Government Directs Procurement of 5 Lakh Tonnes of Onion to Stabilize Prices

New Delhi: In a bid to stabilize onion prices and ensure adequate availability of the staple vegetable, the Government has directed the National Agricultural Cooperative Marketing Federation of India Ltd (NAFED) and the National Cooperative Consumer’s Federation of India Ltd (NCCF) to initiate procurement of 5 lakh tonnes of onion directly from farmers.

As the Rabi-2024 harvest begins to arrive in the market, this procurement initiative aims to address the country’s onion buffer requirements. NAFED and NCCF have been instructed to pre-register onion farmers to facilitate direct benefit transfers (DBT) of payments into their bank accounts.

Rabi onion plays a crucial role in India’s onion supply chain, accounting for 72-75% of the annual production. Its longer shelf life compared to Kharif onion allows for storage and supply until November-December, ensuring year-round availability of the vegetable.

The government’s intervention in onion procurement and distribution has been ongoing, with NAFED and NCCF purchasing approximately 6.4 lakh metric tonnes (LMT) of onion during the 2023-24 period. These efforts have not only bolstered buffer stocking but also supported farmers by ensuring remunerative prices throughout the year.

To stabilize retail prices effectively, retail sale interventions were implemented through outlets operated by NCCF, NAFED, Kendriya Bhandar, and other state-controlled cooperatives, offering subsidized onions at Rs. 25 per kg.

Global supply constraints and the impact of El Niño-induced dry spells prompted the government to regulate onion exports during the fiscal year 2023-24. Measures included imposing a 40% duty on exports, setting a minimum export price (MEP) of USD 800 per metric ton, and ultimately prohibiting exports from December 8, 2023.

The recent decision to extend the prohibition on onion exports reflects concerns over domestic availability vis-à-vis international prices. However, exports to neighboring countries, which rely on India for their onion requirements, have been permitted. These include exports to Bhutan, Bahrain, Mauritius, Bangladesh, and the UAE, totaling significant quantities.