Agri Biz
Onion Prices Double Overnight as India Extends Export Restrictions
Following India’s decision to extend export restrictions on onions, the price of onions in Bangladesh nearly doubled overnight. On Saturday morning in the capital, local onions were being sold at Tk220, compared to Tk140 the previous day. Meanwhile, imported or Indian onions rose to Tk200 from Tk120-140 on Friday.
The Indian Ministry of Commerce and Industry’s notification on December 7 extended onion export restrictions until March 31 next year, setting a minimum export price at $800 and imposing a 40% export duty. The rationale behind this move is to enhance domestic availability and regulate prices. The notification outlines three conditions under which onion consignments can still be exported.
Badda grocery shop seller Mizan noted that onion prices surged in the wholesale market after India’s export ban, making onions both expensive and scarce. Due to the high purchasing rates, selling local onions below Tk220 became impractical for many sellers.
Shariful Islam, a vendor at Dilu Road, highlighted the impact on his daily procurement, stating that due to soaring prices, he could only acquire 15 kg of onions instead of the usual 1-2 sacks. Consequently, local onions were retailed at Tk220, and Indian imports at Tk200, compared to approximately Tk140 just a day earlier.
The commerce ministry in Bangladesh had announced price caps for essential commodities on December 7, including potatoes at Tk35-36 per kg, local onions at Tk64-65 per kg, and eggs at Tk12 per piece. Additionally, fixed prices were set for bottled soybean oil at Tk169 per litre, non-bottled soybean at Tk149, and palm oil at Tk124.
The Indian export ban follows a series of measures, including a 40% duty imposed by the Revenue Department of the Indian Finance Ministry on onion exports to Bangladesh in August. The Indian government also set a Minimum Export Price of $800 per tonne, effective from October 29 to December 31.
Bangladesh had previously halted onion imports from India in May 2022 to support local farmers, resulting in increased onion prices. India’s 2020 export ban on most onion varieties was implemented to control rising domestic prices following flood-related production losses.
Despite Bangladesh’s annual onion production exceeding 3.5 million tonnes, the country relies on imports due to significant wastage caused by storage and management challenges, amounting to 25% or more of total onion production.
Cyclone Remal has inflicted severe damage on crops across 45,590 hectares of land in the Khulna agricultural zone, causing losses worth Tk 180.24 crore, as reported by the Directorate of Agricultural Extension (DAE) in Khulna.
According to Mohon Kumar Ghosh, Additional Director of the DAE Khulna Zone, 44,148.95 hectares of farmland suffered partial damage, while 1,450.90 hectares were completely destroyed in the four affected districts: Khulna, Bagerhat, Satkhira, and Narail.
In Khulna district, Cyclone Remal affected 3,565.65 hectares of cropland belonging to 13,796 farmers, resulting in losses estimated at Tk 42.98 crore. Bagerhat district witnessed damage to 12,611.50 hectares of cropland from 39,465 farmers, with losses amounting to Tk 97.36 crore. In Satkhira, 659.7 hectares of cropland owned by 12,156 farmers were affected, incurring losses of Tk 24.42 crore. Narail saw damage to 28,763 hectares of cropland from 8,620 farmers, with estimated losses of Tk 15.47 crore.
Speaking to BSS, Mohon Kumar Ghosh highlighted the extensive damage caused by Cyclone Remal to the southern coastal areas, particularly croplands. The affected crops include jute, Aush seedbed, aush cultivated land, groundnut, chili, bona Aman, ginger, turmeric, summer melon, litchi, mango, papaya, betel nut, sugarcane, banana, winter maize, sesame, and various Kharif season vegetables such as tomato, mung bean, and banana.
Following directives from Prime Minister Sheikh Hasina, efforts are being made to support the affected farmers. “We are working tirelessly to help the helpless farmers recover their losses,” Ghosh said, adding that the government is providing incentives and regular counseling and supervision at the field level to aid recovery.
In the coming months, the affected farmers will continue to receive various forms of government support to mitigate the impact of Cyclone Remal.
The Bangladesh government has allocated Tk 385 billion for agricultural development over the next three years, aiming for an average annual growth of 10% in the sector by the 2025-26 fiscal year. This investment underscores agriculture’s crucial role in ensuring food security and driving equitable economic growth, according to the ‘Medium Term Macroeconomic Policy Statement (2023-24 to 2025-26)’.
