A Marginal Hike: Why Onion Farmers Are Still Unimpressed with the New Purchase Price

The government has raised the buffer stock procurement price for onions to Rs 16.50 per kg, but the move leaves a massive gap between official rates and the demands of Maharashtra’s cultivators.

The dusty mandis of Maharashtra are buzzing again, but not with the satisfaction the Union government might have hoped for. In a bid to balance market volatility with farmer income, the Centre has nudged the procurement price for प्याज (onions) up to Rs 16.50 per kg, a modest climb from the previous Rs 15.80. While the move is an original effort to provide a safety net under the Price Stabilisation Fund (PSF), the ground reality in the country’s largest onion-producing belt suggests a significant mismatch in expectations.

The Gap Between Policy and Profit

This revision, confirmed by Union Food and Consumer Affairs Minister Pralhad Joshi, follows a series of internal reviews aimed at streamlining the buffer stock. The government has set a target of procuring two lakh tonnes for the current fiscal year—a step down from the three lakh tonnes managed in 2025-26. According to official data, the production for 2025-26 is projected at 307.37 lakh tonnes, nearly identical to the previous year’s output. Yet, for the farmer, the math remains bleak.

Farmers in Maharashtra, the heartland of this volatile crop, had lobbied hard for a purchase price of Rs 30 per kg. They argue that the state’s current high cultivation costs make the government’s revised rate of Rs 1,650 per quintal—up from Rs 1,580—largely insufficient. From their perspective, the interventions by agencies like NAFED and NCCAF are failing to reflect the actual costs incurred to get the crop from the field to the market.

Why It Matters: The Bigger Picture

This tug-of-war highlights the perennial challenge of managing food inflation without alienating the agricultural base. By setting a "Minimum Assured Purchase Price" (MAPP), the government is attempting to act as a market stabilizer. However, the recurring friction between official procurement rates and the market’s demand-supply reality shows that the buffer stock mechanism is often seen by farmers as a reactive measure rather than a proactive solution to rising input costs.

The government maintains that the pricing formula has been improved to stay responsive to market conditions and quality requirements. Still, as long as the procurement price remains significantly lower than the farmer's break-even demand, the political economy of the onion trade will remain fragile. For the ministry, the goal is to keep retail prices stable for the urban consumer; for the producer, this primary source of income is increasingly becoming a gamble against the backdrop of stagnating returns.