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Demand and supply of onion in Bangladesh

Published : Thursday, 29 October, 2020 at 12:00 AM  Count : 1167
Abdul Quaiyum

Demand and supply of onion in Bangladesh

Demand and supply of onion in Bangladesh

Among the main spices crops, onion is one of the most important and essential in Bangladesh. It is used as salad while its stalk becomes green as well. The leaves of onion and its stem are full of Vitamin C and Calcium. Almost in every curry onion is used as a common spice. Sandy loams are good for its production as they contain low sulphur. Onion is mainly grown in Rabi (winter) season and harvested in the spring or early summer. China is the largest onion producer in the world with 26% and India produces 21% while Bangladesh produces 2% of world production yearly. Bangladesh made place on the list of top ten onion producing countries in the world four years ago.

Pabna, Faridpur, Rajbari, Rajshahi, Kushtia, Manikgonj, Jhenaidah, Magura and Madaripur cover almost 79 % of onion production areas and 81% of the total onion production. Onions can be grown from seeds, sets or transplants. The planting of sets and transplants can be beneficial because onions are ready to harvest one to two months earlier than onions planted by direct seeding.

Farmers use their own produced seed, local quality seeds, improved seed, HYV and Hybrid seeds returning different size of the onion bulb. The size of the onion bulb produced from Hybrid seed is bigger than that of others. Seeds were required about 1245 MT to cultivate 4,40,000 Acres of land in previous FY.  It is known that 90% of these were generated by farmers and rest by BADC along with other Private Companies.
The total cost for producing onion in an acre is the summation of cost incurred on using seed, seedlings, transplanting, land, labour seedlings, water, inputs and pesticides. Approximately, 2.83 kg seeds are required for cultivation of one acre land. Price of one kg of different varieties seeds were from Taka 1413 to Taka 7420 per kg in FY 2019. Using these seeds, farmers get different quantity of onion. Hence, calculating Benefit Cost Ratio (BCR) is greater than one tend to benefitted farmers continue the production of onion crop and less than one tend to looser resulting quit the production of the crop.

Total Revenue minus TC of production is Profit.  Produced onion bulb is sorted in to A, B, C categories and Total Revenue i.e. PQ is calculated. Through analyzing all aspects of producing onion it is observed that price of hybrid onion bulb is higher than price of farmer seed. Comparatively less cost is incurred in producing hybrid onion and BCR is high as well.

Since 90% of the seed requirements are generated by farmers, it is assumed that most of the onion bulb supplied in the market produced from farmer seeds. Eight sizes of onion bulb are available in Myanmar. But price of bigger one is higher than that of smaller one. It may be mentioned here that cost for producing one kg onion bulb was Tk. 20.64 in last FY and price per kg was taka 21. On the other hand, cost for producing onion bulb from hybrid was Tk.8.18, but price was about 27Tk.

There is some weight loss due to the high water content exists at the time of harvesting, harvest a bit early in fear of avoiding possible rain water intrusion, the drying up a few layers of skins at the upper level fallen, get rotten while in the farmer's house, during the transporting between farmers houses to the consumer reduces the quantity of onion produced. Farmers store part of the onion bulbs for cultivating onions through "Murikata" system and to produce seeds in the next season.

It is generally estimated that 10% to 12% of the total acreage is cultivated by bulbs (Murikata System) rather than from seeds. Therefore, the required quantity of bulb never comes to the market for sales. Farmers start onion cultivation in October which appears in the market in mid-December. Onion produced from seeds is harvested in March. 

Due to the availability of better seed and increased land use about 107% in 2019-20 compared with 2004-05, production and per acre yield increased by 226% and 57% respectively. By taking the average of the last 10 years it is observed that average uses of land is 3,97,923 Acre, average production 15,52,983 MT and average import 8,44,900 MT has been taken place. Production and Import makes the supply of onion in the market which may be considered as demand i.e. about 24 lakh MT.

Production of onion bulb takes place from December to May in the previous FY should meet the demand till November to the next FY, but showing that domestic production is unable to meet the demand, resulting to depends on import.  About 90% of the onion is imported from India due to which increases the export price or banned by them hampers the supply in Bangladesh market resulting to increase price.

In response to India's onion export ban, effort was made to import onion bulb from other country. But due to high transport cost and other reasons it was not possible to import onion adequately to meet the demand. Therefore, experience in the last couple of years has shown that imports of onion from sources other than India did not prove to be a permanent solution in ensuring adequate supplies and in tackling the crisis.

Increase production of onion by extending the use of land acreage and the quality of seeds may be the permanent solution. The quality of seeds means more yield, resistance to disease, tolerant of biotic and abiotic stresses. The more yield per acre means more of total production, less dependent on imports, stable supply, competitive price, more income for farmer, making more profits and the more land cultivation.

Increase in per acre yield requires make available improved, HYV or Hybrid seed to farmers.  As and when farmers will get better seeds, they will reduce the production of seeds resulting lands will be available to cultivate onions for the market. Besides, the summer varieties BARI-5, BARI-3 and BARI-2 can play a big role in making the country self-sufficient in onion. In this connection, BADC may take initiative to produce adequate seeds of summer onion.

It is known that some land in the North East especially in the Sylhet region remains uncultivated during crops season which may be used for onion cultivation. Sandy Char areas in the northern region have good potential to grow onion. Besides, Hybrid seeds can be distributed to farmers, since it has the high BCR resulting farmers can get high price. This will increase their income. Therefore, to increase land use in this FY quantity of seeds is required more than the used in previous FY. But it is known that this year there is a shortage of onion seed and thereby it is needed to ensure supply of quality seeds to farmers before the season starts.

Onions, fresh or chilled wrapped/canned up to 2.5 kg is imported under HS. Code 0703.10.11 and Total Tax Incidence (TTI) become 31% comprises by CD-5%, VAT-15%, AT-5% and AIT-5%. On the other hand, onions (other) are imported under HS.Code 0703.10.19 and TTI become only CD-5%.  In order to save consumer and farmers TTI-5% on importing onion can be remained from July to September of the FY. CD may be withdrawn during October to June.

Production of onion may be increased at the rate of 7 MT per acre through utilising more land and quality seeds. This would increase supply in the market tending to outweigh demand. Farmers will get more income on the one hand and consumer gets benefitted on the other. This tends to establishing onion processing industry as well.
The writer is former Member, Bangladesh Trade and
Tariff Commission

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