Centre plans to release onion buffer from September to bridge festive supply gap, curb price spike

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With onion prices beginning to climb ahead of the festive and wedding season, the Centre plans to start a calibrated release of onions from its buffer stock from September to bridge the seasonal supply gap before substantial fresh kharif arrivals reach markets, according to two people aware of the development.

The intervention is aimed at ensuring adequate availability of onions during the high-consumption period stretching from Durga Puja through the end of December, when demand typically rises because of major festivals and the peak wedding season.

The move assumes significance as onion prices have started firming up across the country. While the all-India average retail price remains below crisis levels, retail prices in several local markets have already crossed ₹50 per kg.

The intervention also comes at a time when the government is seeking to prevent higher onion prices from adding to food inflation. Onions have historically been among the most volatile food commodities and have frequently prompted policy measures such as buffer stock releases, export restrictions, and changes in import policy whenever prices have risen sharply.

Queries sent to the Department of Consumer Affairs remained unanswered till press time.

Fresh kharif onions typically begin arriving in markets from November, with arrivals gathering pace in December depending on the progress of the monsoon and harvesting. Until then, markets remain largely dependent on stored rabi onions.

The government has set a target to procure 2 lakh tonnes of onions, and procurement is currently underway.

To support procurement, the government on 4 July increased the procurement price of onions for the buffer stock by 13%, from ₹1,875 per quintal to ₹2,125 per quintal.

According to the first person, the calibrated release has been timed to coincide with the period when supplies from stored rabi onions begin to tighten, while kharif arrivals are yet to gather momentum.

"By augmenting market supplies, the objective is to discourage hoarding and speculative trading, improve availability across major consumption centres and keep food inflation under control," this person said.

According to the Department of Consumer Affairs, the all-India average retail price of onions stood at ₹34.51 per kg on 18 July, up 22.2% from ₹28.25 per kg a year earlier and 26% higher than ₹27.39 per kg a month ago.

Wholesale prices have risen even faster. The all-India average wholesale price stood at ₹2,716.21 per quintal, up 22% from ₹2,225.67 per quintal a year earlier and 30.3% higher than ₹2,084.83 per quintal a month ago.

Among major cities, the average retail price in Delhi stood at ₹43 per kg, up 30.3% from ₹33 per kg a year earlier. Mumbai recorded ₹37 per kg, compared with ₹33 per kg a year ago, while Chennai reported ₹40 per kg, up from ₹32 per kg. In Ranchi, prices rose to ₹27 per kg from ₹25 per kg a year earlier.

The firming onion prices are also feeding into household budgets. Crisil Intelligence's latest Roti Rice Report said the cost of a home-cooked vegetarian and non-vegetarian thali increased 5% and 6% year-on-year, respectively, in June, with onions among the key contributors to the rise.

Ahead of the planned market intervention, a team from the Department of Consumer Affairs recently visited Nashik, the country's largest onion-producing and trading hub, along with other key onion-growing states, to assess procurement operations and review the status and quality of onions procured under the government's buffer stock programme, according to the second person.

"The ministry's team also assessed storage conditions and the quantity of marketable stocks available for phased release during the upcoming festive and wedding season," the person said.

The onions are typically released through wholesale markets, state governments, cooperative agencies and subsidised retail ou...