Onion Sector in India – Price Distress and Policy Challenges

Onion Sector Latest News

• Maharashtra’s onion farmers are protesting after prices crashed below production costs, demanding compensation, stable export policies, and procurement support.

Onion Production in India

• India is the world’s second-largest producer of onions, after China, with annual production averaging 25–30 million tonnes. 
• Maharashtra, Madhya Pradesh, Karnataka, Gujarat, and Rajasthan are the leading producers. 
• The country grows three onion crops, Kharif, Late Kharif, and Rabi, with Rabi onions having higher storage potential and accounting for nearly 60% of annual output.
• Maharashtra dominates production due to a favourable climate and large-scale cultivation in districts like Nashik, Ahmednagar, Pune, and Solapur. However, despite its massive output, the sector faces persistent problems.

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Challenges Faced by the Onion Sector

• Price volatility: Onions often witness extreme price fluctuations due to excess production, poor storage, and sudden export restrictions.
• Storage losses: A significant portion of Rabi onions deteriorates due to poor storage infrastructure, leading to wastage and distress sales.
• Export policy flip-flops: Frequent bans and restrictions undermine India’s credibility in global onion markets, leading to competitors like China and Pakistan capturing India’s lost share.
• High production costs: Fertilisers, seeds, storage, and labour raise production costs to Rs. 2,200-Rs. 2,500 per quintal, but farmers often receive far less in the market.

News Summary

• Farmers in Maharashtra began agitating on September 12, 2025, after onion prices fell sharply. 
• Currently, they are receiving only Rs. 800-Rs. 1,000 per quintal, less than half the cost of production. 
• The crisis worsened because Rabi onions stored in anticipation of higher prices began deteriorating, forcing distress sales.
• Adding to the distress, the government released buffer stocks into the market through the National Cooperative Consumers’ Federation (NCCF) and National Agricultural Cooperative Marketing Federation of India (NAFED). 
• While the buffer stock policy aims to stabilise consumer prices, it further dragged down wholesale rates, aggravating farmers’ losses.
• Farmers’ Demands
  • A compensation of Rs. 1,500 per quintal for the losses.
  • Immediate halt to the sale of NCCF and NAFED buffer stocks in cities.
  • A uniform and stable export policy to restore trust among importing nations.
  • Discussions with key buyers like Bangladesh and Sri Lanka, which were once major markets for Indian onions.
• Impact of Export Policy
  • India exported 25.25 lakh tonnes of onions in 2022–23, but exports fell drastically to 11.47 lakh tonnes in 2024–25. 
  • This sharp fall eroded India’s competitiveness, with buyers shifting to China and Pakistan. 
  • Experts argue that inconsistent export policies have damaged India’s reputation in global markets.
• Alternative Solutions Suggested
  • Farmers and exporters have urged the government to incentivise exports to regain India’s lost market share.
  • Replicating Andhra Pradesh’s procurement model, where onions are purchased at Rs. 1,200 per quintal, is being suggested for Maharashtra to ensure a minimum support price.
  • Long-term measures such as cold storage expansion and farmer-producer organisations (FPOs) for collective bargaining have been emphasised.

Conclusion

• The onion crisis in Maharashtra reflects the deep-rooted systemic flaws in India’s agricultural pricing and export policies. 
• While buffer stock release and price stabilisation policies aim to protect consumers, they often end up hurting farmers. 
• The current protests underline the urgent need for structural reforms, from stable export strategies to better procurement models and infrastructure upgrades. 
• Without these, India’s onion farmers will remain at the mercy of volatile markets, recurring protests, and policy inconsistencies.

Source: TH