Government Buys 71,000 Tonnes Of Onions For Buffer Stock, Expects Price Relief

As of the latest data from the Department of Consumer Affairs, the average retail price of onions across India was recorded at ₹38.67 per kg, with a modal price of ₹40 per kg on Friday.

The central government has taken proactive steps to stabilize onion prices by procuring nearly 71,000 tonnes of onions this year, as part of its larger target to acquire 5 lakh tonnes for price stabilization measures. Despite a 20% decline in estimated rabi production compared to the previous year, procurement efforts have remained consistent, with 70,987 tonnes already secured by June 20th.

A senior official from the department highlighted that the procurement strategy remains on track, emphasizing the dynamic nature of procurement prices linked to prevailing market conditions. The shortfall in production for the 2023-24 season, particularly in Kharif, late Kharif, and Rabi crops due to inadequate rainfall in key producing regions, has contributed to the recent price increases.

To manage price volatility, the government has implemented a series of measures, including export duties and restrictions. Starting with a 40% export duty in August last year, followed by a Minimum Export Price (MEP) of $800 per tonne in October, 2024, and a complete export prohibition from December 8, 2023. These measures were gradually relaxed from May 4, 2024, onwards, aligning with improved stability in major onion markets like Lasalgaon in Maharashtra.

The current spike in vegetable prices, including onions, tomatoes, and potatoes, can be attributed to prolonged and severe heatwave conditions affecting agricultural productivity across the country. However, with the onset of the monsoon expected to alleviate these conditions, there is optimism for improved crop yields in the upcoming Kharif season.

The Union Agriculture Ministry’s data for 2023-24 estimates onion production at approximately 254.73 lakh tonnes, a decrease from the previous year’s 302.08 lakh tonnes. Major producing states such as Maharashtra, Karnataka, Andhra Pradesh, and Rajasthan have reported significant declines in output due to adverse weather conditions.

Looking ahead, the government plans to maintain stability in onion prices by strategically releasing onions from its buffer stock as needed. This approach aims to balance market forces while ensuring that consumers are shielded from excessive price fluctuations in essential commodities.