Study finds onion buffer curbs retail price swings, lifts farmer earnings

Subscribe to enjoy similar stories. New Delhi: A new evaluation of the Centre’s onion buffer programme has found that the Price Stabilisation Fund (PSF) has been able to significantly reduce retail price volatility of the vegetable and improve farmer incomes.

The government procures about 300,000 tonnes of onions every year under PSF, a scheme meant to curb price volatility of essential farm commodities such as onion, potatoes, and pulses, for distribution at below market price. The study, conducted by the Department of Consumer Affairs in collaboration with Arcus Policy Research, shows that retail price volatility of onions dropped 24% while consumer prices stayed 36–45% below prevailing market rates during disposal months of August to December, even though PSF procures barely 1-2% of the national output.

The study analysed the impact of the PSF over five disposal months through December, and covers two financial years—FY24 and FY25. The government sold onions at ₹2,500 per quintal, while the retail price averaged about ₹4,557 per quintal—a gap of about 45%—in the five disposal months of 2023-24.

Similarly, the disposal price was ₹3,500 per quintal, compared to the average retail price of ₹5,473 per quintal—a gap of about 36%—in 2024-25. The study was submitted to the consumer affairs ministry early this month, which uploaded it on the website of the Department of Consumer Affairs.

The current findings reaffirm that PSF interventions have become more structured and predictable over time, making the fund a central tool in India’s price-stabilization framework, two government officials told Mint, requesting not to be named. For 2025-26, the PSF has been allocated ₹4,020 crore under the budget of the Department of Consumer