Onion Buffer Stock Procurement Slow Despite Price Hikes

New Delhi, Jun 24 (PTI) Government procurement of onions for the 2026 buffer stock has made a slow start, with only around 2,000 tonnes purchased since June 1, despite three upward revisions to the procurement price.

The two nodal agencies tasked with procurement - Nafed and the National Cooperative Exports Limited (NCCF) - have so far acquired just 1 per cent of the 2-lakh-tonne target the government has set for the year under the Price Stabilisation Fund (PSF).

The procurement price has been revised upward in quick succession since the season opened: from Rs 12.70 per kg to Rs 15.80 per kg on May 22, then to Rs 16.50 per kg on June 13, and most recently to Rs 17.30 per kg on June 20.

"Around 2,000 tonnes have been procured since June 1," a senior consumer affairs ministry official told PTI.

Market participants say the problem lies in the quality differential.

"Grade A onion is commanding a premium in the market. At Rs 17.30 per kg, government agencies are essentially limited to URS (Under Relaxed Specifications) onion, since most of the Grade A produce is being channelled to exports," Ramesh Patil, trader at Lasalgaon in Nashik, the country's largest wholesale onion market, told PTI.

Nitin Seth, another Lasalgaon-based trader, said farmer sentiment is the key variable.


"Arrivals in mandis have been healthy, but some farmers are withholding stock, anticipating better prices. Three upward revisions have not been enough to match their expectations," Seth said.

The government is unlikely to raise the procurement rate again in the near term.

Officials in the Ministry of Consumer Affairs said another revision risks incentivising cartelisation among traders.

A senior ministry official, however, downplayed the slow start, noting that the pace of procurement in the first month is broadly in line with last year and is expected to accelerate in subsequent months.

Onion for the buffer stock is sourced from the rabi season harvest and stored to moderate price spikes during the lean supply months, protecting both farmers and consumers. The quality of onions has been affected due to unseasonal rains.

The government has revamped the procurement and storage architecture for 2026.

The Central Warehousing Corporation (CWC) has been designated as the nodal storage agency, operating under tightened storage norms. Nafed and NCCF have also rationalised their network of empanelled procurement societies to improve operational efficiency.

On the production side, the agriculture ministry has pegged onion output at 307.71 lakh tonnes for the 2025-26 crop year (July-June), broadly unchanged from the previous year -- offering little comfort on the supply front if procurement remains sluggish.