India: Govt raises onion procurement price to INR 2,125/qtl to accelerate buffer stock purchases

• Procurement price revised upward by 13.3% to improve farmer participation
  
  
• Open-market prices continue to influence government buying momentum
  
  

The Centre has increased the onion procurement price under the Price Stabilisation Fund (PSF) to INR 2,125/quintal from INR 1,875/quintal, effective 4 July, in an effort to strengthen buffer stock procurement and offer better price support to growers. The latest revision comes as procurement agencies continue to face challenges in sourcing onions amid relatively firm open-market prices.

Higher procurement price aims to improve arrivals

The revised procurement rate is expected to enhance the competitiveness of government buying, particularly in key onion-producing states where farmers have largely preferred private trade due to better price realizations. The latest increase marks another upward revision in the ongoing procurement season as the Centre seeks to accelerate buffer stock creation under the PSF.

The government has targeted procurement of 0.2 MMT of onions during the current season through NAFED and NCCF to strengthen buffer availability and manage future price volatility.

Market conditions remain broadly comfortable

Despite the increase in procurement prices, onion availability across major producing regions remains adequate. Market arrivals continue to support domestic supplies, while procurement agencies are expected to intensify purchases following the revised procurement rate. The pace of government buying will largely depend on prevailing mandi prices and farmer participation over the coming weeks.

Outlook

The higher procurement price is likely to improve farmer interest in government procurement and support buffer stock creation in the near term. However, procurement momentum will continue to depend on the gap between open-market prices and procurement rates. Market participants will closely monitor arrivals, kharif crop progress, and export demand for further direction in onion prices.