Galloping onion price

FE Team | Published: September 16, 2020 19:05:43

Volatility of market is a common phenomenon in this country. At times there may be unavoidable genuine reasons behind market jitteriness but in most cases over the past decades, barring a few years after the country's independence, abnormal price hikes defy rational explanation. Last year's unrestrained skyrocketing of onion price may be an example of how syndicated manipulation of market can distort the theory of demand and supply. Amid an apparent mismatch between estimates of local production and the import gap, at one stage the authorities had to hire cargo plane for importing onion from as far as Turkey and Egypt. The estimates were not as wide off the mark as it was given to believe. Neither the government nor the media attached importance to the docile news that at the end of the season a large quantity of onions was found to rot in warehouses.
A repeat drama may be set to be staged this year as well. Many elements are common. India suddenly announced ban on export last year and on the very first day price of the common vegetable-cum-spice started to gallop. In a repeat performance, India announced export moratorium on Sunday and no sooner did it so, price of onion in Bangladesh went up by Tk 15-20. By Tuesday, the price of the local variety hit Tk 80 a kilogram and the Indian variety Tk 70-75. Although, the authorities here assure that the price escalation will not follow the same pattern as last year's because local harvest has been far more this year, few will feel at ease. The authorities put forward figures of local yield and imported amount, showing a surplus last year. But what happened ultimately is a consumers' nightmare ---onion price made a mind-boggling record at Tk 300 a kilogram.
The apprehension of onion price following the last year's trail deepens for understandable reasons. Last time also, its price did not soar on the eve of or during the two Eids but it started behaving outrageously after a month or so when India slapped export ban. However, last time there was a genuine shortfall in the Indian domestic market. Consumers there also had to suffer on account of exorbitant onion price. India puts forward the same reason this time also for its sudden decision of not to export. Here, importers from Bangladesh, who opened letters of credit (LCs), have a point. Under the international commercial contract, the suppliers are legally bound to deliver the commodities ordered.
Now the question that irritates every inquiring mind is, do governments of countries like India and Bangladesh base their calculations of domestic consumption of food items on faulty data? The annual yield of a crop like onion should have a more or less accurate figure. Small variations cannot cause an explosive market disruption. Sudden decisions like the one India has taken are in no way in conformity with the warm bilateral relations between the two countries. Bangladesh, on its part, will also fail on its part if it did not check its stock and take measures to arrest the unnatural price escalation. Traders, after all, have used the Indian ban as an excuse for outrageous price hike. Onions now in the stock ---either local or imported ---were not collected at high prices and raising the price by Tk 20 within a day is an indication of outlandish profiteering ploy, if not outright commercial criminality.