Indian onion prices drop as price floor for export removed

India’s withdrawal of the $550 per tonne minimum export price (MEP) and reducing export duty yesterday has started to impact kitchen markets in Bangladesh.
In Shyambazar, a wholesale market in the capital, Indian onion prices have dropped by Tk 4 to Tk 5 per kilogram (kg) compared to the previous day.
However, a wholesale trader at Karwan Bazar, one of Dhaka’s largest kitchen markets, reported that no new shipments of Indian onions arrived today.
The trader believes new consignments of the bulb will significantly affect market prices.
Mohammad Abdul Mazed, a wholesaler and general secretary of the Shyambazar Onion Wholesalers Association, said that Indian onions were selling for Tk 100 per kg yesterday, but today the price has dropped to Tk 95-96 per kg.
He added that India’s recent decision will likely lead to a Tk 10 to Tk 12 per kg reduction in wholesale onion prices in Bangladesh.
“A new consignment of onions will arrive tonight (Saturday night). From what I hear, onion prices are already decreasing,” said Mohammad Kalam Sheikh, another onion wholesaler from Karwan Bazar.
“If we can purchase at lower rates, consumers at the retail end will be benefited as well.”
According to data from the state-run Trading Corporation of Bangladesh (TCB), imported onions are currently being sold at Tk 100 to Tk 105 per kg at retail, down from Tk 100 to Tk 115 a week ago.
Almost ten months after banning the export of the kitchen staple, India on Friday scrapped the MEP and halved the 40 percent export duty imposed in May, according to a report by The Hindu.
This shift comes ahead of assembly elections in Maharashtra, India’s largest onion-producing state.
India had banned onion exports last December, fearing domestic shortages after a weak monsoon, according to the report. In March, the export ban was extended indefinitely, although some shipments were allowed based on diplomatic requests from certain countries.
Onion farmers in India became restless as the extended restrictions coincided with high global prices and strong demand.
In May, ahead of general elections in Maharashtra’s onion farming regions, the government moved onion exports from the ‘prohibited’ to the ‘free’ category but imposed conditions, including a 40 percent export duty and an MEP of $550 per tonne, The Hindu reported.
According to agriculture ministry, some 3.4 million tonnes of onions were produced in Bangladesh year, which is sufficient to meet domestic demand.
However, the ministry noted that an additional 600,000 to 700,000 tonnes would need to be imported due to post-harvest losses due mainly to inadequate storage facilities.
Traders in Dhaka’s Shyambazar market disputed the ministry’s figures, claiming that local production was 15 to 20 percent lower than estimated due to crop damage from adverse weather in February.