Relief for big onion prices as special commodity levy rate reduced

Relief for big onion prices as special commodity levy rate reduced

November 27, 2022   02:56 pm

The Food Policy Committee that met on November 24 has recommended to reduce the Special Commodity Tax (SCL) rate.

Accordingly, increasing the ability to buy big onions in the market will help to reduce the price of big onions.

The national requirement for big onions is about 300,000 MT per annum which is mainly fulfilled by imports (86%). Accordingly, the self-sufficient ratio amounts to 14%. The retail prices of imported big onions varied between Rs. 290 – Rs.390 and the price of local big onions varied between Rs. 340 – Rs. 400 per Kg as of the third week of November. 

(Department of Census & Statistics November 3rd week Colombo Prices). The average CIF of Imported big onions was Rs. 95.3 per kg in the third week of November and it has only shown a relatively modest increase since mid-August 2022.

The government increased the applicable SCL on imported big onions from Rs.10/- Kg to Rs. 50/- Kg from 22nd September 2022 onwards. 

Subsequently, the imports of big onions started to fall drastically. Imports fell from 27,889 MT in August to only 13,496 MT in November (till week 3). This drop in availability pushed up the price of imported big onions from about Rs. 175/kg in August to Rs. 328/kg in week 3 of November. Nevertheless, a sharp drop in price is evident from the 22nd of November to Rs 250/kg however, prices still remain high compared to the period leading up to the SCL increase.

It is important to note that the CIF of imported big onions has only increased slightly since August. Hence, the sudden hike in prices can be attributed to the increase in the SCL rate in September.

From the month of August, the import of large onions will be reduced by 1000 kg. The price (CIF value) has increased only marginally, and the reason for this sudden price increase may be the increase in the rate of Special Commodity Duty (SCL) in September.


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