To prevent volatility in onion prices, the government on Sunday increased the onion buffer to 0.5 million tonne (MT) from the current level of 0.3 MT, and stepped up the procurement of the staple vegetable. The move is aimed at ensuring that any spiralling of the retail prices in the coming months could be prevented with calibrated release from the higher stocks.
The department of consumer affairs directed agencies – National Cooperative Consumers Federation of India (NCCF) and the farmers’ cooperative Nafed to procure 0.1 MT of onion each to achieve the additional procurement target by purchasing the vegetable now and forthcoming kharif season from the farmers
The department has directed NCCF and Nafed to ensure calibrated disposal of the procured stocks in major cities.
The two agencies had procured 0.15 MT of rabi onion each during June and July from Maharashtra and Madhya Pradesh as part of the government’s buffer.
The decision to increase the buffer comes a day after the government had imposed an export duty of 40% on onion exports. The duty of onion shipment will be valid till December 31, 2023, the finance ministry had stated.
Officials told FE that the step would discourage onion exports and curb the recent spike in prices of staple vegetables.
Recently the consumer affairs ministry had decided to release 0.3 MT of onion in its buffer in a phased manner to curb spike in prices. An official statement said that onions from the buffer are also being made available to retail consumers at a subsidized rate of Rs.25/kg through retail outlets and mobile vans of NCCF from Monday.
Inflation in onion, which had been in the negative zone since September, 2021, rose to 11.72% in July while in June it was reported at 1.65%.
Retail prices of onion have started to rise for the first time in the last couple of weeks after nearly two years due to reports of sluggish kharif sowing on delayed arrival of monsoon in the key producing states of Maharashtra and Karnataka.
High moisture content in the stored rabi crops because of unseasonal rains in April in Maharashtra and Karnataka has reduced its shelf-life of the staple vegetable, causing fears of supply constraints by September.
According to the department of consumer affairs, the modal retail prices of onion rose from Rs 20/kg since the beginning of the year, to Rs 30/kg on Saturday. The rating agency Crisil in its report recently has stated that retail onion prices are expected to hit Rs 60-70/kg next month.
“Measures taken by the Government onion like procurement for the buffer, targeted release of stocks and imposition of export duty will benefit the farmers and consumers by assuring remunerative prices to the farmers while ensuring continuous availability to the consumers at affordable prices,” according to an official statement.
India exported a record 2.5 MT of onion 2022-23, which is an increase of 65% from the previous fiscal. Bangladesh, Malaysia, Sri Lanka and Nepal respectively had a major share in the onion exports in the last fiscal.
India is the biggest producer of onion and Maharashtra, Madhya Pradesh, Karnataka and Gujarat have more than 70% share in the country’s production.
The estimated production of onion during the 2022-23 crop year (July-June) declined marginally 31.01 MT against 31.7 MT reported in the previous year. The output of kitchen bulbs was 26.64 MT in 2020-21.