NEW DELHI: The Centre has raised the procurement price of onions for buffer stock by 13 per cent to Rs 2,125 per quintal, marking the fifth increase this procurement season, as it seeks to accelerate purchases under the Price Stabilisation Fund (PSF) and ensure better returns for farmers.
The revised procurement price, effective July 4, comes after the government's onion procurement programme for the 2026 buffer stock witnessed a sluggish start. Since procurement began on June 1, government agencies have purchased only around 2,000 tonnes despite four earlier increases in the procurement rate.
The procurement price has been revised upward in quick succession during the season, rising from Rs 1,270 per quintal (Rs 12.70 per kg) to Rs 1,580, Rs 1,725, Rs 1,875 and now Rs 2,125 per quintal (Rs 21.25 per kg). The repeated revisions are aimed at making government procurement more attractive to farmers and boosting buffer stock creation ahead of the lean season.
The Price Stabilisation Fund is used by the Centre to procure and maintain buffer stocks of key agricultural commodities, including onions, which can later be released into the market to moderate retail prices during periods of supply disruption or sharp price increases.
The decision comes amid early signs of firming onion prices following a delayed monsoon and below-normal rainfall in parts of the country. According to the Ministry of Consumer Affairs, these weather conditions have led to speculative buying by a section of traders, although actual demand in major consumption centres remains subdued at prevailing price levels.
Despite concerns over the weather, the government maintained that overall onion availability remains comfortable and there is no immediate risk of shortages. It said any increase in prices is expected to be in line with normal seasonal trends rather than being driven by supply constraints.
The ministry said stock levels in the key onion-producing and storing states of Maharashtra, Madhya Pradesh and Gujarat remain adequate. There is currently no indication of shortages in stored onions, providing confidence that supplies will remain stable in the coming months.
Market arrivals also continue to be strong. Daily arrivals across wholesale mandis have remained above 50,000 tonnes nationwide, with Maharashtra alone contributing more than 30,000 tonnes. The average modal wholesale price in the state is around Rs 18 per kg, indicating that market supplies remain sufficient despite weather-related concerns.
The government has relied on buffer stock operations in recent years as a key tool to manage onion price volatility, particularly during the lean supply months. Higher procurement prices are intended to encourage farmers to sell to government agencies while helping build adequate stocks that can be released into the market if retail prices rise sharply later in the year