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What really caused the onion woes?

Experts blame it on inaccurate estimates of production, demand

Sohel Parvez
Inaccurate estimates of demand and production of onions as well as the failure of the government agencies to understand the gravity of the problem have pushed the price of the key cooking ingredient up to a record high and hurt consumers, said rights activists and analysts yesterday.
Prices of onion hit an all-time high of around Tk 250 a kg in the third week of November amid supply crunch, fueled also by the export ban slapped on September 29 by India.
Last week, it fell slightly to Tk 230-Tk 240 a kg in the retail market. Yesterday, a retailer in the city's West Tejturi Bazar said the price again shot up to Tk 250 a kg.
"It appears that there is a problem in estimates. If the statistics were correct, such crisis would not have happened. Either production is over-estimated or demand is under-estimated," said Consumers Association of Bangladesh (CAB) President Ghulam Rahman.
Since mid-September when India fixed the export price at $850 a tonne of the bulb and the subsequent ban, the commerce ministry of Bangladesh
has been
maintaining that annual domestic demand for onions was 24 lakh tonnes and 23.76 lakh tonnes were produced in fiscal 2018-19.
And, 30 percent of the
produce gets wasted naturally, according to the commerce ministry.
Based on the data, some government officials on several occasions told the media that there were adequate stock. However, the production estimate maintained by the ministry was 24 percent higher than the estimate of the Bangladesh Bureau of Statistics (BBS), the national statistical agency.
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The BBS estimated that onion production was 18.03 lakh tonnes in the last fiscal year, according to an official.
If the annual onion import, which is nearly 10 lakh tonnes, is considered, the discrepancy in estimates becomes clear.
At a press conference on Wednesday, the CAB said annual demand for onion would be around 30 lakh tonnes.
"Demand for onion is rising as people are consuming more vegetables and eating less rice," said Rahman, suggesting the government to revisit the estimates of demand and supply of essential commodities.
Economist Zahid Hussain said the government's estimate on the annual domestic demand for onion might be underestimated. The annual demand for the item might be 30-33 lakh tonnes.
"It seems that they did not pay adequate attention deriving estimate of demand. They could not understand the gravity of the situation. There might be some sort of complacence among officials and they did not take the issue seriously," said Hussain, also a former lead economist of the World Bank in Dhaka.
On September 13, India set the minimum export price to curb its shipments and help bring down soaring prices in the domestic market. Two weeks later, it announced a ban on exports with immediate effect, after extended Monsoon downpours delayed harvests and supplies shriveled.
India's move to restrict the export
of essential commodities like onion is not new.
"We had a bitter experience regarding rice in 2008 when India restricted shipment of the staple causing prices to shot up in Bangladesh,” Hussain said.
"The lessons are: we have to keep diversified sources open so that we can import faster when necessary and we have to have a contingency planning in advance."
The economist said market monitoring does not mean policing. The government should assume the role of a facilitator so that adequate information flows in the market to help the market function properly.
Hussain suggested easing procedures for imports and exports to facilitate faster trade and measures to increase yield of onions and developing storage facilities to reduce post-harvest loss.
"We have to develop our national capacity to produce our foods. Yields of onions are less than India and Pakistan while 20-40 percent of onions are lost in absence of proper storage facilities. We will not require imports if we could properly stock and increase yield," he said.
Hussain recommended creation of an open database on demand and supply of essential commodities that affect everyone irrespective of income.
"A hike in onion prices affect the poor. There is no alternative to monitoring the onion market regularly," said Nazneen Ahmed, senior research fellow at the Bangladesh Institute of Development Studies.
Locally grown onions meet 60-65
percent of the annual requirement, while the rests are imported, mainly from India.
As the country depends largely on Indian onion, the government should have followed the onion production trend in India long time ago and taken steps accordingly, she said.
"It is our fault," said Nazneen, who led a study on competition in Bangladesh's onion market in 2018.
She said August to November are the lean period for onion production as supply of locally produced onions decline with the passage of time.
She said the government should forecast local cultivation and production in the coming seasons and discourage imports so that farmers do not incur losses in the event of ample supply of the perishable.