Govt to import 1 lakh tonnes of onion soon

The government has decided to import one lakh tonnes of onion as soon as possible to rein in skyrocketing prices in the local markets, Commerce Minister Tipu Munshi told The Daily Star yesterday.

Import of the widely consumed vegetable has already begun and it will continue until the next harvesting season, mainly to ensure affordable prices for consumers, he said.

Supply shortages and disruptions in supply chains are the most common excuses coming up justifying the rise. This week the local variety sold at Tk 60-Tk 65 per kilogramme (kg) while the imported ones Tk 55-Tk 60.

Even a month ago the rate in Dhaka's kitchen markets was Tk 25-Tk 35.

In tune with the price hike, the state-owned Trading Corporation of Bangladesh (TCB) started open market sale (OMS) through trucks from Sunday offering each kg for Tk 30.

Despite the abnormal rise, the National Board of Revenue (NBR) in a circular yesterday maintained that it could not keep the commerce ministry's request to withdraw a 5 per cent duty on onion import.

In a letter to the NBR, the ministry had suggested that the tax administration withdraw the duty to encourage imports and thereby increase supply to bring down prices in the local markets.

However, the NBR declined, citing in the circular that the duty does not have any negative impact on prices.

The TCB has already started making purchases from local markets and areas bordering India to increase stocks meant for the OMS, said Munshi.

"We will also import onion from Turkey and other countries so that the price goes down in the local markets," he said over the phone. The TCB has even been suggested to make direct purchases from wherever it could.

Responding to a question, the minister also said the prices usually go up in domestic markets from September and it continues till December when the harvesting season begins.

September is the turning point because this is when the level of stocks starts receding, he said.

Last year, the TCB gradually imported 10,000 tonnes of onion starting from September to meet local demand. However, the state-owned agency had procured even more from local markets.

During that time, rich and influential local businesspeople were allowed to go for emergency imports while the TCB prepared to purchase those for sale in the local markets.

Last year, Bangladeshi consumers were compelled to give in to prices as high as Tk 250 per kg in the local markets due to an acute crisis resulting from India banning exports over the excuse of low production and crop damage for floods.

In the end, the government flew in imports to shorten the lead time to cool down the heat in the local markets.

The import cost per kg ended up reachingTk 250, since airlines are a highly expensive option for carrying goods in a short time.

However, the government set the selling price at a subsidised rate to bring back normalcy in the domestic markets.

The truck-based OMS will continue until harvests begin coming winter, according to a decision taken at the commerce ministry's taskforce meeting last week.

The meeting noted that as per market monitoring data, there was no reason for the sudden and abnormal price hike in the local markets, since there was an adequate stock and supply was normal.

A section of unscrupulous traders might have hiked the prices to do brisk business putting customers under strain which is a punishable crime, according to details of the meeting published in The Daily Star.

So the government will take tough action against traders found involved in artificially hiking prices in the local markets, the commerce ministry said in a statement.

The government also warned of stern action against persons involved in unlawful stockpiling with expectations of making a hefty profit. Profiteering by stockpiling or hoarding of essential commodities is also a punishable crime.

So the government has strengthened market monitoring so that the culprits are nabbed and punished, read the statement.