Onion procurement price hiked 6th time this season

The Indian government has increased the minimum assured procurement price for onions for the sixth time this season, attempting to boost purchases for its buffer stock. The price in Maharashtra has been raised to ₹2,335 per quintal (₹23.35 per kg) as of July 30, according to an office memorandum issued on July 29.

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Onion prices in India are expected to remain elevated due to a notable production decline in Maharashtra, the country’s largest producer, triggered by unseasonal rains, reduced acreage, and lower yields in the 2025-26 season.

Despite these efforts, government agencies have procured only about 105,000 tonnes of onions against a target of 300,000 tonnes for the 2026-27 buffer stock. Procurement efforts are expected to be extended beyond the original deadline to meet the target. The buffer stock is crucial for the Price Stabilisation Fund, which aims to release onions into the market during the lean supply period from September to November to control price surges.

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High post-harvest storage losses (around 30% in key areas) and inadequate infrastructure have further tightened the supply of marketable bulbs entering the lean period.

This price hike occurs as retail onion prices have climbed approximately 20% in the past month to ₹35 per kg nationwide, and 25% higher than a year ago. Experts attribute the rising prices and tight supply to a significant production decline in Maharashtra, India's largest onion producer, caused by unseasonal rains, reduced acreage, and lower yields. High post-harvest storage losses and inadequate infrastructure further exacerbate the supply shortage. Delayed monsoon impacts on the upcoming kharif crop and speculative buying are also expected to sustain upward price pressure in the near term.

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Combined with delayed monsoon impacts on kharif sowing and speculative buying, these factors are likely to sustain upward pressure on both wholesale and retail prices in the near term.