Govt’s another move to rein in soaring onion prices; stock limit imposed on wholesellers, retailers

The government today imposed a stock limit on onion after the prices more than doubled than the last 5-year average. While the wholesalers can’t keep more than 25 tonnes of onion, the retailers are allowed to stock up to a maximum of 2 tonnes of onion. The limit will be effective from today and will last till the end of 2020, according to the Ministry of Consumer Affairs, Food & Public Distribution. The latest decision by the government has come after it barred onion exports last month and eased the imports earlier this week, to rein in the rising prices.

The all India average retail price of onion rose 22.12 per cent on-year, as of 21 October. The prices rose 114.96 per cent when compared to the last 5 years average. The government said that under the Essential Commodities (Amendment) Act, 2020, the stock limit can be imposed under extraordinary price rise.

In an effort to control the prices of onion, the government had relaxed the conditions for onion imports earlier this week. It included conditions for fumigation and additional declaration on Phytosanitary Certificate under the Plant Quarantine Order, 2003 for import up to 15 December 2020. The government had also announced a ban on onion export on 14 September to ensure availability to domestic consumers at reasonable rates, before the expected arrival of Kharif onion. However, heavy rainfall in the onion growing districts of Maharashtra, Karnataka, Andhra Pradesh, and Madhya Pradesh have created concerns about damage to the Kharif crop, contributing to a sharp increase in onion prices. 

While the government has rolled out measures to ease onion imports and have imposed stock limits on wholesalers and retailers, it has stepped up the disposal of onion through the built-up onion buffer stock from the Rabi onion -2020. The release of onion from the buffer stock is being carried out swiftly in a calibrated manner from the second half of September 2020. Consequently, onion is reaching major Mandis and retail suppliers such as Safal, Kendriya Bhandar, NCCF, etc. Further, onions are also being disposed off through open market sales. The government added that the open market sales will be stepped up further to bring down the price rise.