The government has set a target of procuring 0.3 million tonne (MT) of onion from the farmers at market prices in the current fiscal for creating a buffer under the price stabilization fund (PSF).
This target for the volume of purchase this fiscal is lower than 0.47 MT of the onion purchased from farmers in FY25 for building buffer, which would be offloaded in the market when prices started to spike in festive seasons.
Sources told FE the government agencies – farmers cooperative Nafed and NCCF who had purchased onion at average price of Rs 29/kg in FY25 from farmers for the buffer, is expected to purchase 0.15 MT the key vegetable each at significantly lower market prices this fiscal.
Cold storage units close to consumption centres of onion will be allowed to keep 10,000 – 15,000 tonne of onion at buffer under PSF.
The agencies have floated tenders or expressions of interests for procurement of the key vegetable from the entities including cooperative societies, farmers producer companies, primary agricultural cooperative societies etc who would be purchasing onions from only pre-registered farmers mostly in Maharashtra and Madhya Pradesh.
Sources said after the shortlisting of entities purchase operations could commence by the first week of May.
Meanwhile with the arrivals of rabi crop gradually increasing and robust crop prospects, currently mandi prices of onions are ruling at Rs 1006/quintal, which is 36% less than prices prevailed a year ago.
The modal retail prices of onion according to the department of consumer affairs has dropped to Rs 25/kg at present from Rs 40/kg prevailed three months back.
To ensure that shortlisted entities have adequate storage facilities, only entities with 5000 tonne storage facility in Nashik, Maharashtra, the hub of wholesale onion trade, are eligible to participate in the tender process which would be scrutinised by an internal committee of the government agencies.
Last fiscal the agencies sold onion at a subsidised rate of Rs 35/kg from various retail outlets across the country after retail prices started to spike from September onwards.
In FY24, the agencies purchased 0.64 MT of onion from farmers with an average price Rs.1,724 per quintal for the buffer. Subsequently the agencies sold the onion at subsidised rate of Rs 25/kg.
As per the estimates of agriculture ministry, rabi production 2024-25 crop year (July-June) is estimated at 22.7 million tonne (MT), 18% higher 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 rabi onion harvest, accounts for 70-75% of the country’s total onion production, meets the domestic supplies and ensures stability in prices till arrivals of the kharif crops from October onwards.
Since April 1, the government has withdrawn the 20% duty on onion export imposed last year.
Retail inflation in onions rose by 19.435% in March, 2025 on year because of base effect.