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Onion procurement lags after system overhaul
A major overhaul of India’s onion procurement system this year slowed government purchases for weeks despite an early start to stock-building, forcing authorities to relax quality specifications and repeatedly raise procurement prices to accelerate buying.
A major overhaul of India’s onion procurement system this year slowed government purchases for weeks despite an early start to stock-building, forcing authorities to relax quality specifications and repeatedly raise procurement prices to accelerate buying.
This has troubled the consumer affairs ministry so much so that the ministry had recently for the sixth time raised procurement prices to ₹23.35 per kg.
The government, as of July 7, had procured only around 13,000 tonnes of onion against a target of 200,000 tonnes, even though procurement began on May 15, a senior government official told HT on the condition of anonymity. However, after relaxing the quality grade norms, procurement rose to 115,000 tonnes as of Thursday.
According to officials, the slow pace was largely driven by changes introduced this year to curb irregularities in procurement and storage.
Until last year, procurement and storage were both handled by the National Agricultural Cooperative Marketing Federation of India (Nafed) and the National Cooperative Consumers’ Federation of India (NCCF) through local agencies. This year, however, storage responsibility was shifted to the Central Warehousing Corporation (CWC).
“CWC initially enforced quality norms very strictly and rejected a large quantity of onions offered at procurement centres. This affected procurement,” the senior official stated above said.
Consumer affairs secretary Nidhi Khare, however, told HT that the change was aimed at eliminating an inherent conflict of interest in the system.
“Till last year, both procurement and storage of onions were handled by Nafed and NCCF through local agencies selected by them. This had an inherent problem of conflict of interest. CWC has been roped in to handle storage primarily to resolve this issue,” Khare said.
The changes were introduced after repeated concerns over procurement irregularities. Officials familiar with the matter said issues ranged from middlemen inflating prices and only “on paper transactions” to genuine farmers being excluded from procurement operations.
The stricter scrutiny, however, coincided with quality challenges in this year’s crop. Unseasonal rains during harvesting in Maharashtra resulted in a larger share of onions with single skins, partial discolouration and sunburn damage, leading to higher rejection rates at procurement centres, Khare said.
Faced with poor procurement, the government was eventually forced to dilute its quality requirements. The government had initially allowed procurement only of Grade A onions, which are premium-quality bulbs suitable for long-term storage. But as procurement lagged, authorities eased the specifications.
“Slight relaxation has been provided in Grade A specifications and we call it Grade-URS (Under Relaxed Specification). Grade-URS is far superior to what is generally considered Grade B,” Khare explained.
Rising prices pushed onion inflation to 22.5% in July, up from the 4.7% it stood at in June.
