Govt's new onion strategy focuses on local procurement, storage

New Delhi: In a bid to tame recurring onion price shocks and improve farmer incomes, the Centre is working on a plan to help states locally procure and scientifically store the politically-sensitive crop in the producing regions, two people aware of the matter said. The strategy aims to cut wastage, reduce transport dependence on key producing states such as Maharashtra and create buffer stocks closer to demand centres to avert price spikes that stoke food inflation. Under the proposed framework for the world's second-largest onion producer, states would be encouraged to procure onions directly from local farmers and maintain buffer stocks through state warehousing corporations and other storage agencies, the people said. According to them, the government believes that improving storage infrastructure closer to cultivation clusters could help reduce wastage and stabilize supplies during tight availability periods. The government procures onions under the price stabilization fund framework. India incurs annual onion losses worth nearly ₹11,000 crore due to inadequate storage and transportation infrastructure. The plan also involves increasing onion cultivation in other states and reducing the dependence on Maharashtra, the top producing region. Quality seed support The Centre would provide support in the form of quality seeds and planting material, improved agronomic practices, farmer training, scientific harvest and post-harvest management techniques, said the first person cited above. To be sure, onions have around 0.8% weightage in the consumer price index (CPI), where any spike in onion prices can stoke food inflation. “The broader objective of the strategy is to improve price realization for farmers while simultaneously ensuring more stable retail prices for consumers,” said the second person, adding that details of the procurement mechanism and the scale of financial support to states were still being worked out. According to the consumer affairs department, the country consumes around 13 lakh tonnes of onions every month—with annual consumption at nearly 156 lakh tonnes. The persons cited above said that decentralized onion procurement and storage can help reduce transportation costs and improve supply management during periods of shortage. For instance, if onions produced in Bihar are procured and scientifically stored within the state itself, the stocks can later be used for market intervention during a supply crisis, reducing the need for long-distance transportation from the major producing states. Farmers would also be encouraged to expand its cultivation if they get better procurement opportunities and assured market support. Queries emailed to the ministry of consumer affairs, food and public distribution on Monday remained unanswered until press time. “India’s onion inflation problem is fundamentally a supply chain and storage issue, rather than just a production issue. The country produces enough onions overall, but excessive dependence on a few producing regions, inadequate scientific storage and high transportation costs make prices extremely vulnerable to weather shocks and local crop disruptions," said Dr. Dharmveer, assistant professor of economics at the Delhi School of Economics. "A decentralized procurement and storage strategy can help stabilize supplies, reduce wastage and contain price volatility.” Twin aims The government's plan simultaneously addresses the twin aims of raising farmer income while keeping consumer prices stable, said Binod Anand, a member of the government’s high-power committee on minimum support price and agricultural reforms. "Creating decentralized onion procurement and scientific storage systems across multiple states will reduce wastage, lower transportation costs and help build a more resilient supply chain. It can also encourage farmers in non-traditional regions to expand cultivation by giving them better market assurance and procurement support.” India's onion production has been on the rise. Latest farm ministry data shows acreage rose from 15.41 lakh hectares in 2023–24 to 19.68 lakh hectares in 2024–25, while output was up at 307.67 lakh tonnes from 242.67 lakh tonnes. In India, onion is cultivated in three seasons—kharif, late kharif and rabi. The kharif crop is planted during July-August and harvested between October and December, while the late kharif crop is sown during October-November and harvested between January and March. The rabi crop, planted during December-January and harvested between March and May, is the most important onion crop in India, as it accounts for bulk of the production and is suitable for long-term storage. Maharashtra, Karnataka, Madhya Pradesh, Gujarat and Bihar collectively contribute about 70% to India's onion acreage. The western region dominates onion cultivation in India. It saw around 7.8 lakh hectares under cultivation and an output of 12.17 million tonnes in 2023-24, while also recording the highest productivity at 19.67 tonnes per hectare. South India had nearly 2.93 lakh hectares under onion and produced 4.36 million tonnes, with productivity of 13.03 tonnes per hectare. The eastern region accounted for about 1.6 lakh hectares acreage and produced 2.8 million tonnes, with productivity of 16.71 tonnes per hectare, while north cultivates onions across around 0.74 lakh hectares and produces 1.48 million tonnes, recording high productivity of 19.14 tonnes per hectare. The northeast has the smallest onion acreage at 0.12 lakh hectares, producing 96,450 tonnes with the lowest productivity of 6.7 tonnes per hectare.