Centre Increases Onion Procurement Price by 13%: Reasons Behind the Decision
The Indian government has increased the procurement price for onions to Rs 2,125 per quintal, up from Rs 1,875 per quintal, marking a 13% rise. This adjustment, effective from July 4, 2026, aims to enhance farmer earnings and boost procurement efforts. The decision follows sluggish procurement under the Price Stabilisation Fund, with only about 2,000 tonnes of onions added to the buffer stock since the season began on June 1.
The procurement price has seen five upward revisions this season, starting at Rs 12.70 per kg and increasing incrementally to the current rate of Rs 21.25 per kg. Despite these adjustments, the government has indicated that there are no immediate concerns regarding onion availability in the domestic market. Stocks in key producing states like Maharashtra, Madhya Pradesh, and Gujarat remain sufficient, with daily wholesale arrivals exceeding 50,000 tonnes across the country.
Maharashtra contributes over 30,000 tonnes of these daily arrivals, with the average modal price around Rs 18 per kg. The all-India average retail price for onions currently stands at Rs 31 per kg. While the consumer affairs ministry reports adequate storage of better-quality onions, speculative buying has emerged due to delayed monsoon rains in some areas. This activity is particularly noted in Nashik and parts of Madhya Pradesh, where traders are reacting to anticipated price increases rather than actual market demand.
Onion production for the 2025-26 season is projected at 307.37 lakh tonnes, nearly unchanged from the previous year’s output. Exports remained stable in June, with approximately 1.50 lakh tonnes shipped abroad. However, traders anticipate a decline in export demand as fresh supplies from Pakistan and China enter markets in the Gulf, Sri Lanka, and the Far East at lower prices. Kharif onion planting has been delayed by about 15 days in Maharashtra’s Nashik region, while Karnataka’s Chitradurga and Challakere areas have achieved nearly 60% of normal sowing levels.
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