Govt buying onions at ₹2,410 a quintal to ensure welfare of farmers: Piyush Goyal

The union government began buying onions at ₹2,410 a quintal from Tuesday as prices of the kitchen staple continued to rise. “The measure is being taken to ensure the interest of both farmers as well as consumers,” Union Minister of Consumer Affairs and Food Piyush Goyal said.

The government on Sunday decided to increase the onion buffer to 500,000 tonnes from the initial procurement target of 300,000 tonnes for the current year. As part of the plan, National Cooperative Consumers' Federation of India Limited (NCCF) and National Agricultural Cooperative Marketing Federation of India (NAFED) have started procuring an additional 100,000 tonnes each from around 26 centres, mainly across Maharashtra and Madhya Pradesh.

“This year we have bought 3 lakh metric tonnes of onions, because of which prices have risen and farmers have earned considerable profits. Further, the government decided to buy an additional 200,000 tonnes. There is no bar on procurement, and the number will be increased if needed,” the minister told reporters.

The statement came after the Agriculture Produce Market Committee (APMC) of Lasalgaon in Nashik, Asia's largest onion market, stopped trading the bulb indefinitely starting Monday to protest against the 40% export duty on onions.

Fearing onion prices would hit triple digits, like those of tomatoes, the government on Saturday imposed a 40% export duty on onions until December to augment domestic supplies and tame inflation during the upcoming festive season.

To assure farmers, Goyal said, “Our intervention in tomatoes helped consumers and prices came down significantly. This has helped stabilise prices for 1.4 billion consumers and also helped farmers with the right prices. We aim to follow the same path for onions.”

The free on board (FOB) price, which is the price goods are exported at, stood at $320 a quintal. "This translates to ₹18-20 per kg of realization for the farmers, which is much below the ₹24.10 that we are offering," Goyal said.

At present, the average retail price of onion is ₹40 per kg. Wholesale prices hit ₹2,500 a quintal in Maharashtra’s benchmark markets of Lasalgoan and Pimpalgaon on 10 August.

The government has already started selling onions from the buffer at a concessional rate of ₹25 a kg to consumers in major markets where retail prices have exceeded the national average or seen a significant increase from the previous month.

Onion prices have risen from ₹20 a kg at the start of the year to ₹40 a kg. Inflation in onion prices, which had been negative since September 2021, shot up to 11.72% in July from 1.65% in June and -20.5% in July 2022. Experts have projected that retail prices will jump to ₹100 a kg in September thanks to a likely shortfall in supplies caused by unseasonal rain in April in Maharashtra.