Taming onion price spiral

The sudden rise in the price of onion has started to send shockwaves across the country. Onion, the most sensitive of all kitchen market items, has the 'legacy' of influencing not only economics but also politics. It is said that the current shoot-up of onion prices all over the country is an after effect of the restriction imposed on onion exports by the government of India. Observers believe that the connection, for the most part, is dubious although there is no denying that stability of onion prices in Bangladesh is largely reliant on smooth and unhindered supplies from India. The government of India has explained that it has restricted export of onion by way of fixing the minimum export price to maintain stability in its domestic market as production of onion was affected due to untimely rainfall. It has increased the minimum export price of onion from US$ 425 a tonne to US$ 700 a tonne to ensure domestic supplies.
One has reasons to ask how the decision of the Indian government could so quickly affect the domestic market in Bangladesh. Price of onion in the local markets shoot up to Tk 90 a kilogram from Tk 60 immediately after the Indian restriction became known. Observers hold that there is no valid reason for the sudden hike as supplies currently available and those in the pipeline do not warrant any shortfall in near future. The country produced 1.93 million tonnes of onion this year against the total annual requirement of 2.2 million tonnes. The shortfall of 0.27 million tonnes should be made up from imports already in process. Given this reality, it is alleged that some traders, in the form of an unscrupulous syndicate, have manoeuvred the price hike with the sole objective of making windfall profit on the occasion of Eid-ul-Azha when demand for onion increases substantially. The alleged price manipulation has apparently been easy in the absence of government monitoring of the commodity market. It has been observed that this year, no such monitoring was in place until the onion price hike.
 The tendency to stock on onion by the traders, particularly the wholesalers, in the hope of maximising profit only increases public misery. Added to this is the fear of creating a scarcity in the market by smuggling out local varieties of onion. The fear that smuggling might further deteriorate the situation is there because of the fact that the production cost of locally-grown onion is much lower than its current price in India. The situation might worsen from what is now believed to be an artificial scarcity to a real one if measures to stop smuggling are not in place immediately. Besides, there is an urgency to expedite shipment of onion being arranged by the Trading Corporation of Bangladesh (TCB).