South Asia

Indian Onion Export Ban Likely to Disrupt the Market in Bangladesh

Bangladesh imports 7 lakh to 11 lakh metric tones of onion a year, of which about 75% is exported from neighbouring India.

Dhaka: Onion prices in Bangladesh are likely to increase exponentially in the coming days as a result of India’s decision to impose a ban on the export of this essential kitchen item.

The Indian ministry of commerce and industry on Sunday banned the export of onions as prices continued to soar due to a seasonal shortage that has been worsened by flooding in several Indian states.

In a number of cities across India, prices of the vegetable have doubled in recent weeks, Reuters reported, prompting the government of the world’s largest onion exporter to take steps to calm prices ahead of key state elections later this year.

Citing further reasons for this present surge, the news agency said excessive rainfall in the second half of the monsoon season has led to crop damage in several states and stocks held by traders are insufficient to meet demand until the new crop arrives at the end of October.

Also read: Centre Bans Onion Export, Imposes Stock Limit on Traders to Check Price Rise

A top official of the commerce ministry of Bangladesh, however, said that there is a satisfactory stock of local onion and plans to export onions from alternative countries like Myanmar, Turkey, Egypt and China are in the pipeline. Thus, he said, the Indian export ban may not harm the market price of this essential kitchen item “that much”.

Commerce secretary Dr Md Jafar Uddin told this correspondent that an onion-laden ship from Myanmar has already reached the Chittagong sea port and another ship is on its way to Bangladesh.

He also said that the government is in talks to import more onion from neighbouring Myanmar even though the bilateral diplomatic ties between the two countries are not in good state because of the Rohingya crisis.

According to statistics available with the commerce ministry, Bangladesh produces 17 lakh to 19 lakh metric tones of onion a year – which does not meet the demand of the country. The country has to import 7 lakh to 11 lakh metric tones of onion, of which about 75% comes from India as the transport cost is low due to the close proximity.

The peak season for export of Indian onions is from January to March when hardly any country, barring Egypt, which offers a small quantity, is present in the market.

Also read: Decision to Import Onions Reflects the Government’s Anti-Producer Bias

Global sales from onions exported by country totalled $3.5 billion in 2018. Overall, the value of exported onions rose by an average 12.1% for all exporting countries since 2014 when international sales of onions were valued at $3.2 billion. Year after year, the value of globally exported onions has accelerated by 9.2% from 2017 to 2018.

Among continents, Asia sold the highest dollar worth of exported onions during 2018 with shipments valued at $1.24 billion or more than a third (35%) of the global total. In second place were exporters in Europe at 33.9%, while 19.9% of worldwide shipments of onions originated from North America.

Market portrays a different picture

Traders at the capital Dhaka’s kitchen market, however, said that the Indian ban on export has already disrupted the market.

Nurun Nabi, an onion wholesalers in Karwan Bazaar – Dhaka’s largest kitchen market – told this correspondent, that the price of onions has been fluctuating in the past two week after the Indian authority had imposed a minimum export price of $850 per tonne on onion in a move to control prices in domestic markets in the mid-September.

“One palla (5- g) Indian onion was sold on Sunday at a price of Tk 400 while on Friday, the price for the same was Tk 310,” said Nabi. He told this correspondent that the onion price in the market has been unstable since the second week of June as onion imports from India have reduced by at least half in the past three months.

On June 11, the Indian government withdrew the incentive for the Indian exporters of onions, with the intention of shoring up the Indian market and bringing prices down after they skyrocketed.

It used to allow exporters to get a 10% incentive on the free on board (FOB) prices realised from overseas importers.

Also read: As Prices Soar, Agriculture Minister Assures That Onion Rates Will Be Checked

Traders at Shyambazar, Dhaka’s main wholesale hub for onion, said the wholesale rates of imported onions from India rose to Tk 75-80 each kilogram on Sunday from Tk 55-60 on Friday. Narayan Saha of Nabin Traders, a wholesale store for onion at Shyambazar told this correspondent that “onions have become dearer suddenly. India’s restriction has impacted prices on fears of decline in supply at a time when supply of locally grown onions has been low.”

Abu Hasan, general secretary of Bhomra Land Port Exporters-Importers Association said that since June this year, the market price of onions has not been stable.

“There are other factors behind the price fluctuation such as local onion shortage due to flood in Bangladesh, Eid-ul-Azha (second biggest Muslim festival) which jack up the onion price because of the huge demand. But above all, the near zero import from Indian is the biggest reason behind the price fluctuation,” said Hasan, adding that in the coming days, the price might cross Tk 100 a kg in the country’s retail markets.

Faisal Mahmud is a Dhaka-based journalist