Hike in onion prices: Centre to release stocks from onion buffer of 3 lakh metric tonnes

Amid the buzz that the price of quality onions is likely to nearly double to Rs 55-Rs 60 per kg by next month, the Centre on Friday said it has decided to commence the release of stocks from the onion buffer of 3 lakh metric tonne created this year.

The Department of Consumer Affairs said it has decided to release the onion stocks by targeting key markets in states or regions where retail prices are ruling above the all-India average and also where the rates of increase in prices over the previous month and year are above the threshold level.

Disposal through e-auction and retail sales on e-commerce platforms are also being explored. 

"The quantity and pace of disposal will also be calibrated with the prices and availability situations with the objective of making onion available to consumers at affordable prices. Apart from market disposal, it was also decided to offer to the States at discounted rates for sale through retail outlets of their consumer cooperatives and corporations," the department said in a statement.

Onion prices jumped from Rs 1,200 per quintal on August 5 to Rs 1,900 on August 7. They stood at Rs 2,500 a quintal on August 9 in key markets, according to reports. The retail prices of onions are around Rs 30 a kilo, which are expected to touch Rs 60-70 a kilo by early September due to a lower sowing area during the rabi season.

The Department of Consumer Affairs said a total of 3.00 lakh metric tonnes of onion has been procured for the buffer, which could be enhanced further, if the situation worsens.

The two central nodal agencies, NAFED and NCCF, had procured 1.50 lakh metric tonne each of rabi onion during June and July from Maharashtra and Madhya Pradesh. 

According to a report by Crisil Market Intelligence and Analytics, prices are expected to show a significant increase from early September in the retail market. “The supply-demand imbalance is expected to reflect in onion prices towards end-August. As per our ground interactions, prices are expected to show a significant increase from early September in the retail market, reaching up to Rs 60-70 per kg during the lean patch,” the report said. 

There are three onion-growing seasons in the country: kharif, late kharif and rabi. Of which, Rabi contributes the biggest share of 70 per cent to the total onion produce and is responsible for the supply from March through September.

This year due to heavy rainfall, the sown kharif area for onions as of July 31 was 13 per cent lower compared to last year at 68,000 hectare, data from the agriculture ministry showed.