In order to provide relief to farmers from falling prices of onion, the Centre has decided to procure 2,00,000 tonnes of the crop from Madhya Pradesh, the country's second largest producer.
Wholesale prices of onion have fallen sharply below Rs 6 per kg in the state as the crop production during late kharif season of the 2016-17 crop year (July-June) was higher.
"We have approved procurement of 2 lakh tonnes (LT) of onions under the Market Intervention Scheme (MIS) from MP," a senior Agriculture Ministry official said.
The procurement will be undertaken by the MP-Markfed at Rs 5,867 per tonne for fair and average quality (FAQ) of onion with overhead expenses of Rs 1,467 per tonne or actual whichever is less, the official added.
The decision comes against the backdrop of farmers in MP agitating against the fall in prices of agri-commodities. They are seeking higher support price for their produce and waiver of loans.
Onion output from the crop sown during late kharif (summer) season of the 2016-17 crop year has been higher which led to huge arrivals in mandis and fall in prices.
The official said the price drop was because the onion coming into the mandis was of 'table' variety and not stored due to low shelf life.
Excess supply amid low demand led to crash in prices, which has hit farmers revenues. Also, the scale of arrival is so much that farmers are not able to grade the crop on the basis of size, traders said.
Grading of onions would have helped MP farmers fetch better prices in Delhi and other markets, a trader said, adding that better support to growers is the need of the hour to handle problem of plenty in the state.
Madhya Pradesh produces about 26-28 LT onions annually. It is the second largest producer after Maharashtra.