The government has set a target of procuring 5 lakh tonnes of onions. This stockpile will be used to regulate market prices if necessary. So far this year, they have already purchased nearly 71,000 tonnes of onions.
The average retail price of onions in India is around Rs 38.67 per kg, with a modal price of Rs 40 per kg. The government is confident that its procurement target will be achieved. The procurement price for onions is dynamic and adjusts based on prevailing market prices.
Price Stabilization Efforts by the Government:
The rise in onion prices stems from a 20% shortfall in the 2023-24 season across Kharif, late Kharif, and Rabi crops. This deficit was attributed to insufficient rainfall in major onion-growing regions.
To address this issue, the government implemented a series of measures since last August:
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August 2023: A 40% export duty was levied on onions.
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October 2023: A Minimum Export Price (MEP) of USD 800 per tonne was established.
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December 2023: A complete ban on onion exports was imposed.
These interventions ensured sufficient domestic availability of onions and maintained price stability.
Shifting Focus to Exports with Optimistic Monsoon Forecast:
Considering the improved market stability observed in major onion markets and the prediction of a good Kharif crop due to a potentially above-normal monsoon season, the government relaxed export restrictions in May 2024. A 40% export duty remains intact along with a reduced MEP of USD 550 per tonne.
The government's buffer stock program and strategic export management aim to control onion prices and ensure consumer affordability. The success of these efforts will depend on the upcoming Kharif crop yield and any unforeseen disruptions in the market.
