Onion prices have surged by nearly 10% in the last month, primarily attributed to reduced kharif sowing in key producer states such as Maharashtra and Karnataka. However, an official has assured that the government maintains sufficient buffer stock to manage the price escalation effectively.
As of August 3, the wholesale consumer price of onions in All India stood at INR 2,068.51 per quintal, showing an increase from INR 1,893.56 recorded on July 3. According to data from the consumer affairs ministry, the price has experienced a year-on-year rise of 4.86%.
“Onion prices are expected to firm up as lower output is expected from the kharif crops since monsoon rains have not been adequate in Nasik, Pune and Ahemdnagar districts,” said Nikhil Sule, an onion farmer from the area.
According to a Crisil report, the area dedicated to onion farming had decreased during the last rabi season. The report estimated that the acreage was 3-5% lower than the previous year, leading to an approximate 6% decline in output compared to the previous year.
The rating agency attributed the decline in rabi acreage to the “25-27% lower realization experienced by farmers in the preceding season.”
Nevertheless, a senior official from the Ministry of Consumer Affairs, Food and Public Distribution stated that the central government has acquired a buffer stock of 300,000 tonnes this year, marking a 20% increase compared to the previous year.
“This stock will come in handy for interventions when the prices go up,” the official said.
The individual attributed the modest price upswing in recent weeks to the approaching festive season and assured that the retail prices of onions will not exceed INR 40 per kg this year.
During the fiscal year 2022-23, the government maintained a buffer stock of 251,000 tonnes of onions.
The buffer stock is maintained under the Price Stabilisation Fund (PSF) to meet any exigencies in case rates go up significantly during the lean supply season.
