India, the world's second-largest producer of onions, plans to cut wastage in the 200,000 tonnes of bulbs it aims to procure this season through better storage and reduced post-harvest losses.
This is being done to keep prices of the widely used staple, with a relatively high weightage in consumer inflation, stable.
The central government aims to set a 75% recovery rate for onion procurement under the Price Stabilisation Fund (PSF), ensuring that onions thus procured result in lower wastage and more efficient utilization of the fund, two people involved in the process told Mint, requesting anonymity.
This is the third increase in recovery rate in as many years. Last year, the consumer affairs ministry had set the recovery rate at 70%, up from 65% in 2024.
A 75% recovery rate means that of every tonne of onions procured, 750 kg is expected to remain usable; the remaining 250 kg wasted due to factors such as moisture loss, rotting, sprouting, and physical damage during storage and transport.
With onion procurement set to start from the first week of May to create a buffer of 200,000 tonnes, the move by the department of consumer affairs aims to keep retail prices stable and affordable for consumers by improving storage efficiency and reducing post-harvest losses.
“The rabi crop is better and we are planning to set the recovery rate at 75%,” said the first of the two people cited above, adding that the government has strengthened storage facilities in a scientific manner and is hopeful that a 75% recovery rate is feasible.
High weightage in CPI
This latest move assumes significance as onions carry a weight of around 0.8% in the consumer price index (CPI) and any spike in onion prices can stoke food inflation. As a staple kitchen item in India, onions are a politically sensitive commodity and have in the past contributed to incumbent governments losing power due to sharp and uncontrolled price rises.
The second person said that a higher recovery rate will also ensure better quality onions at the time of delivery. “Given that the national weather forecaster has predicted a below-normal monsoon, which may impact the sowing of kharif onions, having better quality onions in warehouses will help stabilise prices during the peak festive season.”
This person added that initially, the targeted procurement quantity is 200,000 tonnes, which may be increased further to help farmers realise better prices.
Queries sent to the department of consumer affairs remained unanswered till press time.
Meanwhile, farmers have raised concerns over a crash in onion prices and have urged the government to procure the crop at a minimum of ₹15/kg. At present, onions are being sold to local traders at ₹8-10/kg, which is significantly lower than the cost of production, said Bajirao Gagare, an onion-grower from Maharashtra.
Cultivating onions on one acre of land can cost ₹60,000- ₹75,000, with the yield averaging around 10–20 tonnes depending on the agricultural practices followed by farmers, said Gagare. He runs ‘Hi Maitri Vicharanchi’ on social media to educate cultivators on best farm practices.
Analysts said that a higher recovery rate will improve the effectiveness of buffer stocks and help moderate price spikes during lean periods, as more usable onions remain available for market intervention. “However, its impact on price stability will still depend on overall production levels and the timeliness of government releases,” said Rakesh Arrawatia, professor at the Institute of Rural Management Anand (IRMA), Gujarat, and Dean, School of Cooperative Banking and Finance.
“A higher recovery rate is a positive step as it reflects improved storage and handling efficiency, but its success will depend on maintaining quality during procurement and minimising post-harvest losses,” said Binod Anand, agriculture expert and member of the government’s minimum support price (MSP) panel. Kumar also stressed that the government should procure at the best rate from farmers. The MSP committee was set up in 2022 to make the floor price mechanism for crops more effective, promote crop diversification, and bolster agriculture marketing systems.
Driven by rising food prices and energy costs from the West Asia war, India’s retail inflation climbed to 3.4% in March from 3.21% in February. The uptick in March was led by food prices — a key constituent of the country’s consumer price index — which rose 3.87% in March from 3.47% in February.
As per the final estimates released by the agriculture ministry in March, onion area increased from 15.41 lakh hectares in 2023–24 to 19.68 lakh hectares in 2024–25, with production at 307.67 lakh tonnes from 242.67 lakh tonnes. As of 25 April, the retail price of onions has come down to ₹24.79/kg from ₹28.47/kg a year ago.
As per the commerce ministry data, onion exports stood at $337.92 million in FY26 (till January), compared with $480.82 million in FY25 and $525.22 million in FY24, indicating a declining trend over the past two years.
How onions are procured
Onions are procured by the National Agricultural Cooperative Marketing Federation of India (NAFED) and the National Cooperative Consumers’ Federation of India (NCCF) from farmer producer organisations (FPOs) and farmers. The consumer affairs ministry bears the cost of procurement, while NAFED and NCCF act as the front-end agencies for procurement and buffer stock creation.
The major onion producing states are Maharashtra, Madhya Pradesh, Gujarat, Karnataka, Rajasthan, Bihar, West Bengal, Uttar Pradesh, Haryana and Andhra Pradesh. Maharashtra ranks first in onion production with a share of about 36%, followed by Madhya Pradesh with a share of 17%.