India is set to begin onion procurement for the 2025-26 buffer stock under the Price Stabilisation Fund, aiming to prevent price surges during festive seasons. Led by Nafed and NCCF, the procurement targets 0.3 million tons of onions in response to increased production and decreased mandi prices, particularly in Maharashtra and Madhya Pradesh.
The procurement process will involve purchasing onions from farmers at market rates, with the buffer stock released when prices rise. Selected cooperative societies and farmers' producer organizations (FPOs) will provide storage, monitored with CCTV for transparency. Major procurement will occur in Nashik, Maharashtra, with additional operations in Pune, Ahmednagar, and select locations in Madhya Pradesh and Gujarat.
Last year, government agencies acquired onions at an average price of $0.35 per kilogram for the buffer. This year, they plan to procure 0.15 million tons each at lower market prices due to favorable production forecasts. Current mandi prices in Lasalgaon, Nashik, Maharashtra, range between $0.12 and $0.14 per kilogram, a 36% decrease from the previous year. The Department of Consumer Affairs reported modal retail prices at $0.24 per kilogram, while last year's buffer stock was sold at $0.42 per kilogram.
Jaydutt Holkar, director of the Agricultural Produce Market Committee (APMC) in Lasalgaon, emphasized the importance of purchasing onions at market prices to ensure farmers receive fair compensation. "For ensuring that farmers get remunerative prices, the government agencies must buy onions at market price in the mandi for the buffer, which is not being done for the last couple of years," Holkar stated.
The government has set an overall recovery rate for onions stored by FPOs and societies at 68% for this fiscal year. The agriculture ministry estimates the rabi production for the 2024-25 crop year at 22.7 million tons, 18% higher than the previous year, potentially easing market prices in the coming months.
Rabi onions, accounting for 70-75% of India's total production, help stabilize prices until the kharif crop arrives in October. Last year, lower domestic production and high international prices led to supply challenges. The government recently removed the 20% export duty on onions imposed last year.
Source: Financial Express