Onion market becomes volatile

The country’s onion market has become unstable due to various reasons including production shortage, slow-moving policy of farmers, increase in prices due to many exchanges of hands and import halts.

The onion prices have increased by Tk 20-25 per kg in the last two weeks. According to Trading Corporation of Bangladesh (TCB), the price is currently 78 per cent higher than the previous year.

Consumers are worried about the increasing prices ahead of the upcoming monsoon and Eid-ul-Adha.

The Department of Agriculture Extension (DAE) officials, however, say that there is nothing to worry about although the onion production is slightly less this year. The country has produced onions according to the demand which will last till the next season, they said.

Meanwhile, Commerce Minister Tipu Munshi on Thursday said that if the price of onion increases abnormally, the government will allow import from India.

According to the DAE and farmers, the production cost of per kg onion this year was Tk 24-25. The farmers have to sell it for a minimum of Tk 30 per kg. However, since the beginning of the season till the end of last April, the farmers sold onions at Tk 17-19 per kg.

The DAE sources said incurring continuous losses, the farmers became cautious. They stopped selling onions at losses after the end of season. For this reason, the supply is a bit tight which resulted in the gradual rise in prices in major onion-producing regions including Faridpur. The price, however, is now decreasing again.

However, one of the main reasons behind the sudden increase in onion prices is the unusual increase in the barter process. There are at least three exchanges of hands from farmer to consumer level, each of which increases the price by a minimum of Tk 10.

According to the traders of different onion markets including Goalmari, Chitar Bazar, Moyndiya markets of Faridpur, the price of onion started increasing from the last week of April after Eid. Even a week ago, after an increase in prices, onion was sold for Tk 2,000-2,100 per maund or Tk 49-52 per kg. But currently it is being sold at Tk 1700-1800 per maund or Tk 42-44 per kg.

Low quality onions are sold at Tk 32-35 per kg.

The farmers said almost everyone’s onion yield is slightly lower than the previous year. Last year the yield was about 2 maunds per decimal but this year it dipped to 1-1.5 maunds, resulting in a slight decrease in the overall production. It happened due to heavy rain during the season, adverse weather and the import of low-quality seeds. However, the increase in transportation costs may be a reason behind the increased prices.

Mizanur Rahman, a farmer from Boalmari in Faridpur, said, “Those who cultivated with the imported seeds have seen a decrease in their yield. Hence, the production cost has also increased. But during the season, farmers sold in losses as they were in dire need of cash then. But now that the need for cash has somewhat reduced, they have stopped selling at losses.”

DAE Deputy Director and chief of Faridpur office Ziaul Haque told The Business Post, “The production cost for onions is Tk 25 per kg. In that case, the farmer has to sell at a price of more than Tk 30 due to additional expenses. If it is sold for less, he will incur losses. The farmers are now in profits, which was not the case a few weeks ago.”

“Many farmers had to start cultivation lately due to cyclone Sitrang. Those who used imported seeds faced problems. Overall, the yield of murikata onion has decreased slightly. But the hali onion which we are currently eating is yielding normally. As a result, there should not be a shortage,” he added.

Haji Chunnu Molla, a farmer from Moyndia in Faridpur, said, “I cultivated onions on a total of 135 decimals of land. About Tk 1 lakh has been spent on labour. The production was 150 maunds. So, the cost of production is Tk 17 per kg. Along with this, if we consider our own labour, losses due to spoiled produce, storage costs and transport fare into account, the selling price should be at least Tk 30 per kg.”

“The farmers who cultivate on leased land have more expenses because the land owner takes away one-third of the harvest. In that case, the initial cost of the farmer is Tk 25 per kg,” he added.

DAE Director General Badal Chandra Biswas told The Business Post, “Although the onion production is slightly less than the target, there is enough to meet the country’s demand. The shortage could happen towards the end of the year but the next season’s harvest will start entering the market by that time.”

“The production target of onions was 36 lakh tonnes but the production was a little over 34 lakh tonnes. This time our post-harvest loss is less. As a result, our needs for the year will be fulfilled and there is no need for import,” he added.

He said, “If the prices do not increase a little, the farmers face losses. Therefore, I think that we should also try to ensure that the farmer can sell onion above the production cost.”

Difference in prices

Onions are sold at an average of Tk 32-44 in the wholesale depots but the prices increase by more than Tk 10 per kg in a single exchange of hands. This Monday and Tuesday, onions were sold at Tk 52-54 per kg in the Karwan Bazar wholesale market. But in various markets including Segunbagicha, Rampura, Maniknagar in the capital, local onions are being sold at Tk 60-65 per kg.

According to the TCB, local onions were sold at Tk 30-40 per kg in the same period of the previous year, which means that the prices have increased by 78 per cent.

Md Khalil, a wholesale onion trader at Karwan Bazar, said, “Onion import is halted and the supply of local onions has also reduced. So the price has increased. But we sell onions on a commission basis. After the farmers sell it to the local wholesalers, they then transport it all to Dhaka and store it. We then sell the products and get only Tk 1 commission per kg. The retailers of Dhaka then buy from us and sell in different markets. If you are outside Dhaka, another exchange of hands happens.”