the local onion supply to fall, they argued.
"There can be no excuses from the wholesalers and retailers," Palash said, adding: "Consumers are cheated out of hundreds of crores of taka in the name of increasing costs."
As Dhaka Courier went to press this week, news was breaking that India may keep a ban on onion exports until February because domestic prices have risen after the harvest of summer-sown crops, which were expected to augment supplies, was delayed and damaged by untimely rains.
Despite the export ban enacted in September to keep domestic supply inside India, prices have surged after rain and floods during October and November limited onion supply, especially in Maharashtra.
Wholesale onion prices are about 40 rupees (55 cents) per kg, down slightly from 55 rupees earlier this month, the highest in six years, according to data compiled by the state-run National Horticultural Research and Development Foundation.
"We will think about resuming exports once prices come down. Right now it is not possible," a senior government official at the Indian Department of Consumer Affairs said.
The situation in Bangladesh however, is far more untenable.
"The government should extend help to the farmers to increase onion production from next year. They have to provide loans and incentive, and keep monitoring so that onion farmers get fair price," said Golam Rahman, secretary general of the Consumers Association of Bangladesh, or CAB.
Rahman suggested that the domestic production can be increased in two ways - increasing acreage by ensuring a fair price to the farmers and mounting yield. An initiative needs to be taken to increase productivity through providing high-yielding onion seeds, fertilizers and loans to the farmers.
"One more thing needs to be done. The prices of onion in India are very low in the season because of the high productivity. As there is no duty on onion import, it can be imported from India at a lower price during that time," Rahman said.
And, import duty will have to be imposed during peak season in Bangladesh so that the country's farmers get a fair price of their onions. Again, the import tariff has to be withdrawn at the end of the season so the traders can import the variety at low cost to bring stability in the market, he explained.
Besides, as the onion is deciduous crop, so the government should take an initiative to enlarge its preservation adopting modern process, Rahman said. If the onion preservation can be enlarged and modernised, the production and productivity of onion can be increased as a result of which onion market will be stable throughout the year, he summarised.
Those are themselves pretty long-term solutions. Besides, Bangladesh is losing agricultural land at a rate of nearly 1% per year, according to data from the Bureau of Statistics. For now, consumers have no option other than reducing their consumption of onions or using alternatives items to overcome the crisis. After all, even the prime minister has stopped eating them.
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