All-time high onion, record low paddy prices mark 2019

FT ONLINE

Both consumers and farmers experienced major setbacks in the outgoing calendar year (2019) following all-time high onion prices as well as a record low paddy price in all seasons.

Prices of onion hit an all-time record high of Tk 260-270 a kg in November, while paddy prices fell to a record low of Tk 9.5-10 a kg in Boro harvesting season between April and July, according to the Trading Corporation of Bangladesh (TCB) and the Department of Agricultural Marketing (DAM).

Meanwhile, prices of 58 essential commodities under 16 categories witnessed a medium to a massive hike in 2019 compared to those of 2018, according to the TCB.

The TCB data showed that prices of most essentials, including flour, pulses, edible oil, spices, beef, mutton, fish, poultry meat, sugar and potato etc, showed a 3.0 percent (coarse flour or atta) to 173 percent (onion) hike on an average in a year.

On the other hand, the DAM data showed that paddy prices fell to record low both in Boro and Aman season in 2019. The prices were Tk 380-400 a maund in Boro season and Tk 520-600 a maund in this ongoing Aman harvesting season.

Agricultural Research Foundation (ARF) and Bangladesh Agricultural Farm Labour Federation (BAFLF) reports showed that a paddy farmer incurred Tk 3,500-5,500 loss at per bigha (33 decimals) of land this year, both in Boro and Aman harvesting seasons.

Market observers urged the government for compensating farmers with direct cash subsidy as well as raising market monitoring to help the limited-income group of people buys essentials at their affordable rates.

An unprecedented rise in onion prices marked the year 2019. The local onion market started becoming volatile with an imposition of ban on onion export by neighbouring India on September 29.

The onion prices rose gradually between October and November, and ultimately reached an all-time high of Tk 260-270 a kg in Mid-November.

Consumers Association of Bangladesh (CAB) secretary Humayun Kabir Bhuiyan said lack of market monitoring and appropriate data on local onion stock along with a delay in sourcing the spice from other countries caused such an exorbitant price hike.

Apart from onion, prices of most essentials witnessed an illogical hike in 2019 due to poor monitoring and apathy of the Ministry of Commerce and other agencies concerned.

He also said a large number of people from the low-income group might fall further into poverty trap amid the essentials' skyrocketing trend in the market.

The prices of commodities might rise further in the coming calendar year (2020) if the government does not tackle the evil syndicates of traders in the market of essentials, he added.

However, onion prices started declining from the first week of December with the beginning of local seed onion harvest.

The current price of local onion is Tk 90-110 a kg, which is still 173 percent higher than that of a year ago.

Meanwhile, prices of sugar and edible oil witnessed a notable hike in the last quarter of the year, which traders concerned attributed to higher taxes and VAT on the items from their import to marketing levels.

Powdered milk prices increased by 6.0-8.0 percent, as the government raised its import duty, according to the TCB.

Prices of atta and flour (maida) showed a notable hike despite the fact that prices of wheat showed a static trend for the last six months.

Vegetable prices remained much higher across the year, as most of the produces were sold between Tk 50 and Tk 140 a kg.

Potato prices increased by 15-22 percent in the latter part of the year compared to that of a year ago, the TCB data shows.

The year 2019 started with a depressing note for the farmers, who grew onion, potato, rice, wheat and maize last season.

Onion prices reached an all-time high in November. But it was traded at only Tk 14-20 a kg at farm level in the January-April period, forcing farmers to incur a huge loss.

Farmers sold potato at Tk 4.5-7.5 a kg in the peak harvesting period between February and April, which was lower than their production cost of Tk 5.0-8.5 a kg, according to the DAM.

Its data also showed that growers sold maize at Tk 10-12 a kg in 2019 against their production cost of Tk 12-15 a kg.

"Local traders even exported 0.3 million tonnes of maize in 2019, but farmers got nothing," said the DAM assistant director T M Rashed Khan.

Wheat farmers incurred double losses - for low market prices and crop loss due to blast attack in many places - in the outgoing year.

He further said paddy prices fell to a record low of Tk 9.5-10 a maund in Boro season in April-July period against the production cost of Tk 20-22 a kg.

Most of the paddy varieties are now selling at Tk 13.76-15.00 a kg based on varieties in this Aman harvesting season, against their production cost of Tk 19-21 a kg.

Only the farmers, who grew minor crops, like - garlic, ginger, tobacco, oilseeds and vegetables etc, got some profits in 2019, he noted.

The Centre for Policy Dialogue (CDP) in its study, published in July 2019, recommended a cash incentive of Tk 5,000 for every farmer, who suffered a loss due to low paddy prices in Boro season.

Toufiqul Islam Khan, a senior research fellow of the CPD, said Boro harvest was not profitable for farmers due to unexpected low prices against higher production cost and lack of buyers.

In the given situation the government should consider providing a cash incentive of Tk 5,000 this year to each of the 18.2 million farmers (agricultural input assistance cardholders) in absence of any crop insurance scheme to offset the loss that they incurred from Boro cultivation.

He also said they are reviewing the condition of farmers in this Aman season, as they are also incurring a notable loss. It should be compensated to keep them engaged in farming in the next Boro season.

However, the Bangladesh Bureau of Statistics (BBS) estimated rice production in the fiscal year 2018-19 at an all-time high of 37.2 million tonnes.

The Bangladesh Institute of Development Studies (BIDS) Professorial Fellow M Asaduzzaman said both farmers and consumers suffered in the outgoing year.

Big importers and their allied traders cashed most benefits of the volatile onion market, depriving both producers and consumers.

He also said it is a good sign that the government is selling onion through its open market sale (OMS) scheme.

The government should also raise its stock of some other key essentials to provide those to limited-income consumers at subsidized rates.

Besides, the state-run TCB should be made more functional, so that its market operation could make a positive impact on the mainstream market, he opined.

The government has recently reduced the prices of DAP fertilizer, which is a good sign.

Apart from such indirect subsidy, farmers should be given cash subsidy, both for Boro and Aman seasons, to keep them in farming, which is a key challenge in the twenty-first century, he noted.

However, local farmers are in hope and fear regarding what is going to happen in the new year.

Many of them made a profit from onion farming in the outgoing calendar year, but most of them incurred loss amid persisting low prices of Aman paddy.

The low-income consumers, who went through bitter experiences throughout the year, are in a finger-cross situation, hoping that things will not be so harsh in the upcoming year