BTC suggests seasonal tariff on onion import

FT ONLINE

The Bangladesh Tariff Commission (BTC) has suggested imposing a duty on the import of onion during its harvesting time to ensure a fair price for the farmers.

Duty should be imposed during the January-April period, the harvesting time of the local onion, the BTC recommended in a report recently.

Even industry insiders said the government should impose a regulatory duty on onion import during the peak harvesting season to benefit local growers of the item.

They, however, said farmers get discouraged to grow such a perishable item if they do not get fair prices for their produce due to cheap imports.

"We recently submitted a report on production and market situation of onion and the next course of action," said BTC member Shah Md Abu Raihan Alberuni.

The "BTC has suggested the imposition of a seasonal duty on onion import from the peak January-April harvest time," he said.

Domestic onion producers are not getting a fair price. This demotivates the onion growers.

If farmers grow less, Mr. Alberuni explained, the country has to rely on onion imports.

"We've found it that imposing a duty on onion import during harvesting season would ensure a fair price for the locally produced onion."

On September 13, India raised the export price of onion to $850 a tonne, pushing up prices of the item in the Bangladesh market.

As such, onion prices rose up by Tk 20-25 a kg at the retail level here.

Later on September 29, India banned the export of all varieties of onion for an indefinite period, triggering a hike in prices of onion in the Bangladesh market.

Onion prices shot up to Tk 120 later in Dhaka city. However, onion prices have started coming down.

Traders said different varieties of onion were selling at Tk 80-90 a kg on Thursday from Tk 80-100 a week back.

The item was being sold at Tk 64-72 (imported) and Tk 76-82 a kg wholesale at Shyambazar and Karwanbazar the same day, according to trading sources.

The government is considering slapping duty to curb onion imports with intent to support the local peasantry, said a senior commerce ministry official.

"The BTC has recently given an overall report on onion to the commerce ministry," he added.

According to section 18 (2) of the Customs Act 1969, the government can impose as high as 25-per cent regulatory duty on onion imports, he added.

No duty is now imposed on onion imports by traders, but they have to pay value-added tax on the import of packed or canned onion up to 2.5 kg.

A BTC official said Tk 97,388 is needed to produce  56 quintals of onion on one acre of land. The production costs for a kilogramme of onion is Tk 17.38.

The selling price at farmers' level would stand at Tk 21, including a 20-per cent profit margin, he added.

More than 1.30 million families across the country are involved in onion farming covering an area of about 0.23 million hectares of land.

Official data shows Bangladesh produced more than 2.16 million tonnes of onion in fiscal year 2017-18. By a provisional calculation, over 1.9 million tonnes of onion were grown last season.

The government has set a target to produce 2.37 million tonnes this fiscal.

Some 1.0 to 1.1 million tonnes are imported every year to meet the demand for roughly 2.4 million tonnes.

But demand for the spice rises every year with rising population and multiple uses of the vegetable.

The country has to import onion due to a mismatch between annual demand and production. Import reliance varies from 25-35 percent of the total demand.

Some 25 percent of local onion and 12-15 percent of imported ones get damaged during processing.

The demand for the item rises before two Eids. After the two Muslim festivals, the volume of imports does not fluctuate largely.

Over 95 percent of onion is being imported from India. Industry insiders said the price of local onion largely depends on that of imported varieties.