The retail onion prices in major cities — Delhi, Mumbai and Chennai — have declined in the range of 8-10% since the government started to sell the key vegetable at subsidised rate last week through retail intervention, according to a senior official.
Officials said that the onion prices are unlikely to increase in coming months because of higher kharif crop sowing and the government’s move to offload onion at subsidised rate of Rs 35/kg through retail outlets from its stocks since September 5.
“Enhanced retail and bulk sale strategies along with the available buffer stock of 0.47 million tonne (MT) of onion and increased kharif sowing area as compared to the previous year, onion prices will remain under control in coming months,” according to a statement of department of consumer affairs on Saturday.
According to official data, average retail prices of onion in Delhi currently have declined to Rs 55/kg from Rs 60/kg in a week while prices in Mumbai and Chennai have declined to Rs 56/kg and Rs 58/kg, respectively from Rs 61/kg and Rs 65/kg.
An official with the department of consumer affairs told FE that kharif harvested onions have started to arrive in the market in Karnataka while new crops from Maharashtra, Madhya Pradesh and Rajasthan are likely to enter the market by the middle of next month.
There is an expectation of a bumper harvest given the higher sowing.
So far, 0.36 million hectare (MH) of kharif onion has been sown as per data till September 9, against 0.22 MH reported last year during the same period.
The government on Friday decided to abolish minimum export prices (MEP) for onion and also reduced the export duty on the staple vegetable to 20% from 40% on robust kharif prospects.
According to the agriculture ministry, output of onion in the 2023-24 crop year (July-June) was estimated at 24.21 MT, a decrease of 20% compared to previous year.
Retail inflation in onion was 54.04% in August on year because of lower production.
Government agencies such as farmers’ cooperative Nafed and NCCF have procured 0.47 MT of onion for the price stabilisation fund buffer from the rabi 2024 harvest this year from farmers, against 0.3 MT purchased in the previous year.
In addition, 3.8 MT of onions are still stored by private traders and farmers.
The two agencies have purchased onion from farmers at an average price of Rs 28.33/kg this fiscal, compared to procurement of staple vegetables at an average price of Rs 17.24/kg in FY24.
“Keeping food inflation under control is a priority of the government, and various direct interventions through price stabilisation measures have played an important role in bringing down inflation in recent months,” food minister Pralhad Joshi had said after launching subsidised retail sale of onion at Rs 35/kg from the government’s buffer last week.