Surge in onion prices

Notes

• Onion prices have surged significantly, with the all-India average reaching ₹49.59/kg by September 1, 2025, a 74% increase from the previous year.
• Production for 2025-26 is estimated at 307.37 lakh tonnes, comparable to the previous year, suggesting supply is adequate for domestic consumption (approx. 307 lt) and exports (approx. 15 lt).
• Key drivers for price volatility include seasonal demand during festivals, weather-related harvest delays, and supply-chain inefficiencies.
• Quality concerns: Reduced availability of high-quality onions due to erratic rainfall and harvest delays in Maharashtra have contributed to price hikes.
• Market behavior: Hoarding and black marketeering by large traders are identified as factors limiting supply release.
• Government intervention: The Centre is utilizing a calibrated release from buffer stocks, selling at ₹35/kg to stabilize retail prices.
• Policy challenges: The government faces a balancing act between ensuring remunerative prices for farmers and affordable prices for consumers.
• Trade policy: Frequent shifts in export duties and bans have created uncertainty for farmers and failed to provide long-term relief.
• Storage issues: High post-harvest losses (up to 30% this year) and inadequate storage infrastructure remain critical structural flaws.
• State-level interventions: Targeted subsidies, such as those in Tamil Nadu, risk exhausting Central buffers if adopted widely.