Onion prices go up after India slaps export duty

Onion prices at wholesale and retail markets in Bangladesh rose overnight today after India imposed a 40 percent duty on exports of the bulb.

India slapped a fresh tax on onion exports on Saturday in a bid to retain stocks and thereby tame escalating domestic prices, according to a notification from the neighbouring nation's finance ministry.

As such, the wholesale price of Indian onions has risen by as much as Tk 12 per kg, according to traders in Dhaka and Chattogram.

Mohammad Hafiz Uddin, a wholesaler in the capital's Shyambazar, ‍said he sold Indian onions for about Tk 50 per kg on Saturday while the price was Tk 62 on Sunday.

"The price started to rise after the Indian government imposed a new duty on onion exports," he added.

Although Bangladesh produces enough onion to meet domestic demand, a significant portion is imported each year to cover the supply dearth resulting from post-harvest losses caused by insufficient storage facilities.

And with India being a major source for the bulb, the recent restriction on onion exports from the country has encouraged local traders to hike their prices in a bid to profit from the situation.

As such, the price of local onion has increased by Tk 10 at the retail level.

Mohammad Shiplu, who operates a retail outlet at Mirpur-11 in Dhaka, said he sold local onions for Tk 85 per kg on Saturday while it was Tk 95 the day after.

While visiting the Khatunganj wholesale market in Chattogram, it was found that most traders are not selling onions for the time being in hopes of getting higher prices later.

"I ordered 500 tonnes of onion at Tk 45 per kg last Friday but got only 100 kg on Sunday," said Arif Hossain, a trader from Hathazari upazila in Chattogram.

Abdul Haque, a wholesaler at Khatunganj, said the supply of onion has been low for the last week.

Minto Hossain, an onion importer from Chattogram city, said India imposed the duty on exports of the bulb in a bid to keep its domestic market stable in face of lower production this year.

"This has impacted imports. So, onion has not been available as per demand for the past two weeks," he added while claiming that unreasonable delays in the exemption of goods from India is also to blame.

Responding to a query, Agriculture Minister Muhammad Abdur Razzaque today told reporters at an event in Dhaka that 13 lakh tonnes of onion have been cleared for import considering the supply crunch.

However, only three lakh tonnes have entered the country so far.

Razzaque also said it was found that many farmers still have a relatively large stock of onion.

"So, the export tariff imposed by India should have little impact on onion prices in Bangladesh," he added.

Obaidul Haque, an importer from Chattogram city, said in order to overcome this crisis, many traders have opened letters of credit for importing onion from Myanmar and China.

"This means the prices could become stable when new consignments enter the market about two weeks from now," he added.

Mizanur Rahman, former president of the Jessore Chamber of Commerce and Industry, said shipments of onion that were ordered before India imposed the new duty are now being imported.

"But no onion has been ordered from India ever since the duty was imposed," he added.

Abdul Jalil, director for traffic of Benapole port, said 26 tonnes of onion were imported from India through the land customs station today.

"Field-level officials have been instructed to clear onion consignments quickly," he added.

[Our Benapole correspondent contributed to this report]