India Has Millions Of Tonnes Of Onions. So Why Are Prices Touching ₹62/Kg?

Onion prices are once again putting pressure on household budgets, with retail prices climbing sharply ahead of the festive season. In Delhi, onion prices have touched ₹62 per kg, prompting the Centre to intervene with subsidised sales and additional supplies from its buffer stock.

The government has attributed the latest increase to black marketing, hoarding and profiteering, while maintaining that there is enough stock to meet domestic demand during the festive period. It has also ruled out an immediate need for an export ban.

So why do onion prices rise sharply even when India produces millions of tonnes of onions every year?

The answer lies less in how much India produces annually and more in when that produce is harvested, how much can be stored and how efficiently it reaches consumers.

How Much Onion Does India Produce Every Year?

India is the world's second-largest onion producer after China, producing around 25-30 million metric tonnes annually under normal agricultural conditions.

Maharashtra, Madhya Pradesh, Karnataka and Gujarat are among the country's major onion-producing states. On an annual basis, production is large enough to meet domestic requirements and leave a surplus for exports.

But annual production figures can mask significant seasonal gaps. Onion consumption continues throughout the year, while cultivation and harvesting are concentrated in specific periods.

That creates a recurring problem: India can have enough onions for the year on paper, but not necessarily enough marketable onions at a particular time and place.

Why Does India Face Onion Shortages Despite High Production?

The key problem is a mismatch between the timing of supply and year-round demand. Farmers harvest onions in distinct crop cycles, whereas consumers require them every day.

During periods between harvests, the market depends heavily on stored onions. Any disruption caused by unseasonal rain, delayed monsoons, crop damage or transportation bottlenecks can reduce available supplies.

The problem can be amplified by the concentration of production in a few major states and by inefficiencies in moving onions from producing regions to large consumption centres.

Hoarding and speculative activity can further tighten supplies available in the market. As a result, even a relatively modest reduction in physical availability can translate into a much larger increase in retail prices.

The Centre has also pointed to market intermediaries as a factor behind the recent increase.

Agriculture Minister Shivraj Singh Chouhan has said middlemen are responsible for pushing up onion prices, while stressing that farmers should receive a fair price and consumers should not have to pay excessive rates.

Consumer Affairs Secretary Nidhi Khare has similarly attributed the increase to black marketing, hoarding and profiteering. The government has said onion availability is sufficient for the festive season and that it is not currently considering an export ban.

Why Rabi Onions Matter For India's Supply

India grows onions in three principal cycles — Rabi, Kharif and Late Kharif. The Rabi crop is particularly important because it accounts for roughly 65-70% of annual production. Harvested between March and May, Rabi onions have relatively low moisture and a thicker outer skin, making them better suited to prolonged storage.

This crop effectively becomes India's supply cushion for the months when fresh onion arrivals are limited.

Why Are Stored Onions So Important Between June And November?

The period between June and November is a crucial lean season for onions.

Once the Rabi harvest ends, fresh supplies from major producing areas decline while the next crop is still being cultivated. The market consequently relies heavily on onions stored from the Rabi harvest.

This means the availability and quality of stored onions can have a major influence on prices for several months.

If stocks deteriorate faster than expected, or if fresh Kharif arrivals are delayed, supplies can become tight just when demand remains steady.

Onion And Sugar Prices Add To Festive Pressure

The onion price increase is coming alongside higher sugar prices, adding to pressure on household food budgets before the festive season.

Retail onion prices have reportedly risen from around ₹35 to ₹60-65 per kg in several markets. Sugar prices have also increased, reportedly moving from around ₹48 to nearly ₹65 per kg within a month.

To ease the pressure, the government has launched ‘Kanda Express’, transporting around 800 tonnes of onions to major consumption centres for subsidised sale at ₹35 per kg.

How Do Storage Losses Push Up Onion Prices?

Storage is another major weakness in the onion supply chain.

Much of India's traditional onion storage takes place in ventilated structures known as kanda chawls. While these facilities allow airflow, stored onions remain vulnerable to heat and humidity.

Over the summer and monsoon months, onions can lose weight, rot or sprout. The source estimates that 20-40% of stored Rabi onions can be lost to post-harvest deterioration.

Every tonne lost to spoilage reduces the quantity ultimately available for sale. By the end of the lean season, those cumulative losses can significantly tighten market supply and push prices higher.

Why Is The Kharif Onion Crop Important?

The Kharif crop, harvested mainly between October and December, provides fresh supplies after the Rabi stocks have carried the market through much of the lean period.

It accounts for around 15-20% of annual production but is more moisture-rich and therefore less suitable for long-term storage.

Its timely arrival is consequently critical. If excessive or unseasonal rainfall damages the crop or delays harvesting, the market can face a supply gap just as stored Rabi stocks are running down. That is one reason onion prices can rise sharply towards the end of the year.

How Does The Government Use Onion Buffer Stocks?

The government maintains an onion buffer stock through agencies including NAFED and NCCF.

During the Rabi harvesting season, these agencies procure onions directly from farmers and hold them as a strategic reserve. When market prices begin rising, the stocks can be released through open-market sales, subsidised retail outlets and supplies directed towards major consumption centres.

The objective is to increase physical availability at times when market supplies are tight and prevent temporary shortages from turning into extreme price spikes.

The Consumer Affairs Ministry has directed NAFED and NCCF to sell onions at ₹35 per kg through retail outlets and mobile vans in cities such as Delhi.

NCCF has nine outlets and 40 mobile vans, while NAFED has 13 outlets and 50 mobile vans. Kendriya Bhandar has around 100 outlets participating in the programme.

The government is also moving onions from its buffer stocks by both rail and road, with supplies being directed towards major consumption centres depending on market conditions.

The intervention is intended to improve availability and provide consumers with an alternative to higher-priced retail supplies.

Can Buffer Stocks Stop Onion Price Inflation?

Buffer stocks can help cool prices in the short term, but they cannot completely eliminate onion-price volatility.

Government procurement represents only a portion of the country's overall onion requirement, while transporting stocks to areas facing shortages can take time. Storage losses can also reduce the quantity available for eventual release.

The deeper challenge is therefore structural. Greater investment in better storage and cold-chain infrastructure, climate-resilient cultivation, efficient transportation and processing capacity could reduce the vulnerability of the onion supply chain.

In other words, India's onion problem is not necessarily one of producing too little.

It is often a problem of producing at the wrong time, losing too much in storage and moving too slowly from farm to market. Until those gaps are addressed, a bumper annual harvest will not necessarily prevent another onion price shock.