Onion Price Stability Achieved as Government Buffer Cuts Volatility by 24%

A new government study confirms India’s onion buffer stock policy is working. The Price Stabilisation Fund (PSF) has significantly reduced retail price swings. This finding comes from an evaluation by the Department of Consumer Affairs and Arcus Policy Research. It covers the last two financial years.

The programme stabilizes a politically sensitive kitchen staple. Officials say the fund is now a central tool in India’s price-control framework. According to the report, its predictable interventions send powerful market signals.

Detailed Study Shows Sharp Price Benefits for Consumers

The numbers are compelling. Retail price volatility for onions dropped by 24%. During buffer disposal months from August to December, consumers paid far less. In 2023-24, government onions sold for ₹2,500 per quintal.

The average market rate was ₹4,557. That is a 45% discount. The gap was 36% in the 2024-25 period. This impact is achieved by procuring just 1-2% of national output. The small, timed releases effectively calm the market.

Farmers also gain. The report states they received 3-19% higher prices than mandi rates. Payments now arrive within three days instead of ten. This improves liquidity and cuts distress sales.

Broader Impact and Evolution of the Stabilisation Scheme

The scheme’s scale has expanded dramatically. Procurement grew from 0.14 lakh tonnes in 2018 to 300,000 tonnes in 2025. Over 18,000 farmers benefited directly last year. The government uses agencies like NAFED and NCCF for the work.

Reforms have boosted efficiency. Using railways halved delivery times and cut transport costs by 17%. Disposal channels now include e-commerce and mobile vans. The PSF operates in 20 states.

Economists note the results match global evidence. Small, predictable buffers can tame volatile agricultural markets. The PSF has been merged into the broader PM-AASHA scheme but remains a key price-monitoring tool.

The government’s focused onion buffer strategy is delivering tangible results. It enhances market predictability for a crucial crop. This approach to onion price stability protects both farmers and household budgets effectively.

A quick knowledge drop for you:

Q1: How does the onion buffer stock scheme work?

The government procures onions from farmers after harvest. It stores them and releases stocks during lean periods. This timed release helps moderate market prices.

Q2: Who benefits from the Price Stabilisation Fund?

Both farmers and consumers benefit. Farmers get assured procurement and faster payments. Consumers access onions at prices significantly below volatile market rates.

Q3: How much onion does the government procure?

The annual procurement target is about 300,000 tonnes. This represents roughly 1-2% of India’s total onion production but has an outsized impact on market psychology.

Q4: What is the price difference for consumers?

The study found consumers paid 36% to 45% less during buffer sales. In one period, the government price was ₹2,500 per quintal versus a market average of ₹4,557.

Q5: Will the scheme continue in the future?

Yes. The PSF has a budget allocation for 2025-26. It is now a permanent component of India’s agricultural price support framework under the PM-AASHA umbrella.