Govt Directs Agencies to Purchase Onion from Farmers Due to Fall in Prices

It directed that onions be procured from farmers by the National Agricultural Cooperative Marketing Federation of India Limited (NAFED) and the National Consumers Cooperative Federation of India Limited (NCCF).

To address the challenges of falling prices, the government has established a Price Stabilization Fund for onion procurement and storage as a buffer to keep the supply chain running smoothly during the lean seasons. The Ministry of Agriculture and Farmers Welfare said in a statement on Tuesday evening that NAFED had purchased around 4,000 tonnes of onions from farmers directly for more than Rs 900 per 100 kg in the previous ten days.

According to reports, the staple vegetable was selling for as little as Rs 1-2 per kg in Lasalgaon mandi, India's largest onion market.

According to the ministry's statement, NAFED has opened 40 procurement centres where farmers can sell their stock and receive payment online. NAFED has made arrangements for the stock to be moved from purchase centres to Delhi, Kolkata, Guwahati, Bhubaneswar, Bangalore, Chennai, Hyderabad, and Kochi. The estimated onion production in 2022-23 is around 318 lakh tonnes, exceeding last year's production of 316.98 lakh tonnes.

"Prices remained stable due to consistency in demand and supplies as well export potential. However, red onion prices fell in February, particularly in the state of Maharashtra, where the modal rate fell to Rs.500-700/qtl. "The experts attribute this fall to overall increased production in other states, reducing reliance on supplies from the country's major producing district, Nashik," said the statement.

Although onions are grown in all states, Maharashtra is the leading producer, accounting for approximately 43% of national production, followed by Madhya Pradesh (16%) and Karnataka and Gujarat (9%). It is harvested three times a year, with cropping seasons in Kharif, late Kharif, and Rabi.

Rabi harvest is crucial because it contributes nearly 72-75 percent of national production and is harvested from March to May. The Rabi harvest has the longest shelf life and is best stored, whereas the Kharif and late Kharif crops are best consumed fresh and should not be stored.

"The timing of the harvest of onion across the country provides a regular supply of fresh / stored onion all over the year. However, due to weather fluctuations, either the stored onion spoils or the sown area is damaged, resulting in supply constraints and domestic price increases."

NAFED purchased 2.51 lakh tonne of Rabi onion as buffer stock last year. "The timely and calibrated release ensured that prices did not rise abnormally. The stored onion was distributed throughout the country, ensuring consistent supplies." It decided to keep 2.5 lakh tonne as buffer stock again this season.

"The storage of onion is challenging as the majority of the stock is stored in the open ventilated structures (Chawl) in the open fields and this storage has its own challenges. As a result, there is a need for scientific cold chain storage, which is currently being tested in order to extend the shelf life of onions. The success of such models will aid in avoiding price jerks like those seen recently. Market observers also recommend consistency in export policy, as this will ensure a better export market for the Indian onion," according to the ministry's statement.