The government has started procurement of onion from the farmers at market prices for creating a buffer for 2025-26 under the price stabilization fund.
Aimed at purchasing 0.3 million tonne (MT) of onion for buffers which would be offloaded in the market, when prices start to spike in festive season, the agencies – Nafed and NCCF – have commenced purchase operation recently.
So far two agencies have purchased 23,517 tonne of the key vegetable from farmers in Nashik, Maharashtra. Sources said in the current fiscal these two agencies are expected to purchase 0.15 MT the key vegetable each at significantly lower market prices because of higher production prospects.
Sources told FE that the government agencies have purchased onion at average price of Rs 16.75/kg so far from the farmers against the average prices paid of Rs 29/kg in FY25 for procurement of 0.47 MT of staple vegetable.
While a major chunk of onion this season would be purchased in Nashik, Maharashtra, purchase operations would be carried out in Pune and Ahmednagar districts along with few places in Madhya Pradesh and Gujarat.
In FY25, the government agencies had purchased 0.47 MT of onion. The agencies sold onion at a subsidised rate of Rs 35/kg from various retail outlets across the country after retail prices started to rise from September, 2025 onwards.
On account of a robust crop prospects, at present mandi prices of onion at Lasalgaon, Nashik, Maharashtra is ruling in the range of Rs 15 – Rs 16 kg, which is over 30% less than prices prevailed a year ago. The modal retail prices of onion according to the department of consumer affairs was Rs 25/kg on Friday.
Retail inflation in onion declined by 10.71% in May, 2025 on year.
“For ensuring that farmers get remunerative prices, the government agencies must buy onion at market price in the mandi for buffer which is not being done for the last couple of years,” Jaydutt Holkar, director, agricultural produce market committee (APMC), Lasalgaon, Nashik, said.
According to horticulture crop production estimates, the onion production in the 2024-25 crop year rose by 27% to 30.77 MT compared to previous crop year. “The estimated higher production this season is expected to further ease the market prices in coming months,” according to a recent official note.
The government had lifted the 20% export duty on onions imposed on September 13, last year, from April 1, 2025.
To ensure domestic availability, the government had taken several measures to curb export by means of duty, minimum export price and even to the extent of banning exports for almost five months, from December, 8, 2023 till May, 3, 2024.
India exported 1.14 MT of onion in 2024-25 while Bangladesh, Malaysia, United Arab Emirates, Sri Lanka and Nepal were the major export destinations.