Onion prices may rise further? 30% of Centre’s buffer stock damaged, Kanda Express sent to Delhi as kharif crop faces delay

India's onion supply is facing uncertainty after approximately 30% of the central government's summer onion buffer stock was damaged, sparking concerns of steep price hikes, according to a senior Nafed official. The damaged stock, out of the 1.2 lakh tonnes procured this year, could further deteriorate to 40% this year, compared to the usual loss of 20%. Unseasonal rainfall during the summer harvest is blamed for the poor quality of the crop, shortening its storage life and making long-term storage challenging.

The situation is concerning as stored summer onions are crucial for meeting market demand before the next major crop arrives. To address this, the Centre has initiated the transportation of onions using the Kanda Express, which recently delivered 500 tonnes of onions to Delhi's railway station. This train, delayed for almost 24 hours due to grading and sorting operations, will continue to transport onions from the buffer stock at a subsidised rate of Rs 35 per kg.

The Centre aims to procure 2 lakh tonnes of summer onions for its buffer stock this year, but has only managed to acquire 1.20 lakh tonnes so far. Over 90% of this year’s buffer stock has come from Nashik, which typically contributes more than 80% of total procurement. However, many farmers have begun releasing their stored onions earlier than usual due to concerns over spoilage, exacerbating the supply issue.

The delayed kharif onion crop, which normally arrives in mid-November, could further tighten the supply gap in October. With no major fresh crop expected until December, stored summer onions remain the primary source of supply for wholesale and retail markets. Traders predict that the spoilage of stored onions and the early depletion of stocks will put additional pressure on onion prices in the coming months.