Govt must head off onion crisis, check against market ploys

Published: 00:00, Sep 16,2020


INDIA’S ban on onion export to Bangladesh, as Indian authorities notified on September 13, has come to be a reason for concern as onion prices have already increased about four times on the Bangladesh market in two weeks because of off-season shortage, usually spanning September–March, which is met with import. The concern is evident in view of India’s having increased in 2019 the minimum price on the export of its onions, which virtually halted onion export to Bangladesh, on September 29. Onion prices in Bangladesh then increased up to Tk 300 a kilogram and the authorities had to import onions from other countries to keep prices stable although prices had remained somewhat high for a long time. India, however, withdrew its ban on onion export on March 15, 2020, much after the situation had become almost normal. India’s banning onion export to Bangladesh for a second time shows that the ‘friendly relations’ with Bangladesh that India often claims are mere rhetoric. This is more so as Indian authorities had almost stalled the onion export over the past 20 days or so as many trucks laden with onions had waited for Indian clearance on the other side of the border.

Bangladesh has, however, showed its friendly gesture in giving a special permission to the export of 1,475 tonnes of hilsa to India before Durga Puja. Banglad esh in 2019 also approved the export of 500 tonnes of hilsa — which had been banned since 2012 after the inclusion of hilsa into the list of export-restricted items — to India before Durga Puja. Bangladesh authorities should in no way restrict the Durga Puja-time export of hilsa to India in the wake of India’s having banned the export of its onions to Bangladesh. But the situation suggests that Bangladesh should have plans readied for onion import from other countries to handle the off-season shortage. The commerce ministry on September 7 requested the National Board of Revenue to withdraw customs duty of 5 per cent on the import of onions and the revenue board on September 14 declined to waive the duty that was put in the budget to ensure fair prices for farmers, to encourage domestic production and to reduce dependence on onion import. It is true that farmers should get fair prices for their produces, but the government should also consider that this is off-season and the local production cannot meet the demand. Onion prices are reported to have reached Tk 120 a kilogram, as of Tuesday, in the absence of any market intervention. The onions that are on the market are local produces or have been imported earlier, giving no reasons for such a sudden sharp increase, a half of which increased in about two days.

This shows that there are problems with the market and the government’s control of the market. The government must, in such a situation, try to meet the demand with onion import from other countries and make it a practice especially for the off-season, and perhaps for other times, when India may again ban onion export. The government must also look into policy issues and attend to any problems therein. But the government must, meanwhile, immediately intervene into the market to keep onion prices stable and stop traders from making undue profit by creating an artificial crisis.

More about:

Want stories like this in your inbox?

Sign up to exclusive daily email