Why is the onion market repeatedly unstable?

The onion market in Bangladesh is unstable. The price of onions has increased gradually. Now it has started to decrease again. Last Thursday, December 9, India announced the ban on onion exports. The office of the Director General of Foreign Trade in India announced this ban to keep domestic onion prices stable. Since then, the onion price has increased by leaps and bounds in the Bangladeshi market. Earlier in March this year, onion was sold at Tk 30 to Tk 35 per kilogram. However, the price of onions started increasing last April. At the beginning of June, the price of onion per kg reached Tk 100. After that, the government of Bangladesh allowed the import of onion into the country from June 5.

If there is a little unrest about onion import, that unrest spreads everywhere from the wholesale market, from the land ports to the Karwan Bazar of Dhaka. Onion supply disappears from some markets in a moment. Many onions are removed from the store to sell at a higher price in the future. Thus, the unbridled rise in onion prices overnight is unwarranted. The inflation of domestic onion prices with imported onions is unethical, as the Indian onion export ban is unrelated to the supply of domestic onions. A syndicate of onion traders is active in this case. On September 14, the government fixed the retail price of the product at Tk 64-65 as the price of onion became unstable in our domestic market, but it was not implemented. At present, onions are being sold at more than four times the price set by the government. In this case, there is manipulation by dishonest traders. The volatile onion market is mainly due to their greed for unfair profits. The current production cost of onion is around Tk 22 per kg. Its selling price at the farm end is 25 to Tk 27.

Adding marketing, transportation, storage and trader's profit, the price of onion can range from Tk 35 to Tk 40 per kg at the consumer level. At the end of the season, it can go up to 50-60 rupees at most, it can never cross three digits. It is very unusual and unfair to increase the price of onion from Tk 100 to Tk 250. Onion production in Bangladesh is about 30-35 lakh tons annually. 7-8 lakh tons are imported. Total availability is 42-43 lakh tons. Of this, 25 to 30 percent of the onion is wasted, rots and dries up. As a result, the net availability for our consumption is 28-30 lakh tons. It meets our needs. We have had such availability for the last two years, but no setbacks or over-inflation have been observed. The reason for this was that there was no additional price increase in onion in India, our main exporting country. Normal onion export has not been disrupted. This time it happened because India first controlled and then banned the export of onion. As a result, our unscrupulous businessmen got an opportunity.

They have increased the price of onion overnight through syndicate manipulation. But this year too, the production of onions in the country is about 3.4 lakh tons and by this time, about 7.5 lakh tons have been imported. The total availability of onion stands at 42 lakh tons. At least 28-30 lakh tons of onion remains after excluding wastage. There should be no shortage of our needs. There is no reason to increase the price of this product by leaps and bounds. India has stopped the import of onion, and on that pretext, our traders have increased the price of onion rapidly to earn unfair profit. Onion is a perennial tuberous herb. It is a plant of the Aliaceae family. The scientific name is Allium cefa. Onion plants have hollow bluish-green leaves, which are cylindrical, long and edible. The root of the plant is swollen. It is called a bulb or tuber. It is surrounded by fleshy leaves. We eat it or use it as a seed. Onion has been used in almost all countries of the world since the beginning of human civilization. Onion is used in cooking. It is a spice crop. We also use it as a vegetable. Currently, it is used raw, crushed, crushed, fried, dried and pickled. Onion slices are also very popular as a salad ingredient. It makes food attractive and enhances the taste of food. Its nutritional and medicinal properties are immense. Onion is also appreciated as a food fast digester and flavour enhancer. Onion is native to West Asia. Aryans brought it to India and Bangladesh. It tastes rough or spicey. The taste of onion differs by species. Onions contain vitamins A, C, E and calcium. It also contains iron, calcium, magnesium, phosphorus and sulphur. If the body temperature is high due to fever, many believe that placing thinly sliced onion on the forehead will reduce the temperature.

China is the largest producer of onions in the world. The second position goes to India. The position of Bangladesh is third. The world's total onion production is about 23 billion tons. Production in China is 249 lakh tons, India 228 lakh and Bangladesh 34 lakh tons. About 11 percent of the world's onions are supplied by China, 10 percent by India and one and a half percent by Bangladesh. In addition, large quantities of onions are produced in the United States, Egypt, Turkey, Pakistan, Sudan, Iran and Russia. Although Bangladesh is among the top countries in the world in onion production, domestic production is not able to meet the demand, because the population is increasing, the consumption of onions is increasing with the increase in income, and the total demand for onions is increasing. As a result, there is a shortage of the product.

