Onion stockholding centres planned to plug supply chain risks

New Delhi: With onion shortages becoming a perennial headache, the government is working on a plan to create stockholding centres across different parts of the country to reduce its dependency on a single centre – Nashik in Maharashtra – for buffers, two people involved in the process said.

Once the plan takes shape, the move is expected to help check the rise in prices of the bulbous crop during times of shortage and ensure the kitchen essential is available to all households.

By establishing regional stockholding centres, the plan seeks to address supply chain vulnerabilities caused by centralization, said the first among the two people mentioned above.

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Besides, it will save the significant amount of money that the government spends on moving around onions from Nashik to different parts of the country for its market intervention initiatives, such as selling onions at discounted rates through agencies like NAFED and NCCF and offloading buffer stocks to wholesale markets.

The plan is currently being discussed with the ministry of agriculture, this person said.

Queries emailed to department of consumer affairs remained unanswered till press time.

Declining production

The proposal comes amid a steady decline in the production of onions. According to agriculture ministry data, production dropped from 31.6 million tonnes in FY22 to 30.2 in FY23, marking a 4.67% decline. It further dropped to 24.2 million tonnes in FY24, reflecting a 19.85% decrease. Meanwhile, annual household consumption of onions in FY23 was recorded at 19.3 million tonnes.

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Currently, while Nashik plays a crucial role in the storage of onions, this centralization has led to supply chain vulnerabilities. By decentralizing the storage process and establishing regional stockholding centres, the government aims to create a more resilient supply system.

The process to identify locations that can provide alternative storage ecosystems, similar to Nashik, is being worked out. The areas under consideration include Delhi NCR, Ranchi, Guwahati, Rajasthan, Madhya Pradesh, Karnataka and Gujarat.

Buffer target

The government has set a target to procure 475,000 tonnes of onions for the buffer stock in FY25.

As of now, the government transports onions by trucks and trains from Nashik to Delhi-NCR, Lucknow, Guwahati, Jammu & Kashmir, Gujarat, Ranchi, etc., during times of high prices. 

It takes around 5-6 days to ship onions from the place of origin to other cities by truck and about 2-3 days by train.

“It’s being discussed whether to create storage facilities on a public-private partnership model or utilize any other existing storage facility for storing onions,” the second person said.

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The government had started selling onions at a discounted rate of ₹35/kg in September 2024, when the kitchen staple was being sold for over ₹70/kg in the national capital and ₹80/kg in some other parts of the country.

"The major issue is warehousing, as we don’t have adequate infrastructure. I believe it has to be efficient because, for a perishable commodity like onions, poor-quality storage facilities can result in huge wastage. Warehouses should be large enough to meet the demand," said Rakesh Arrawatia, professor at the Institute of Rural Management Anand, Gujarat.

“From a consumer perspective, having well-scaled and strategically located warehouses is a good idea, but they must be at optimal distances and properly scaled to make a real impact," said Arrawatia.