Government reportedly initiates onion procurement drive to build emergency buffer stock

To ensure smooth procurement operations, NAFED and NCCF will pre-register onion farmers, facilitating direct benefit transfers of payments to their bank accounts as per the government's directives.

The Union government has initiated the procurement of onions directly from farmers at market rates to establish an emergency buffer stock of 500,000 tonnes for the fiscal year 2024-25, according to a report in the Hindustan Times citing an official from the consumer affairs ministry.

This move aims to bolster supplies and intervene in the market in case of price spikes, particularly following the recent lifting of the government's five-month ban on onion exports. In conjunction with this, the government has imposed a floor price of $550 per tonne plus a 40% tariff on outbound onion shipments to discourage excessive exports at lower rates.

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Consumer Affairs Secretary Nidhi Khare expressed confidence that onion prices will remain stable despite the resumption of free exports, citing normal availability, steady prices, and robust output from the winter crop, estimated at 19.1 million tonnes.

Sensitive commodity

Onions are known for their volatile nature, often experiencing shortages during the annual summer lean season, making them a sensitive commodity for consumers due to their status as a kitchen staple. The government had previously enforced a ban on onion exports in December 2023 in response to a surge in prices resulting from diminished supplies.

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To execute the procurement, the government has instructed two state-backed food agencies — the National Co-operative Consumers’ Federation of India and the National Agricultural Cooperative Marketing Federation of India — to purchase 500,000 tonnes of onions directly from farmers as the Rabi harvest begins to arrive in the markets. This procurement process involves the government purchasing farm produce to build state reserves.

Winter onions play a pivotal role in India's overall onion production, contributing 72-75% annually. They are crucial for maintaining year-round availability due to their superior shelf life compared to summer onions, enabling storage and supply until December.

To ensure smooth procurement operations, NAFED and NCCF will pre-register onion farmers, facilitating direct benefit transfers of payments to their bank accounts as per the government's directives.