June 22nd 2024.
The Indian government has taken steps to stabilize onion prices by purchasing a significant amount of onions for buffer stock. As of now, they have procured approximately 71,000 tonnes, and they have a target of acquiring 5 lakh tonnes. With the monsoon progressing in most parts of the country, the government is hopeful that retail prices will decrease.
According to the Department of Consumer Affairs, the average onion retail price in India on Friday was Rs 38.67 per kg, with the modal price at Rs 40 per kg. A senior official from the department stated that so far, the government has acquired 70,987 tonnes of onions, which is comparable to the amount procured in the same period last year. Despite a 20% decrease in the estimated rabi production, the pace of onion procurement for buffer stock remains on track to meet the target of 5 lakh tonnes.
To maintain price stability, the government has the option to release or hold onions from the buffer stock. The procurement price is determined by the current market prices. The recent increase in onion prices is due to a 20% decrease in production during the Kharif, late Kharif, and Rabi seasons in 2023-24, compared to the previous year. This decline was a result of less rainfall in major onion-producing areas.
To control prices, the government has implemented various measures since August of last year. This includes an export duty of 40%, followed by a Minimum Export Price of USD 800 per tonne in October 2024, and an export prohibition in December 2023. These measures have been effective in maintaining a consistent supply of onions at stable prices. In May 2024, the export prohibition was lifted with a Minimum Export Price of $550 per tonne and an export duty of 40%, as there was a significant improvement in major onion markets like Lasalgaon in Maharashtra, and a promising prediction of above-normal monsoon this year.
The current heatwave conditions in many parts of the country have also played a role in the increase in vegetable prices, including onions, tomatoes, and potatoes. However, with the monsoon expected to arrive in most parts of the country, the situation is likely to improve. The Union Agriculture Ministry has released data stating that the onion production for 2023-24 is estimated to be around 254.73 lakh tonnes, which is lower than the previous year's production of 302.08 lakh tonnes. This decrease is due to a decline in production in major onion-producing states like Maharashtra, Karnataka, Andhra Pradesh, and Rajasthan.
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