The persistent reliance of Bangladesh on India for essential commodities like potato and onion has long been a subject of concern. Such reliance poses significant risks due to the unpredictability of supply from a single source. Factors like poor harvests, increased domestic demand, price spikes, export restrictions, or even political tensions can disrupt the supply chain, leaving Bangladesh vulnerable to inflation and scarcity. It is high time the government adopted a proactive strategy to diversify import sources for these crucial kitchen staples.
India has traditionally been the primary supplier of potato and onion to Bangladesh, largely because of competitive prices and short delivery times. Imports through land ports take as little as a week from order placement, which has made India a preferred trading partner. However, this dependence is fraught with risks. India frequently enforces export restrictions, such as setting minimum export prices (MEP), to meet its own domestic demand during periods of scarcity or price volatility. This policy, aimed at stabilising Indian markets, often leaves Bangladesh grappling with sudden shortages and surging prices.
Onions and potatoes are sensitive commodities in both countries, critical to household consumption and political stability. Any disruption in supply has a cascading effect on the market. For instance, India's imposition of an MEP or outright export ban has historically led to dramatic price increases in Bangladesh, a development that has repeated itself with alarming frequency. Despite these challenges, Bangladesh has yet to effectively reduce its reliance on India-a situation that seems increasingly untenable in today's globalised and unpredictable market.
The ongoing price hikes for potatoes and onions in Bangladesh highlight deeper systemic issues. According to the Bangladesh Bureau of Statistics (BBS), the country's potato production reached 10.4 million tonnes last year, exceeding the annual demand for 8.5 million tonnes. Yet, despite this surplus, retail prices have doubled in just four months, reflecting market inefficiencies and speculative trading. Farmers, despite incurring losses in some years, continue to favour potato cultivation, which has seen a steady rise in both land area and production since 2012.
As regards onion, it is a similar story of discrepancy. In 2023, Bangladesh reportedly produced 3.4 million tonnes of onions, exceeding the domestic demand for 2.5 million tonnes. However, due to the highly perishable nature of onions, over one million tonnes were reportedly lost during harvesting and storage. This wastage, coupled with data mismatches and inadequate market planning, often necessitates last-minute imports. Currently, the Bangladesh Trade and Tariff Commission (BTTC) projects a need for 600,000 tonnes of onion imports over the next six months. This is prompted by India's suspension of exports through a couple of land ports-Bhomra and Hilly.
India's reliance on seasonal harvests for onion production further compounds the issue. For instance, this year's autumnal harvest-accounting for 20 per cent of India's onion supply-suffered severe damage due to floods, driving prices up. Such disruptions have led to export restrictions, forcing Bangladesh to scramble for alternative sources at inflated costs. When India banned onion exports in September 2023, prices in Bangladesh soared to Tk 250 per kilogram almost overnight. Similar scenarios are likely as Indian authorities consider imposing an MEP between $500 and $700 per tonne, which could effectively render Indian onions unaffordable.
The current crisis underscores the urgent need to diversify import sources. The BTTC has identified potential suppliers for onions, including China, Turkey, Egypt, Spain, Myanmar, and Pakistan. For potatoes, it has identified Germany, Egypt, China, and Spain as viable alternatives. Now assuming that importing from some of these countries would mitigate risks associated with over-reliance on a single supplier and ensure steady supply may be misleading. The government should sit with the business community to work out viability of one or more of these sources.
Transitioning to new sources requires a well-thought-out strategy. Factors such as pricing, logistics, and quality must be carefully evaluated. For instance, while importing from distant countries may involve higher transportation costs and longer delivery times compared to India, these challenges can be addressed through strategic planning and improved storage facilities. Moreover, fostering trade relations with multiple suppliers will provide leverage during negotiations and shield Bangladesh from price shocks and supply disruptions.
While diversifying import sources is critical, enhancing domestic production and reducing post-harvest losses are more important. For potatoes, Bangladesh's consistent production surplus suggests potential for self-sufficiency if storage and distribution systems are improved. Establishing modern cold storage facilities and streamlining supply chains could prevent artificial scarcity and stabilise prices.
Similarly, addressing onion wastage requires investment in better harvesting and storage technologies. Developing high-yield, disease-resistant onion varieties through agricultural research can also boost production. Encouraging private sector involvement in agro-processing industries can further minimise losses and add value to local produce.
The recurring crises involving potato and onion imports are a stark reminder of the dangers of over-reliance on a single supplier. Bangladesh must take decisive actions to diversify its import sources while simultaneously strengthening domestic production and distribution systems. By adopting a proactive and multifaceted approach, the country can ensure the availability and affordability of these essential commodities, safeguarding the food security of its population and the stability of its markets.
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