New Delhi: The consumer affairs ministry has firmed up a plan to store onions at 90 locations across the country, so the produce can be quickly offloaded in markets when prices are high.
The plan is part of the government’s onion procurement set to start next week, two people said.
Private players will also be included for storage, and a tender will be floated shortly to finalize the agencies.
India maintains buffer stocks to stabilize prices of the kitchen essential, prone to volatility since about a quarter of the produce is lost post-harvest. Currently, stocks are ained at warehouses run by national agricultural cooperatives.
Onion prices have posed a headache for governments over the years, with the matter often figuring in election campaigns.
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Prices tend to rise during August and remain high through October and November, coinciding with the festive season. To address this, the government begins selling onions at subsidized rates of ₹35 per kg from August or September. In 2023, discounted onions were sold at ₹25/kg from August through stores and mobile vans operated by government agencies.
The government’s onion procurement target may surpass last year’s 470,000 tonnes, as onion production is significantly higher this year.
In the previous crop year, output was down by 20%. The procurement will be undertaken under the Price Stabilization Fund (PSF). Mint reported on the government’s plan to engage private firms for onion storage and transportation on 21 January this year.
“We have identified different places for storing onions based on demand patterns, so that in the event of a price rise, they can be immediately pushed into the retail market to help control the prices of this essential commodity,” said the first of the two persons mentioned.
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“The private players will enter into contracts with the government to supply onions to any designated location, with a cost recovery of 65–75%,” said the second person.
Onion recovery refers to the quantity of good onions left after storage. If recovery is 65–75%, it means 65 to 75 kg out of every 100 kg remain fit for sale.
“The point is to prevent spoilage of essential food items that influence retail inflation, especially when prices rise, by decentralizing storage instead of keeping everything in one place, like Lasalgaon in Nashik,” said the second person.
Among the 90 locations identified for onion storage are areas near Lucknow, Delhi-NCR, Ranchi, Guwahati, Chennai, Mumbai, Jaipur, Ahmedabad, Bhubaneswar, Bhopal, Srinagar and Raipur.
Currently, the onion buffer is managed by the National Cooperative Consumers’ Federation of India Ltd (NCCF) and the National Agricultural Cooperative Marketing Federation of India Ltd (Nafed) for a fee paid by the consumer affairs ministry.
“Procurement will be carried out by both government agencies and private players,” said the first person.
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Queries emailed to the consumer affairs ministry remained unanswered.
As per the Agriculture Ministry’s first advance production estimate of horticultural crops for 2024-25, onion production is expected to rise by 19% to 288.77 lakh tonnes in the ongoing crop year ending June 2025. Production stood at 242.67 lakh tonnes in the previous year. The crop year runs from July to June.
Retail inflation
India’s retail inflation eased in March to its slowest pace in over six years (since August 2019) on the back of lower food prices, government data showed.
Retail inflation, based on the Consumer Price Index (CPI), rose by 3.34% annually in March, lower than the 3.61% registered in February and 4.85% recorded in the year-ago period, according to data from the Ministry of Statistics and Programme Implementation (MoSPI).
Interestingly, food inflation eased in the month, rising 2.69% year-on-year, down from 3.75% in February and 8.52% a year ago.
As per the consumer affairs ministry data, the price of onion in Delhi is currently ₹30 per kg, down from ₹33 per kg last year. In Mumbai, it has dropped to ₹26 per kg from ₹34 per kg a year ago. Similarly, in Kolkata, the retail price has declined to ₹28 per kg from ₹32 per kg. In Chennai, prices have remained unchanged at ₹27 per kg. However, in Ranchi, onion prices have increased from ₹25 per kg last year to ₹27 per kg as of Thursday.
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Vinod Anand, an agricultural policy expert and member of a government committee on minimum support prices, said, “The move will ensure the availability of onions to consumers at peak-demand times at affordable rates. It’s an appreciable step, but the government should also make sure that farmers are not exploited by private firms. They (farmers) should be paid immediately after selling onions to them, and the best possible price should be given to them.”
The government procured 4.70 lakh tonnes of onions from the rabi harvest last year at an average price of ₹2,833 a quintal, sharply higher than the previous year’s ₹1,724. Buffer stocks were released to curb price surges, and export policies were calibrated to ensure domestic supply. Meanwhile, annual household consumption of onions in FY23 stood at 19.3 million tonnes.
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