Strategic Procurement Aims to Support Farmers and Stabilize Retail Prices
The Indian government has successfully procured approximately 0.45 million tonnes of onions at prevailing market rates for the current financial year, with plans to reach a target of 0.5 million tonnes. This procurement is managed by agencies such as Nafed (National Agricultural Cooperative Marketing Federation of India) and the National Cooperative Consumers’ Federation of India. The average purchase price stands at Rs 25 per kilogram, a significant increase from the Rs 17 per kilogram observed in the previous fiscal year.
Strategic Use of Onion Buffer
The authorities are evaluating strategies for the optimal utilization of the onion buffer to ensure market price stability. This may include carefully timed releases to manage supply and demand dynamics. As the kharif onion sowing season begins in major cultivation states including Karnataka, Maharashtra, and Madhya Pradesh, aided by favorable monsoon conditions, the government is on track to meet its procurement goals.
For the kharif season, the targeted onion cultivation area is set at 0.36 million hectares, representing a 27% increase from the previous year’s 0.28 million hectares. The government’s proactive approach follows a successful procurement campaign last fiscal year, during which 0.64 million tonnes of onions were purchased and sold at a subsidized rate of Rs 25 per kilogram. This initiative was instrumental in stabilizing retail prices while ensuring that farmers received fair compensation.
Market Dynamics and Price Trends
Current retail prices for onions are around Rs 40 per kilogram. Retail inflation for onions has been in double digits since July 2023, with a year-on-year increase of 36.71% recorded in July. Wholesale prices in Lasalgaon, Nashik—a key onion market—are currently between Rs 2,500 and 3,000 per 100 kilograms, up from Rs 1,500 to 2,000 three months ago. This increase underscores the need for strategic interventions to stabilize prices and protect both consumers and producers.
