The government is considering imposing regulatory duty (RD) at the rate of 20 per cent to curb onion imports with an intent to support the local producers of the key kitchen item.
"We're thinking of imposing duty to raise import price of the item in the interest of local farmers," said a senior official of commerce ministry.
"The Bangladesh Tariff commission (BTC) has recently submitted a report to commerce ministry as instructed earlier."
"We will also ensue that onion's supply chain is not disrupted due to the proposed duty on onion imports," the official mentioned.
When contacted, commerce secretary Md Mofizul Islam said the government's top priority is to protect the local peasantry.
According to section 18 (2) of the Customs Act 1969, the government can impose as high as 25 per cent RD on onion imports, he added.
No duty is now imposed on onion imports by traders, but they have to pay Value Added Tax (VAT) on the import of packed or canned onion up to 2.5kg.
According to a BTC official, around Tk 97,388 is needed to produce 56 quintal onion on one acre of land. The production cost of a kilogram of onion is Tk 17.38.
The selling price of the essential item at farmers' level would stand at Tk 21, including 20 per cent profit with production cost, he added.
On the other hand, the minimum price of imported onion per tonne was $173 to $214 for the past six months.
A kilogram of imported onion retails at Tk 14.53-the price less than the production cost of local onion, he explained.
The official said the price of imported onion per kilo would be Tk 18.05 if 15 or 20 per cent RD is imposed on onion import for protection of farmers.
The duty could be imposed only for the January-April period every year, he observed.
Official data showed the country produced more that 2.16 million tonnes of onion in fiscal year 2017-18.
The government has set a target to produce 2.37 million tonnes of onion this fiscal.
The annual demand for onion here is an estimated 2.4 million tonnes.
Over 1.30 million families across the country are involved in onion farming. More or less 0.23 million hectares of land are used to produce the item.
Onion production is rising locally, but the annual demand for it cannot be met due to rising population and multiple uses of the vegetable.
The country has to depend on imported onion due to a mismatch between annual demand and production.
Its import dependence fluctuates from 25 per cent to 35 per cent of the total demand.
Some 25 per cent and 12-15 per cent of onion are damaged in local production and imported onion respectively during processing the spice.
The demand for the item increases before Eid ul-Fitr and Eid ul-Azha.
After the two Muslim festivals, the volume of import of the kitchen item does not fluctuate largely.
Over 95 per cent of onion is being imported from India.
Industry insiders said price of local onion largely depends on that of imported varieties.
Prices of the item inflate on the local market if the export price is increased despite collection season.
Between the months of January and April is the collection season of the most important kitchen goods.
When contacted, Shambazar onion sellers association secretary Hazi Md Mazed said, "The government should impose duty on onion import during peak harvesting season so local growers could be benefited.
The government can impose duty for up to two months period tentatively, he exclaimed.
Onion farmers get discouraged to grow such perishable item if they do not get fair price of their produce.
Local onion sold at Tk 25-30 and imported varieties at Tk 22-28 a kg on February 22.
