As Onion Prices Spike, Govt Hikes Buffer To 5 Lakh Tonnes

In a latest move that is likely to give some relief from soaring onion prices, the Union Government has opted to increase the quantum of onion buffer to five lakh tonnes after accomplishing the initial procurement target of three lakh tonnes.

Amid the soaring onion prices, the Department of Consumer Affairs has asked the National Cooperative Consumers' Federation and the National Agricultural Cooperative Marketing Federation of India to obtain one-lakh-tonne each to achieve the additional procurement target, as per an official release on Sunday.

It will begin selling onions from its buffer stocks at a subsidised rate of Rs 25 per kg through retail outlets and mobile vans of the NCCF from Monday, the Ministry of Consumer Affairs, Food & Public Distribution said.

Disposal of onions from the buffer has commenced, targeting major markets in states and Union territories where retail prices are above the all-India average or are significantly higher than the previous month, according to a BQ Prime report.

The government on Saturday levied a 40% duty on the export of onions to boost domestic availability as there is surge in the prices. This is the first time ever an export duty on onion has been imposed as retail prices of the kitchen staple hit Rs 37 per kg on Saturday in Delhi, as per government data.

The Finance Ministry through a Customs notification imposed a 40% export duty on onions till December 31, 2023.

Earlier this year between April 1 and August 4, 9.75 lakh tonne of onions have been exported from the country. The top three importing countries in value terms are Bangladesh, Malaysia and the UAE, according to a PTI report.

Onion prices began soaring as reports surfaced of lag in onion coverage in the ongoing kharif season. According to the wholesale price index data for July, onion inflation soared to 7.13%, against -4.31% in June.

The annual retail or consumer price inflation touched a 15-month high of 7.44% in July against 4.87% in June amid a sharp spike in food prices.

As of date, about 1,400 tonnes of onions from the buffer have been dispatched to the targeted markets and are being continuously released to augment the availability, stated the BQ Prime report.

The onion buffer hike, targeted release of stocks and imposition of export "will benefit the farmers and consumers by assuring remunerative prices to the onion farmers while ensuring continuous availability to the consumers at affordable prices," stated the release.