Tears in your eyes: Onion buffer stock way below the govt's FY25 target

Due to trader hoarding and farmers' reluctance to sell their stock, the government has only achieved less than 10 per cent of its 500,000-tonne onion buffer stock target

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The government's effort to procure onions from farmers for buffer stock aimed at stabilising prices has achieved less than 10 per cent of its target of 500,000 tonnes for fiscal year 2024-25, The Economic Times has reported.

June signals the end of the peak season for rabi onions, which then go into storage with traders, stockists, and farmers.

Officials cited in the report mentioned that the delay in procurement was due to the general elections and the low purchase prices offered by the government, which discouraged farmers from selling.

During the 2023-24 period, the Centre purchased 640,000 tonnes of onions during both the rabi and kharif seasons.

Government estimates predict that onion production will drop by 16 per cent to 25.47 million tonnes in 2023-24 due to lower yields in key growing states like Maharashtra, Karnataka, and Andhra Pradesh.

The creation of onion buffer stock

Since 2016-17, the Centre has been building a strategic buffer stock for price stabilisation. Previously, the government only purchased onions to support farmers when prices fell sharply. 

The National Agricultural Cooperative Marketing Federation (Nafed) and the National Cooperative Consumers' Federation (NCCF) are responsible for procuring onions for this buffer. Nafed can store around 10,000 tonnes, while NCCF lacks storage facilities, the business-daily claimed.

Both agencies must procure onions directly from farms or Farmer Producer Organizations (FPOs). Delays in starting procurement operations and the discrepancy between government and market prices are among the reasons for the farmers' lukewarm response.

Onion prices on the rise

Due to reduced supply and increased demand, onion prices have surged by nearly 30-50 per cent in the past two weeks ahead of Eid-al-Adha (Bakri Eid).

The recent price hike is attributed to the supply-demand imbalance. Onions entering the market from June onwards come from stocks held by farmers and traders. Farmers are reluctant to sell, anticipating higher prices following a decrease in the rabi crop of 2023-24. Traders are also hoarding stocks, expecting the government to relax price control measures.

Furthermore, onion exports to countries such as Sri Lanka, Bangladesh, and Malaysia have resumed after the Centre lifted the export ban.

To discourage hoarding and manage price volatility caused by supply disruptions, the government announced plans last month to use radiation technology on a larger scale to extend the shelf life of onions. The aim was to build a buffer stock of 100,000 tonnes this year to prevent shortages and price hikes.

The Ministry of Consumer Affairs has instructed state agencies Nafed and NCCF, which are procuring 500,000 tonnes of onions for the buffer stock this year, to explore irradiation facilities near key consumption centres like Sonepat, Thane, Nasik, and Mumbai.

Last year, the government started radiation processing on a smaller scale of 1,200 tonnes in Maharashtra.

The Consumer Affairs Ministry is also considering establishing controlled atmosphere storage facilities at major railway hubs to expedite the transportation of the buffer stock.