The Financial Express

The same old tricks behind onion price hike

| Updated: October 15, 2021 20:57:11

The same old tricks behind onion price hike

An October explosion of onion price has now become a common phenomenon. Yet the skyrocketing of this item's price takes the consumers by surprise. After the record hike of the spice at Tk 250 a kilogram in 2019, it has not become as dear as in the previous two years yet but all the same the price is outrageously high. Within a week the price of this common vegetable cum spice shot up from Tk 40-45 a kg to Tk 70-80. The pretext as always is supply crunch. Why is the lean supply? Excessive rains and flood in the onion-growing northern districts, such as Bogura, of the country have been attributed to the shortage of supply. But the question is, do farmers have stocks of this crop right at this time of the year? With some rare exceptions most farmers have sold their onions beforehand. It is the hoarders who now control the warehouses of onions.

Clearly, the supply lines of onions have been manipulated with the sole aim of dictating market. Already, the hoarders/stockists and wholesale traders have been successful in their intrigues. Now the question is, how far will they be able to push up the price tag before the new crop start arriving in late November or early December? The hope expressed by the authorities concerned that the price of the item will come down within a month is based on weak grounds. That the commerce ministry has decided to waive 5.0 per cent import duty and is likely to increase the number of trucks for open market sale (OMS) from the Trading Corporation of Bangladesh (TCB) may not be enough to arrest skyrocketing onion price. In fact, traders will interpret the authority's assurance from their standpoint: before a month the government cannot procure large consignments from abroad and they can take full advantage of this.

This year onion, according to the official version, has a bumper harvest and the TCB has also arranged for a larger stock than that of the previous year. It has, moreover, started its OMS from early September. Even import of onion by private traders has been quite satisfactory. Yet scarcity of the item has been advanced as a cause for abnormal price hike. Can it be then that there is something wrong with the figure of local production? The country produced 2.55 million tonnes of onion as against its demand for about 3.0 million tonnes. But where things go wrong escapes most people's notice. About 25-30 per cent of the crop goes wasted for various reason. Thus the total amount comes down to 1.8-1.9 million tonnes and 1.1 million tonnes have to be imported.

Thus production figure can be highly tricky in calculating the total requirement. It is because of this, there is a need for monitoring the yield and make use of advanced technology for preservation of onion aimed at reducing post-harvest losses. So far as market monitoring is concerned, a lack of it is conspicuous not only in case of onion but     also for the entire range of commodity inflationary trend. Free market economy is OK but manipulative means to fleece consumers have to be dealt with iron hands.

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