Onion Update: The government has raised the procurement price of onions for buffer stocks by 13%, from Rs 1,875 to Rs 2,125 per quintal (Rs 21.25 per kg), effective as of July 4, 2026. This marks the fifth increase in onion purchase prices this season as part of efforts to support farmers and boost government stocks.
Government procurement under the Price Stabilization Fund has been sluggish, with only 2,000 tons of onions purchased since June 1st. The procurement price has steadily increased from Rs 12.70 per kg at the beginning of the season to the current Rs 21.25 per kg.
Onion production and market status in India:
– Record production is expected at 307.37 lakh tonnes for 2025-26, similar to the previous year.
– No shortage of onions reported in key states like Maharashtra, Madhya Pradesh, and Gujarat.
– Daily arrivals of over 50,000 tons in markets, with retail prices averaging Rs 31 per kg compared to Rs 18 per kg in wholesale markets.
Challenges faced
Delayed monsoon in Nashik and parts of Madhya Pradesh causing a 15-day delay in onion sowing for the Kharif season. Some traders hoarding onions due to delayed sowing, potentially leading to price hikes. Indian onion exports facing competition from cheaper onions from Pakistan and China, impacting future export prospects.
The government has increased the procurement price three times this season due to the slow buffer stock procurement pace. However, further hikes could encourage traders to inflate prices artificially. The target for onion purchase this year is two lakh tonnes, but only five thousand tonnes have been procured so far.The Ministry of Agriculture’s second advance estimate predicts onion production to be 307.37 lakh tonnes in 2025-26, similar to last year’s production. Despite this, onion prices are expected to increase due to weather conditions.
Maharashtra, Madhya Pradesh, and Gujarat currently have sufficient onion stocks, with over 50,000 tons of onions entering markets daily nationwide. In Maharashtra alone, about 30,000 tons of onions are supplied daily, with a wholesale price of around Rs 18 per kilogram and a national average retail price of about Rs 31 per kilogram.
Traders in some areas like Nashik, Maharashtra, and parts of Madhya Pradesh are making additional purchases due to delayed monsoons and low rainfall, expecting higher prices in the future. Normal onion exports in June were 150,000 tons. Indian onion exports might slow down in the future as new crops from China and Pakistan are available at competitive prices in Gulf countries, Sri Lanka, and Eastern markets.