Moreover, excess wastage after production is one of the causes of shortage. As a result, onions have to be imported every year. Currently, Bangladesh is at the top of the world list of onion imports. Then America. Bangladesh imported 7 lakh 27 thousand tons of onion in 2022. America's import amount was 660 thousand tons. The top onion-exporting countries are the Netherlands, India, China, Egypt, Spain, USA, Mexico, Uzbekistan, Peru and Turkey. Bangladesh's government has now allowed onion import from 9 countries besides India. Among those countries are China, Egypt, Pakistan, Qatar, Turkey, Myanmar, Thailand, Netherlands and the European Union. The cost of importing onions from Europe and the Netherlands is high because of the high shipping costs. Onion can be imported from India, China, Egypt, Myanmar and Pakistan at a relatively low price.

Bangladesh is import-dependent for onion, but its quantity is gradually decreasing. In 2016-17, our onion import was 10.98 lakh tons. Currently, it has come down to 7-8 lakh tons. This is due to an increase in domestic production. In 2010-11, the onion cultivation area in Bangladesh was 1.28 lakh hectares and production was 10.51 lakh tons. In 2021-22 it is 2. 59 lakh hectares and increased to 3.5 lakh tons. The yield per hectare increased from 8.22 to 13.51 tons. Onions are produced in almost all the districts of the country. Among these, the important districts are Pabna, Faridpur, Rajbari, Rajshahi, Jhenaidah, Kushtia, Magura, Meherpur, Natore, Manikganj, Madaripur, Gopalganj, Naogaon, Shariatpur and Bogra.

Onion is mainly produced in two seasons in our country. Rabi (November to February) and Kharip (April to July) seasons. 98.5 percent of total onions produced are rabi and winter onions. The remaining one and a half percent is Kharip or summer onion. Newly developed high-yielding varieties include Bari Onion 1, 4 and 6 for the winter season and Bari Onion 2, 3 and 5 for the summer season. Their production capacity is 12 to 22 tons per hectare.

There is no alternative to increasing production to solve the current onion crisis. In the context of the situation, more than 10 lakh tons of onions must be produced. On top of that, production should be increased to two and a half lakh tons every year. For this both the amount of arable land and hectare coverage should be increased. However, emphasis should be given to increasing the production of summer onions. Cultivation of the recently developed onion variety Bari onion 5 is expanding during summer. Its production capacity is 16 to 22 tons per hectare. More high-yielding new varieties have to be developed. Farmers should be encouraged to produce onions with the necessary financial support.

This time, the main reason behind the rapid increase in onion prices is excessive dependence on India for imports and India's unilateral export controls. Consumers of Bangladesh witnessed this suffering in 2019 and 2020. In those two years, India imposed export bans on September 2 and 14 respectively to maintain domestic supplies. Even then, the price of onion per kg was more than Tk 250 in the Bangladesh market. Taking lessons from that experience, measures should have been taken to import onion quickly from various alternative sources in the month of July-August. We must be careful about this in future.

To keep the onion market under control, the concerned departments of the government should monitor the market regularly. Unscrupulous traders should be brought under exemplary punishment. Along with this, the government should build onion stocks so that the supply to the market can be increased during the crisis. That would make price gouging by the scheming syndicates less effective. In Bangladesh, onion is wasted due to rotting and drying, which is 25 to 30 percent of the total supply. It should be brought down to at least 10 percent. This requires proper archiving. Government and private initiatives are needed in this regard. Moreover, proper grading and packaging of onions should be given attention. In this case, it is necessary to provide low-interest loans. The amount of onion produced in the country should be accurately determined and the extent of the shortage should be informed quickly to the concerned authority. On that basis, the market supply should be kept normal by fixing the import target by importing the necessary onions before the crisis.

Moreover, if the price rises in the market, the import duty should be withdrawn. This system can run from August to December. Imports should be reduced and abolished during the main production season from January to May. The current onion crisis in the country is very temporary. It will be resolved soon. Already, Murikata onions have started hitting the market and prices of domestic and imported onions are slowly coming down. A large quantity of new onions will be available in the market in the next two to three weeks. Then the price will drop further. After a month, the onion market will be normal. In the meantime, the citizens of the country should reduce the consumption of onion. We must remember that onion is a necessary ingredient for cooking but not essential. Reducing its use will not cause any harm.

Author: Agricultural economist and veteran Freedom Fighter. Director, Dhaka School of Economics and former Vice-Chancellor, University of Global Village.