Centre allots full onion buffer stock for retail as procurement lags
With a smaller buffer available, the government has decided to conserve stocks for direct retail intervention rather than release them in wholesale mandis.
The Indian government is set to distribute its complete onion buffer stock through retail sales this year, following an underwhelming procurement effort that fell short of its 200,000-tonne target. This strategic shift from previous years, when interventions were made in both wholesale and retail markets to control prices, stems from an unusually challenging procurement season.
The minimum assured procurement price (MAPP) had to be raised multiple times due to farmers' reluctance to sell to government agencies amid firm market prices. Moreover, operational challenges involving procurement and storage agencies further hindered purchases. With a reduced buffer available, officials have opted to conserve stocks for direct retail intervention rather than release them in wholesale mandis.
The government plans to commence sales by the end of August or early September, contingent on the rising prices of onions in key consumption centers. Although onion prices have remained stable around ₹50 per kg in retail markets, officials anticipate maintaining control until the end of September, when delayed kharif crop arrivals might tighten supplies.
Around 100,000 tonnes of the procured onions will be available for market intervention after adjusting for storage losses and operational needs. At a daily release rate of approximately 800 tonnes, the government estimates it can sustain subsidized sales for about 125 days, adequate to bridge the period until fresh kharif crop arrivals boost supplies.
The annual consumer price inflation for onions has surged to 22.5% in July, up from 4.7% in June. The onion buffer, maintained under the Price Stabilisation Fund, is employed to curb prices by releasing subsidized stocks during supply tightness periods. Last year, the Centre sold buffer-stock onions at ₹24 per kg through NAFED and NCCF retail outlets in major cities such as Delhi-NCR, Mumbai, Ahmedabad, Chennai, Kolkata, and Guwahati.
Experts emphasize the critical role of storage and market infusion in retail sales, highlighting the direct impact on consumer prices.
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