Buffer stock: Centre starts procuring onion from three states

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The Centre has begun procuring onions from Maharashtra, Gujarat and Madhya Pradesh, to create a buffer stock to tackle any sharp rise in prices later during the year through the National Agricultural Cooperative Marketing Federation (NAFED).

NAFED has set a target of procuring around 250,000 tonne this year, the bulk of which will be procured from Maharashtra. In Maharashtra, NAFED will be procuring onion through wholesale markets in the Lasalgaon, Pimpalgaon, Pune agriculture produce market committees (APMCs) and neighbouring wholesale markets. Around 90% of the onion will be purchased at the prevailing market price from the wholesale markets and farmers producers’ companies (FPCs) in and remaining 10% from and other onion growing states, officials said.

Market committee officials said that NAFED has procured 5,149 quintals in a couple of days. NAFED had procured nearly 200,000 tonne last year from Maharashtra, Gujarat and Madhya Pradesh. The Centre has been creating a buffer stock of onions for the past few years to stabilise the wholesale onion prices and meet the demand in case of a scarcity situation that usually arises between July and September. Onions from buffer stocks are then released in a calibrated manner through retail intervention to retail agencies/states/UTs and for open market sale during the lean season or period, to contain prices and availability.

According to Narendra Wadhavane, secretary, Lasalgaon APMC, there has been a rise of Rs 200 per quintal in the average wholesale onion prices, from Rs 900 per quintal last week to Rs 1,100 per quintal this week. Market arrivals have been in the range of 12,000 quintals to 15,000 quintals in Lasalgaon and neighbouring markets as well. The arrival of fresh summer onions has increased in most mandis resulting in a sharp drop in prices in some markets. Earlier, the arrivals of the summer onions were around 20% of total supply of 15,000 quintals a day at Lasalgaon around a week back, while the remaining 80% of the arrivals were of late kharif onions. Now, the supply of summer onions has now increased to 75% of the total supply of the onions and the remaining 25% of the arrivals are of late kharif onions. Summer onions are fetching good prices as compared to the late kharif onions.

PK Gupta, director, National Horticultural Research and Development Foundation (NHRDF), said the drop in onion prices is because of higher production and a drop in exports. Several states including Uttar Pradesh, Haryana, Bihar, Rajasthan, Karnataka, Telangana and Andhra Pradesh have increased the area under onion cultivation leading to increased supplies in the market, he pointed out. Prices may drop further unless exports pick up, he said. This season, the area under cultivation of summer onions, which are harvested in March and April, has increased by 40% this year across Nashik district to 2.11 lakh hectares. The onion plantations in the district were damaged due to the rainfall last year, creating a scarcity of onions. Farmers had fetched better prices for their produce.

Hence, most of the farmers preferred planting summer onions which led to a rise in acreage. There are three cycles of onion in a year — kharif, late and summer onions. The shelf life of kharif and late kharif onions is less than a month and the produce get rotten thereafter. On the other hand, summer onions have a shelf life of around six months and farmers prefer storing onions with the hope of getting better prices. The late kharif onions have a shelf life of less than a month and they start rotting thereafter. Hence, farmers have no option but to sell the late kharif produce at the prevailing market rates.

The price trend of average wholesale onion prices is expected to be downward in April and May, officials said. India’s onion production is estimated to increase by 16.81 % to 31.12 million tonne (mt) in the crop year beginning July 2022 on likely increase in acreage. The country had harvested 26.64 mt of onion in the 2021-22 crop year (July-June). According to first advance estimates shared by the agriculture ministry, the area sown for onion cultivation is estimated to be higher at 1.91 million hectares in the 2022-23 crop year from 1.62 million hectares in 2021-22.