In response to the recurring issue of onion shortages, the Indian government is formulating a strategy to establish stockholding centers across various regions to mitigate reliance on Nashik, Maharashtra, as the sole buffer zone. This initiative is aimed at stabilizing onion prices during deficits and ensuring availability to households nationwide. By introducing regional stockholding centers, the government intends to eliminate the vulnerabilities in the supply chain attributed to the centralized storage system. This approach is also expected to reduce the expenditure incurred in transporting onions from Nashik for market interventions, including discounted sales through NAFED and NCCF and releasing buffer stocks into wholesale markets. Discussions regarding this plan are ongoing with the Ministry of Agriculture.
The backdrop of this proposal is a noticeable decline in onion production, with figures falling from 31.6 million tons in FY22 to 24.2 million tons in FY24, alongside a consistent annual household consumption of 19.3 million tons in FY23. The centralization of onion storage in Nashik has been identified as a key factor contributing to supply chain weaknesses. The proposed decentralization and creation of regional stockholding centers aim to foster a more robust supply system. Potential locations for these alternative storage ecosystems are being explored, with Delhi NCR, Ranchi, Guwahati, Rajasthan, Madhya Pradesh, Karnataka, and Gujarat under consideration.
The government's objective for FY25 includes the procurement of 475,000 tons of onions for buffer stock. Currently, onion transportation from Nashik during price surges involves a logistical timeframe of 5-6 days by truck and 2-3 days by train to various destinations. The feasibility of establishing storage facilities through public-private partnerships or utilizing existing storage infrastructures is under review.
Amid these developments, the government commenced selling onions at a reduced rate of $0.42/kg in September 2024, countering the higher market prices. The issue of inadequate warehousing infrastructure has been highlighted, emphasizing the necessity for efficient storage solutions for perishable commodities like onions. The strategic placement and scaling of warehouses are crucial for minimizing wastage and satisfying demand effectively, according to Rakesh Arrawatia, a professor at the Institute of Rural Management Anand, Gujarat.
Source: Mint