Traders reluctant to import onion for dollar appreciation

Traders show reluctance to import onion amid a record appreciation of US dollar as well as India's imposition of tectonic duty on its export.

Meanwhile, the price of the key kitchen spice has increased further in domestic market as local traders are cashing in on 'least import', insiders say.

The local onion price shot up to Tk 80-85 a kg on Sunday from Tk 70-75 a kg on Friday.

According to the Department of Agricultural Marketing (DAM) and the Trading Corporation of Bangladesh (TCB) data, onion witnessed a 23-28-percent hike in a month during the peak harvest and the primary trading period.

However, India withdrew its ban on onion export to certain countries, including Bangladesh, on May 4 last.

But, the neighbouring country also slapped a 40-percent export duty on the product on the same day, reported Economic Times.

It also fixed a minimum export price (MEP) as $550 a tonne to prevent any hike in the price of the spice in its domestic market.

A Dinajpur-based importer said traders became very enthusiast after hearing the news of the withdrawal of export ban by India.

Later, Indian exporters informed us that their government had fixed MEP and slapped higher duties which has made minimum price at $770 a tonne, he said.

Apart from this, US greenback was appreciated by Tk 7.0 per dollar on May 8 in Bangladesh, he added.

"If we import onion now, it would cost Tk 91-99 a kg if we could source a dollar in between Tk 117 and Tk 125," he said.

Although the onion prices have increased, local wholesale price is still below Tk 70 which is much lower than that of the possible import cost, the importer goes on.

The private sector will not import onion from India for now, he further said.

However, the Bangladesh government requested the Indian government in March last to permit 50,000 tonnes of onion export.

Later in the first week of April, India sold 1,650 tonnes of onion to Bangladesh under the G2G agreement.

The state-run TCB imported the onion for its open market sale (OMS) at a subsidised rate.

Meanwhile, an official at the Plant Quarantine Wing (PQW) under the agriculture ministry says private importers have collected import orders (IPs) to bring 0.246 million tonnes of onion in the last five weeks.

They (private importers) were yet to open any L/C, he said, adding that last import was done by the government agency TCB, amounting 1650 tonnes.

According to the PQW, traders got total IPs for 2.35 million tonnes of onion in the last one year while they could bring 0.719 million tonnes.

Of the imported onion, 99 per cent was brought between June and December last year.

Farm economist Prof Md Gazi MA Jalil said raising local production and its proper management should now be the main focus for the government for stability in the onion market.

The agriculture ministry claimed onion production was 3.6 million tonnes when maximum demand is 3.0 million tonnes, he added.

He suggested that local importers should be encouraged to bring onion from other countries than India to prevent sudden volatility in Bangladesh market.

"From our past experience over onion market, we can say that the Indian market is very uncertain as the country imposes ban or slaps duties all of a sudden," he said.

Imports should also be going on from alternative channels to reign over big traders who are now raising prices for lack of other options, he said.

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