To prepare for a potential price rise during the upcoming lean season, which begins in August and lasts until December, the Union government has built a record reserve of 250,000 tonnes of onions for 2022–2023. The action aims to reduce the vegetable's volatility and maintain stable prices, which is important at a time when inflation is already at 7%.
The department of consumer affairs is maintaining the onion buffer as part of a price stabilization fund, which attempts to effectively intervene in the market to lower costs when availability declines.
Some food items' prices, when seasonality plays a significant role, tend to be volatile. One of them is the onion. Its rates frequently increase, affecting household budgets. The vegetable is the main component in the majority of Indian recipes, and price spirals are practically a yearly thing. The weight of vegetables in the consumer price index is 6.04 percent.
According to an official statement, the government bought the onions from this year's winter-sown crop from farmers in major producing states including Maharashtra, Gujarat, and Madhya Pradesh through the National Agricultural Cooperative Marketing Federation of India (NAFED).
According to the statement, "the price stabilization buffer fulfills the twin aims of giving remunerative pricing to onion farmers and augmenting the availability of onions to the customers at affordable costs."
65% of India's onion production comes from winter-sown onion harvested between April and June, which also supplies demand until the summer crop is harvested between October and November. The statement said, "Therefore, it is essential to successfully store onion in order to assure the regular supply."
According to an official, open-market releases will concentrate on states and cities where prices have risen from the previous month as well as important agricultural markets to expand supplies after August.
Past data show onion prices usually tend to peak around September because stocks from previous crops deplete. Fresh harvests usually arrive in markets only in January. Onion is semi-perishable vegetable produce and post-harvest losses due to weight loss, rotting, sprouting, etc. are substantial.
According to statistics, onion prices in Maharashtra's Lasalgaon, which determines pricing across the nation, averaged 1,225 per quintal across all varieties on Friday.
