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Centre allots full onion buffer stock for retail as procurement lags
With a smaller buffer available, the government has decided to conserve stocks for direct retail intervention rather than release them in wholesale mandis.
The Union government will deploy its entire onion buffer stock through retail sales this year after procuring only about 120,000 tonnes — well short of its 200,000-tonne target — marking a departure from the past two years when it intervened in both wholesale and retail markets to contain prices, officials aware of the matter said.
The shortfall follows an unusually difficult procurement season, during which the Centre was forced to raise the Minimum Assured Procurement Price (MAPP) six times as firm market prices discouraged farmers from selling to government agencies. Officials also cited operational challenges involving procurement and storage agencies that slowed purchases.
With a smaller buffer available, the government has decided to conserve stocks for direct retail intervention rather than release them in wholesale mandis. “We are planning to start sales by end-August or early September, depending on when onion prices begin rising in key consumption centres,” a senior government official told HT, adding that no final date has been fixed.
The Centre believes the strategy will be sufficient because onion prices have remained broadly stable at around ₹50 per kg in retail markets despite concerns over lower production and delayed kharif planting. Officials expect prices to remain largely under control until the end of September, when delayed arrivals of the kharif crop could tighten supplies during the annual lean season.
According to officials, around 100,000 tonnes of the onions procured this season will eventually be available for market intervention after accounting for storage losses and operational requirements. At a release rate of about 800 tonnes a day, the government estimates it can continue subsidised sales for nearly 125 days, enough to bridge the period until fresh kharif arrivals gather pace.
Meanwhile, the year-on-year consumer price inflation in onion has risen to 22.5% in July, up from the 4.7% it stood at in June.
The onion buffer, maintained under the Price Stabilisation Fund, is used to cool prices by releasing subsidised stocks during periods of tight supply. Last year, the Centre sold buffer-stock onions at ₹24 per kg through NAFED and NCCF retail outlets across major cities, including Delhi-NCR, Mumbai, Ahmedabad, Chennai, Kolkata and Guwahati. Officials said this year’s sales will similarly be calibrated to price movements in major consumption centres.
“Major challenge here is storage and then infusing in market. Selling in retail has direct effect on consumer prices and hence effective,” said Madan Sabnavis, chief economist at Bank of Baroda.
