India, the world’s second-largest onion producer, plans to reduce wastage of the 200,000 tonnes of onions it wants to harvest this season through better storage and reduced post-harvest losses.
This is done in order to keep the prices of widely used basic goods with a relatively high weight of consumer inflation stable.
The central government aims to set a 75% rate of return for onion procurement under the Price Stabilization Fund (PSF) to ensure that the onion so procured leads to lower wastage and more efficient use of the fund, two people involved in the process told Mint, requesting anonymity.
This is the third increase in the rate of return in as many years. Last year, the Department of Consumer Affairs set the recovery rate at 70%, up from 65% in 2024.
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A 75% yield rate means that for every tonne of onion harvested, 750 kg is expected to remain usable; the remaining 250 kg is wasted due to factors such as moisture loss, rot, germination and physical damage during storage and transport.
With onion procurement set to begin from the first week of May to create a reserve of 200,000 tonnes, the move by the consumer affairs ministry aims to keep retail prices stable and affordable for consumers by improving storage efficiency and reducing post-harvest losses.
“The the rabi crop is better and we plan to set the recovery rate at 75%,” said the first of the two people cited above, adding that the government has strengthened storage facilities in a scientific manner and hopes that a 75% recovery rate is feasible.
High weight in CPI
This last step assumes significance as onion has a weight of around 0.8% in the consumer price index (CPI) and any sharp rise in onion prices can fuel food inflation. As a staple kitchen item in India, onion is a politically sensitive commodity and in the past has contributed to incumbent governments losing power due to skyrocketing and uncontrolled price increases.
The second person said that higher yield rates will also ensure better onion quality at the time of delivery. “As the National Weather Service has predicted a sub-normal monsoon that may impact kharif onion sowing, better quality of onion in storage will help stabilize prices during the peak festive season.”
The person added that initially the intended purchase amount is 200,000 tonnes, which may be increased further to help farmers get better prices.
Inquiries sent to the Department of Consumer Affairs remained unanswered as of press time.
Farmers, meanwhile, expressed concern over the fall in onion prices and urged the government to procure the crop at minimum ₹15/kg. Currently, onions are sold to local traders at ₹8-10/kg, which is significantly lower than the cost of production, said Bajirao Gagare, an onion grower from Maharashtra.
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Growing onions on one acre of land can cost ₹60,000- ₹75,000, with a yield averaging around 10-20 tonnes depending on the agricultural practices used Farmers, Gagare said. He runs ‘Hi Maitri Vicharanchi’ on social media to educate growers on best farming practices.
Analysts said the higher recovery rate will improve the effectiveness of buffer stocks and help mitigate price spikes during lean periods as more usable onions remain available for market intervention. “However, its impact on price stability will still depend on the overall level of production and the timeliness of government releases,” said Rakesh Arrawatia, professor at the Institute of Rural Administration Anand (IRMA), Gujarat and Dean, School of Cooperative Banking and Finance.
“A higher recovery rate is a positive step as it reflects improved storage and handling efficiency, but its success will depend on maintaining quality during procurement and minimizing post-harvest losses,” said Binod Anand, an agriculture expert and member of the government’s Minimum Support Panel (MSP). Kumar also emphasized that the government should buy at the best price from farmers. The MSP Committee was established in 2022 to streamline the crop minimum price mechanism, promote crop diversification and strengthen agricultural marketing systems.
India’s retail inflation rose to 3.4% in March from 3.21% in February due to rising food prices and energy costs from the war in West Asia. March’s growth was led by food prices – a key component of the country’s consumer price index – which rose 3.87% in March from 3.47% in February.
According to the final estimates released by the company agriculture ministry in March, onion area increased from 15.41 lakh hectares in 2023-24 to 19.68 lakh hectares in 2024-25, with production at 307.67 lakh tonnes from 242.67 lakh tonnes. Since April 25, the retail price of onions has decreased ₹24.79/kg from ₹28.47/kg a year ago.
According to Commerce Department data, onion exports stood at $337.92 million in FY26 (up to January), compared to $480.82 million in FY25 and $525.22 million in FY24, indicating a downward trend in the last two years.
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How to get onions
Onions are procured by National Agricultural Cooperative Marketing Federation of India (NAFED) and National Cooperative Consumers’ Federation of India (NCCF) from farmers’ organizations (FPOs) and farmers. The Ministry of Consumer Affairs bears the cost of procurement while NAFED and NCCF act as lead agencies for procurement and buffer stocking.
Major onion producing states are Maharashtra, Madhya Pradesh, Gujarat, Karnataka, Rajasthan, Bihar, West Bengal, Uttar Pradesh, Haryana and Andhra Pradesh. Maharashtra ranks first in onion production with a share of about 36%, followed by Madhya Pradesh with a share of 17%.
