Onion prices in India vary based on seasonal harvests. The Economic Survey 2021 explained why onion prices spike between the months of August and November.
Rabi harvesting takes place between March and May in most states and the crop is sold during the June-July period. Kharif harvesting takes place between October and November and the crop is available in the market till Rabi harvest. Hence, the period between when Rabi harvest stocks are sold and when Kharif harvesting happens (August to November) is when we observe the prices of onion rise sharply. During this period, supply is low, when demand is high, hence prices rise.
National Agricultural Cooperative Marketing Federation of India Ltd (NAFED) procures and stores onion mostly in three states - Maharashtra, Madhya Pradesh and Gujarat. The concentration of stock storage in just three states makes it more susceptible to adverse weather shocks. Moreover, this doesn’t allow for immediate action when needed, in fact, delays it. A decentralised system of procurement and storage with proper tracking can make the system more robust.
The Economic Survey suggests that there should be a transparent online platform where all information relating to requirement details by states, procurement that is undertaken state-wise and month-wise, the amount disbursed per state, agency and month-wise should be made available for better planning and decision making.