Govt adds 71,000 tonnes of onion to buffer stock, expects retail prices to ease as monsoon progresses

The government has bought nearly 71,000 tonnes of onion so far this year to add to its buffer stock. It has set a target of procuring 5 lakh tonnes of onion for price stabilisation and expects retail prices to ease as monsoon progresses over most parts of the country. 

Data compiled by the Department of Consumer Affairs showed the all-India average onion retail prices stood at Rs 38.67 per kg on June 21, while the modal price was Rs 40 per kg. 

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

“The pace of onion procurement for price stabilisation buffer this year is largely comparable with last year, despite about 20 percent 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 procurement price is linked to prevailing market prices. 

A shortfall in production of onion in 2023-24 by about 20 percent each during Kharif, late Kharif and Rabi crops over the previous year due to less rains in major producing areas has led to a spike in the prices. 

The government has adopted a graded response to rein in prices from August last year starting with export duty of 40 percent, followed by Minimum Export Price (MEP) of $800 per tonne in October 2023 and imposition of export prohibition from December 8, 2023. 

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

It is to be noted that ban on onion exports was lifted on May 4, 2024, with MEP of $550 per tonne and 40 percent 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. 

In March, the 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. 

The drop is attributed to 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.