India: Govt raises onion procurement price, tightens quality norms

• Procurement price hiked to INR 2,335/quintal from INR 2,175/quintal, effective 30 July
• Withdrawal of relaxed quality norms limits procurement to Grade-A onions with 45-65 mm bulb size

The Centre has increased the onion procurement price for government agencies to INR 2,335 per quintal (INR 23.35/kg) from INR 2,175 per quintal, effective 30 July. While the revision provides marginal support to growers, the withdrawal of the Under Relaxed Specification (URS) category has tightened procurement norms, restricting purchases to Grade-A onions. Grower organisations have termed the price increase inadequate, citing rising cultivation costs and storage losses.

Stricter procurement conditions offset price hike

The URS category, introduced on 3 June to speed up procurement, had expanded the eligible bulb-size range from 45-65 mm to 35-70 mm. With the relaxation withdrawn, only onions measuring 45-65 mm and meeting Grade-A standards will now qualify for procurement, reducing the volume eligible for government purchases. So far, government agencies have procured around 100,000 tonnes against the seasonal target of 200,000 tonnes, with procurement supported by 57 centres operating across Nashik district.

Growers seek higher support price

Producer organisations stated that onion production costs have crossed INR 2,000 per quintal, while wholesale market prices remain around the same level. Combined with storage losses of nearly 30%, growers argue that the revised procurement price offers limited relief. They have also sought an increase in the procurement price to INR 3,000 per quintal, stating that the stricter quality norms will exclude a significant share of marketable produce from procurement.

Outlook

The higher procurement price may provide some support to onion growers, but tighter quality specifications could limit procurement volumes. With nearly 50% of the seasonal procurement target already achieved, market participants will closely monitor procurement progress and its impact on farmer participation and onion supplies.