The government will soon commence procurement of onion from the farmers at market prices for creating a buffer for the 2025-26 under the price stabilisation fund.
Sources told FE that the target is to buy 0.3 million tonne (MT) of onion for the buffer which would be offloaded in the market, when prices start to spike in festive seasons.
The sources said currently the storage facilities of shortlisted cooperative societies and farmers producer organisations (FPOs) are being checked by agencies — farmers cooperative Nafed and NCCF — for adherence to various protocols including provision of CCTV cameras and other facilities for ensuring transparency in the procurement and storage process.
While a major chunk of onion 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.
Sources said the government agencies had purchased onion at average price of Rs 29/kg in FY25 from farmers for the buffer, while 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.
On account of a robust crop prospects, at present mandi prices of onion at Lasalgaon, Nashik, Maharashtra is ruling in the range of Rs 10 – Rs 12 kg, which is 36% less than prices prevailed a year ago. The modal retail prices of onion according to the department of consumer affairs was Rs 20/kg on Sunday.
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.
“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, told FE.
The government has fixed overall recovery rates for onion for FPOs and societies who store the key vegetable on their behalf at 68% this fiscal.
As per the estimates of agriculture ministry, rabi production 2024-25 crop year (July-June) is estimated at 22.7 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.
“The emerging production and prices scenario came as a welcome breather for the country which had to grapple with the twin issues of lower domestic production and high international prices from August, 2023,” according to the note.
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.