Why onion prices are stinging despite high procurement & ample buffer?

The government has attributed the rise in retail prices of onions to delays in kharif arrivals, export curbs by Turkey and Egypt, hailstorms during kharif crops, and high global retail prices due to concerns about availability.

While onion prices currently stand at ₹56 per kg on an all-India average, Consumer Affairs Secretary Rohit Kumar Singh has assured that the government currently has ample onion buffer to intervene in the market if a price rise is noted any further.

Five lakh tonnes onions have already been bought for market intervention, out of which three lakh tonnes of procured onions have already been released, and the government is still allowed to buy two lakh tonnes more if the need arises. The existing onion buffer is between 50,000 tonnes to one lakh tonnes.

Explaining the retail price cycle of onions in India this year, the secretary said onion prices in India's biggest wholesale market of the product, Lasalgaon, hit a low in February this year, after which National Agricultural Cooperative Marketing Federation of India (NAFED) increased its procurement to help farmers get remunerative prices.

By August 2023, a rise in exports and global availability concerns started increasing retail prices of onions, and a 40% export duty was levied to keep domestic prices in control.

However, onion prices kept on rising till late October due to further exports, low kharif estimation, and trade restrictions in Egypt. To check prices during the festive season, India further imposed a minimum export price (MEP) on onions and started selling discounted onions at ₹25/kg, after which a decline in retail prices was noted.

However, the recent export ban on onions was prompted by continuing exports of the commodity, which witnessed an export volume of 22% of its exports in December 2022 within the first seven days of December itself.

Commenting on the recent decision to stop the use of sugarcane for ethanol production, the secretary referred to the petroleum secretary's statement that the decision is just a pause, stating that domestic availability is supreme as far as sugar is concerned.

Stressing the need to ensure local availability of 60-70 lakh tonnes sugar for the next year's festive season, he reiterated that the maxim 'One Earth One Family' doesn't mean a nation sacrifices the interests of its citizens.