The Union government has increased the onion procurement price for the sixth time this season as purchases for its buffer stock continue to fall short of the revised target, even as authorities extend procurement efforts to build adequate stocks for the lean supply season, people familiar with the matter said.
Market Context
Under an office memorandum issued on July 29, the Department of Consumer Affairs raised the Minimum Assured Procurement Price (MAPP) for onions in Maharashtra to ₹2,335 per quintal ( ₹23.35 per kg), effective July 30. The order also discontinues procurement of Grade-URS onions, making only Grade-A quality onions eligible for procurement from July 30.
Government agencies have procured around 105,000 tonnes of onions so far against the 300,000-tonne buffer stock target for 2026-27. Market participants expect the procurement deadline to be extended until August 15 to enable agencies to complete a larger share of purchases, those aware of the details said.
The buffer stock is maintained under the Price Stabilisation Fund, which allows the Centre to release onions into the market during the lean supply period between September and November to curb price spikes.
Despite the recent rise in prices, the government has maintained that onion availability remains comfortable. In a recent statement, the consumer affairs ministry said stocks in Maharashtra, Madhya Pradesh and Gujarat remain adequate, with no indication of any shortage.
However, experts believe declining stocks could tighten market supplies and push prices higher.
“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. 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,” he said.
Crisil Intelligence also sees prices firm over the medium term because of tight rabi supplies and delayed arrivals of the kharif crop.
In its last statement issued on July 5, the ministry attributed the recent firmness in onion prices largely to speculative buying triggered by below-normal rainfall in parts of Maharashtra and Madhya Pradesh, rather than any immediate supply shortage.
Future Forecast
“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,” said Deepak Pareek, founder of agri-consulting firm HnyB.
According to the Department of Agriculture and Farmers’ Welfare’s Second Advance Estimates, onion production for 2025-26 is pegged at 30.7 million tonnes, almost unchanged from 30.8 million tonnes in the previous year.
EOM
Source
The latest revision comes at a time when onion prices are firming up. Average retail onion prices across India stood at ₹35 per kg on July 29, about 20% higher than a month ago and 25% above the level recorded a year earlier, according to data from the consumer affairs ministry. Wholesale prices averaged ₹2,760 per quintal, registering similar month-on-month and year-on-year increases.
