Onion prices have soared to record highs despite a recent import surge, with traders blaming a combination of Taka depreciation, hoarding and supply chain disruptions.
Compared with June, onion prices increased by Tk 10-15 a kilogram in July to Tk 110-Tk 130 per kg in Dhaka. Imported Indian onions are Tk 110-120.
Traders blame the rising cost of the US dollar against the Bangladeshi taka for the higher prices, while some consumer rights activists believe big traders are also influencing the situation.
Imported onions have flooded the market in the past three weeks but prices have continued to rise despite a plentiful supply, said Rabiul Alam, a grocer at Buddhijibir Dhal of Rayer Bazar area in Dhaka.
Md Billal Hossain, a spice trader in Dhaka's Shyambazar, said local traders in onion hubs like Faridpur, Rajbari and Pabna have stored large quantities of the bulb and are now making hefty profits.
He also said onion production was damaged by unseasonal rain in February and the April-May heatwaves -- eventually resulting in an overall lower production.
According to Mr Hossain, after local prices exceeded Tk 110 a kilogram in July, importers began bringing in large volumes of onions from India.
India's minimum onion export rate is $770 a tonne, including a 40 per cent duty, he said. Based on this, the import cost was Tk 102-104 a kilogram, which could rise further as the taka weakens against the dollar.
Another trader Juel Kabir said the cost of US dollars has jumped to Tk 125 in a week from Tk 119-120. Import costs have risen sharply in the past week due to the further devaluation of the taka.
An official at the Plant Quarantine Wing of the agriculture ministry said onion imports were almost halted between December and June due to India's imposition of a minimum export price and a 40 per cent duty on onion shipments.
Imports began to some extent from the last week of June, with traders bringing in 58,000 tonnes of onions in July so far against a permit of 161,000 tonnes, he said.
TM Rashed Khan, assistant director of the Department of Agricultural Marketing (DAM), said onion production in neighbouring India has fallen by 15-16 per cent this year, leading the country to impose a minimum export price of $550 a tonne and a 40 per cent duty to protect its domestic supply.
Despite import costs being almost 80 per cent higher than last year, Bangladeshi importers have started bringing onions from India due to soaring domestic prices, he said.
About 2,000 tonnes of onions are now being imported daily, which is more than 75 per cent of local demand, Mr Khan added. Imports may continue until the local harvest begins in November or December.
He said the Bangladesh Bureau of Statistics (BBS) should also release production data quickly to inform import policy.
The country's onion production target for the last financial year was 3.7 million tonnes, but the BBS has yet to release actual output figures.
Traders and market observers predict actual production could be below 3 million tonnes due to adverse weather conditions from February to May.
Bangladesh imported 0.6 million tonnes of onions in FY 2023-24, down from 0.783 million tonnes in the previous year. Current retail onion prices are 84-110 per cent higher than a year ago, according to the Trading Corporation of Bangladesh (TCB).
tonmoy.wardad@gmail.com