In a move aimed at accelerating buffer stock creation and encouraging greater farmer participation, the Centre has increased the procurement price of onions under the Price Stabilisation Fund (PSF) by 13% to Rs 2,125 per quintal, effective July 4. The revised rate is expected to improve returns for farmers and help government agencies procure the targeted 2 lakh tonnes of onions for the national price stabilisation buffer.
The government has directed the National Agricultural Cooperative Marketing Federation of India (NAFED) and the National Cooperative Consumers' Federation of India (NCCF) to procure 2 lakh tonnes of onion under the Price Stabilisation Fund (PSF).
Rural Voice had reported last week that very few farmers were coming forward to sell onions to government agencies because they were getting higher prices in the open market. Good-quality onions are currently selling for as much as Rs 3,000 per quintal in the open market.
Apart from the better prices, the procurement process and delayed payments by NAFED and NCCF are also major reasons discouraging farmers. Narendra Wadhavane, Secretary of the Lasalgaon Agricultural Produce Market Committee (APMC), the country's largest onion market, had said that government agencies make payments 72 hours after procurement, whereas private traders in the open market pay farmers immediately.
As per the Second Advance Estimates of the Department of Agriculture & Farmers' Welfare for 2025-26, onion production is estimated at 307.37 lakh metric tonnes (LMT), which is almost equal to the production of 307.67 LMT in 2024-25. Going by the production estimates, according to the ministry, the overall availability of onions is not a concern at this stage, though prices may be expected to inch up in line with the normal price seasonality.
According to the Ministry of Consumer Affairs, Food & Public Distribution, procurement of onions through NAFED and NCCF for the Government's Price Stabilisation Buffer is in progress. The revised procurement price will ensure better returns for onion farmers while supporting buffer procurement efforts. The Ministry said that current stock levels in Maharashtra, Madhya Pradesh and Gujarat are adequate. At present, there are no indications of any shortage of stored onions.
Daily mandi arrivals at the all-India level remain robust at over 50,000 metric tonnes (MT), while arrivals in Maharashtra are over 30,000 MT. Better-quality stocks continue to remain in storage and are expected to be released during the lean period. The all-India average retail price is Rs 31 per kg.
The delay in monsoon arrival and lower-than-normal rainfall in some regions has led to speculative buying by a section of traders, though there is no significant demand at the prevailing price levels in major consuming centres. Despite the sentiment in consumer markets, production centres such as Nashik and parts of Madhya Pradesh are witnessing a tendency for speculative trading activity, largely on expectations of a future market recovery rather than on strong underlying demand.
The Ministry said that onion exports are normal, with about 1.50 LMT exported during June 2026. However, traders expect that the pace of onion exports may slow down for a short duration, primarily because fresh crops from Pakistan and China are available at competitive rates in key export destinations such as the Gulf countries, Sri Lanka and the Far East.
While the Nashik region of Maharashtra has reported about a 15-day delay in Kharif sowing, the sowing progress in the Chitradurga and Challakere belt of Karnataka is estimated to be around 60 per cent of normal.