The Indian decision to increase the minimum export price (MEP) of onion has started having its impact on the market in Bangladesh.
Prices of the essential item increased by Tk 1.5-3.0 just in two days, traders in the city markets said.
Experts, however, said market monitoring should be stringent following the Indian move as there was no shortage of the item following a bumper local production.
The Indian government on June 26 last raised the MEP of onion to $ 425 per tonne from $ 250 per tonne earlier to keep the price within the reach of their people, the Economic Times reported.
The report also said production of Indian onion declined to 18.92 million tonnes in the FY '15 from 19.4 million tonnes in the FY'14, which also forced the government to take the decision as a precautionary measure to keep prices of the item within the limit.
However, despite a good local production, prices of onion had been increasing in Bangladesh since the beginning of the holy month of Ramadan.
According to the Department of Agricultural Marketing (DAM), imported Indian onion had been selling at Tk 32-34 per kg at the wholesale level and Tk 38-42 at the retail level while the local varieties were selling at Tk 38-40 per kg at the wholesale level and Tk 44-46 per kg at the retail level since the beginning of Ramadan, up by Tk 5.0-7.0 from the pre-Ramadan levels.
However, the prices of onion further increased by Tk 1.5-3 per kg both at the wholesale and retail levels just in the last two days at Shyambazar, Karwan Bazar, New Market, Hatirpool, Palashi Bazar and Nawabganj Bazar in the city.
The local varieties were traded at the minimum price of Tk 1,640 per maund (40 kg) at Shyambazar Tuesday up from Tk 1570-1580 per maund two days back, Motaher Hossain, a wholesaler at the market said.
According to Mr Hossain, the Indian Nashik variety of onion was trading at Tk 1440-1460 per maund on the day up by Tk 60-80 in just two days.
Narayan Chandra Saha, proprietor of Nabin Traders at Shyambazar and also a spice importer, told the FE that prices of onion changed slightly over the last ten days.
He said prices of the item declined by Tk 1.0-2.0 per kg one and a half weeks back at Shyambazar. But they increased by Tk1.0-1.5 per kg recently.
He said the slight price movement was a common phenomenon in the raw agro-product market and it had no link with the recent MEP hike by India.
"Yes, prices of imported varieties will rise, but it would take time as traders have to sell out their stocks first," he said.
When asked, senior secretary to commerce ministry Hedayet Ullah Al Mamun told the FE that there was no chance of further increase in prices as there was a bumper local production in the FY '15.
He said the local traders had also imported a large quantity, which would rather be wasted if not sold timely.
He said any move to create an artificial crisis would be dealt with in an iron hand.
The Department of Agriculture Extension (DAE) data showed that onion production surpassed the mark of 1.68 million (16.8 crore) tonnes in the just ended financial year against 1.65 million tonnes in the FY'14.
Consumers Association of Bangladesh (CAB) secretary Humayun Kabir Bhuiyan told the FE there was no chance of any shortage before the September-October period following a bumper production and a large quantity of import over the last four months.
He also emphasised strict market monitoring by the government to tame unscrupulous traders and their syndicates ahead of the upcoming Eid festival.
Bangladesh is now the key onion importer from India with 6.0-8.0 million tonnes of annual import.
Some local importers said India was taking this advantage to raise the prices.
An importer said: "The Indian government hiked the MEP by 70 per cent recently when prices of onion were only Tk 19.5-21 per kg (16-17 rupees) at different key markets in India."
"But, the decision of India will see an increase in smuggling of the spice item into Bangladesh from the neighbouring country," he said.
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