E-Paper
Govt will buy 500,000 tonnes of onion to keep prices stable
The Union government will start procuring onions from farmers beginning April 1 at market rates to build an emergency reserve of 500,000 tonne for 2024-25
The Union government will start procuring onions from farmers beginning April 1 at market rates to build an emergency reserve of 500,000 tonne for 2024-25. The buffer will be used to ramp up supplies and keep prices stable, according to an official of the consumer affairs ministry.
Prices of onion can be highly volatile when supplies tend to run low during the annual summer lean season. Since it is the base ingredient of most Indian dishes and widely consumed, consumers are sensitive to a rise in onion prices relative to many other farm produce.
The government banned export of onion in December amid a price spiral due to lower supplies.
“The Union government has directed two state-backed food agencies – the NCCF (National Cooperative Consumers’ Federation) and NAFED (National Agricultural Cooperative Marketing Federation) -- to initiate procurement of 5 lakh tonnes of onion for the buffer requirement directly from the farmers as Rabi 2024 harvest started arriving in the market,” consumer affairs secretary Rohit Kumar Singh said. Procurement refers to the government’s purchases of farm produce for state reserves.
Onion harvested in spring is critical for country’s availability as it contributes 72-75% of India’s annual production. It is also crucial for ensuring year-round availability as it has a better shelf life compared to kharif onion and can be stored for supplies till December.
For the procurement, NAFED and NCCF will preregister onion farmers to ensure payments are transferred to their bank accounts directly, according to the government’s directive.
The department of consumer affairs had, through NAFED and NCCF, purchased about 600,000 tonne of onion during 2023-24 for the government’s reserves. These agencies then intervened in retail markets, selling the vegetable at a subsidized price of ₹25, when market rates had more than doubled due to a supply crunch in 2023. The buffer currently has just about 20,000 tonne and needs to be replenished.
“The timely intervention and calibrated release ensured stabilization of retail prices effectively without impacting farmer realization,” Singh said. The country is unlikely to lift the ban on overseas shipments of onion due to tight global supplies and lower output.
A global supply crunch and a dry spell induced by the El Niño weather phenomenon had prompted the government to take up policy measures to regulate onion exports during the year to March. These included a 40% duty on onion shipments imposed on August 19, imposition of minimum export price of $800 per tonne with effect from October 29, and finally an export ban with effect from December 8 to ease domestic prices.
Market watchers point to a familiar pattern in India’s onion price spirals. Retail rates soar every alternate year or so due to poor harvests. It’s not uncommon for prices to crash as well.
