Center Initiates Onion Stock Release to Tackle Rising Prices: Measures and Impact

Amidst concerns of soaring onion prices reaching Rs 55-Rs 60 per kg next month, the Indian government has taken steps to address the situation. The Centre recently announced plans to release stocks from the newly established onion buffer of 3 lakh metric tonnes, aimed at stabilizing the market and ensuring affordable prices for consumers.

Strategic Release of Onion Stocks:

The Department of Consumer Affairs has strategically planned to release onion stocks from the buffer, targeting regions where retail prices exceed the national average and where price hikes have been significant. The release will be carefully managed, considering both quantity and pace, to align with prevailing market conditions and availability. The objective is to ensure onions remain accessible to consumers at reasonable prices. Additionally, the possibility of utilizing e-auctions and e-commerce platforms for disposal is being explored.

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Collaborative Efforts with States:

Apart from market disposal, the department also intends to collaborate with states to offer discounted rates for the sale of onions through their consumer cooperatives and corporations. This cooperative approach seeks to ensure the widest distribution of onions at affordable prices.

Rising Onion Prices and Causes:

The price of onions has been rapidly rising, with reports indicating an increase from Rs 1,200 per quintal on August 5 to Rs 2,500 per quintal on August 9 in key markets. Retail prices have also surged from around Rs 30 per kilo to potentially touch Rs 60-70 per kilo by early September. This escalation is attributed to a lower sowing area during the rabi season, leading to supply-demand imbalances.

Forecasted Price Trends and Seasons:

A report by Crisil Market Intelligence and Analytics predicts a significant price increase in the retail market starting from early September. The report anticipates onion prices to reach Rs 60-70 per kg during the lean period. The country experiences three onion-growing seasons – kharif, late kharif, and rabi – with the rabi season contributing 70% of the total onion produce.

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Increasing Buffer Size and Future Outlook:

Over the past four years, the onion buffer's size has tripled, expanding from 1 lakh metric tonnes in 2020-21 to 3 lakh metric tonnes in 2023-24. This proactive approach aims to create a stable market environment and curb the impact of sudden price spikes on consumers.

In conclusion, the Indian government's decision to release onion stocks from the buffer is a strategic move to stabilize onion prices amidst rising concerns. Collaborative efforts, strategic release plans, and the exploration of alternative distribution methods reflect the commitment to maintaining reasonable onion prices and ensuring that consumers are not unduly burdened by the increasing costs.