Despite its declining share in GDP, agriculture remains vital for the livelihoods of the majority, especially in rural areas. To enhance food production and resilience against challenges, the government’s strategy includes developing high-yield and adversity-tolerant crop varieties, expanding mechanization and irrigation, and improving access to affordable inputs such as seeds and fertilizers.
The policy document highlights various initiatives aimed at modernizing agriculture through technology. These include prioritizing surface water over groundwater for irrigation to conserve resources, integrating renewable energy solutions, and utilizing remote sensing for crop monitoring.
The government continues to support the sector through subsidies, financial incentives, and technological innovations to establish a sustainable and self-reliant agricultural framework.
The fisheries and livestock sub-sectors also make significant contributions, accounting for 2.53% and 1.91% of GDP, respectively, while providing essential protein sources and livelihoods for over 12% of the population. Achievements in these areas include achieving self-sufficiency in fish, meat, and egg production, with milk production expected to follow suit. Moreover, these sectors play a crucial role in foreign exchange earnings through exports.
Looking ahead, the Ministry of Livestock and Fisheries plans to launch development projects to enhance production capacities, adopt advanced management technologies, and improve conservation efforts, particularly for young hilsa fish (‘jatka’).
Water resource management is another focal point, given its importance for sustainable agriculture. Initiatives are underway to improve surface water availability by excavating water bodies and enhancing coastal afforestation to secure equitable water shares from transboundary rivers.
With climate change posing significant economic risks, projected to reduce GDP by 6.8% by 2030, the government has prioritized comprehensive strategies to mitigate these impacts. The Mujib Climate Prosperity Plan aims to equip vulnerable sectors and communities with tools to enhance resilience and stability against climate-related disruptions.
Through these multifaceted efforts, Bangladesh is taking decisive steps to safeguard and advance its agricultural heritage amidst evolving global challenges.
The International Finance Corporation (IFC) is investing US$30 million in Pran Dairy Limited (PDL) and Habiganj Agro Limited (HAL), both part of the PRAN Group, a leading player in the food and beverage industry (F&B) in Bangladesh. This investment aims to support severely impacted businesses, particularly those reliant on imports for raw materials. The goal is to enhance the resilience of the food processing market, create jobs, foster gender diversity, and strengthen the economy.
This marks the first time IFC’s USD term loans will be utilized for working capital purposes in Bangladesh. These funds will enable PDL and HAL to sustain their operations, increase exports, and preserve over 30,000 jobs, as stated in a press release today. Additionally, IFC will assist PRAN Group in enhancing women’s participation and inclusion in the workplace through relevant policies and practices. The F&B sector plays a crucial role in Bangladesh’s economy, accounting for about 13 percent of manufacturing production value and employing 19 percent of the industrial manufacturing workforce, with a projected compound annual growth rate of 12 percent.
However, challenges such as foreign exchange shortages, high energy prices, and power shortages have disrupted the import of raw materials and constrained local commercial banks’ lending capacity. In response, IFC’s longer-term US dollar financing aims to improve access to foreign exchange, helping Bangladeshi companies navigate the crisis.
Uzma Chowdhury, director (Finance) of PRAN-RFL Group, emphasized the importance of regular access to US dollars for a net importer like PRAN Group. Given the current shortage, accessing USD funds for working capital has been challenging. IFC’s provision of scarcely available US dollar working capital will ensure the long-term stability of the company’s operations and contribute to the country’s economic stability.
As part of its advisory services, IFC will also support PRAN Group in developing the company’s smallholder sourcing supply chain in Bangladesh and identifying opportunities to decarbonize its agro-processing operations, among other initiatives.
Martin Holtmann, IFC country manager for Bangladesh, Bhutan, and Nepal, reiterated IFC’s commitment to supporting clients during crises. He stated that IFC’s financing aims to alleviate the lack of access to foreign exchange while promoting private sector growth in Bangladesh. This investment is expected to enhance food security, prioritize support for strategically important industries, diversify Bangladesh’s export base, create jobs, expand market opportunities, and enhance economic resilience.
Since 2010, IFC has invested over US$3.8 billion to help the private sector grow in Bangladesh.
