Government Buys 71,000 Tonne Onion Buffer To Stabilise Prices

The government has bought nearly 71,000 tonnes of onion so far this year for buffer stock, out of the total target of procuring 5 lakh tonnes for price stabilisation and it expects retail prices to ease with the progress of monsoon over most parts of the country.

According to data compiled by the department of consumer affairs, the all-India average onion retail prices stood at Rs 38.67 per kg on Friday, while the modal price was Rs 40 per kg.

Till June 20, the Centre has procured 70,987 tonnes of onion, as against 74,071 tonnes procured in the same period last year, a senior official in the department of consumer affairs said.

"The pace of onion procurement for price stabilisation buffer this year is largely comparable with last year, despite about 20% decline in estimated rabi production," the official said, adding that the government is on course to achieve targeted procurement of 5 lakh tonnes for price stabilisation.

The government will exercise the option of holding or releasing onions from the buffer in order to maintain stability in prices of onion, the official said. The procurement price is a dynamic one, linked to prevailing market prices.

The increase in prices of onion is on account of a shortfall in production in 2023-24 by about 20% each in Kharif, late Kharif and Rabi, over the previous year due to less rains in major producing areas, the official explained.

To control prices, the government has been taking measures in a graded manner, from August last year starting with export duty of 40%, followed by Minimum Export Price of $800 per tonne in October, 2024 and imposition of export prohibition from Dec. 8, 2023.

These measures have helped in maintaining domestic availability of onion at reasonably stable prices.

Export prohibition had been lifted from May 4, 2024 with MEP of $550 per tonne and 40% export duty in view of substantial stability observed in major mandis like Lasalgaon, in Maharashtra and the prospect of good Kharif production on the back of above-normal monsoon prediction this year.

"The prolonged and extreme heatwave condition currently prevailing over large parts of the country has impacted the production of green vegetables and led to increase in prices of vegetables including tomato, potato and onion," the official said, adding that the situation is expected to ease with the onset of monsoon over most parts of the country.

In March, the Union Agriculture Ministry released the data for onion production. As per the data, onion production in 2023-24 (First Advance Estimates) is expected to be around 254.73 lakh tonnes, compared to around 302.08 lakh tonnes last year.

This is due to a decrease of 34.31 lakh tonnes output in Maharashtra, 9.95 lakh tonnes in Karnataka, 3.54 lakh tonnes in Andhra Pradesh and 3.12 lakh tonnes in Rajasthan, the data showed.