India to store potatoes and onions to avoid abnormal price increase

The Government of India has stepped up taking measures, well in advance, to avoid any situation of abnormal increase prices of onion and potato.

Two major entities at national level - National Agricultural Cooperative Marketing Federation (Nafed) and Small Farmers Agri-business Consortium (SFAC) - will be tasked to procure the two major kitchen staples and store them so that the supply can be pumped in when prices go up.

Sources said while Nafed has proposed to procure 10,000 tonnes of onion and recently sought Rs 9.6 crore sanction from the price stabilization fund, SFAC has sought Rs 5 crore for procuring onion and potato. "The committee that is operating the fund has asked Nafed to rework its proposal to keep the amount limited to Rs 5 crore. Both Nafed and SFAC have been asked to coordinate so that they don't up buying same item," said an official privy to the panel's last meeting held on February 20.

Onion prices start rising from July and usually it reaches peak during September-October. Similarly, potato prices go up abnormally between September and November.

Both the agencies besides other state agencies would get financial support from the Rs 700 crore corpus of price stabilization fund to procure these items in advance when the prices are low and also buy items from different markets/ sources when prices start rising. In the second case, potato and onion would be sold at a price which will be little more than the procured price. "Since the role of middlemen is eliminated in such case, the prices will be well within the reach of people. There will be no room for jacking up prices artificially. The system will take care of bringing items from markets where these are available in huge quantity to places where there is shortage. It will discipline the market as well," said a government official.

As per the scheme, the central fund will take care of the loss of procured items during storage.

Sources said the actual requirement of the fund to tame the prices of onion, potato and other perishable commodities would be known in the next two to three months when prices start rising.

However, sources said that the government's thrust to intervene has sent strong message to the middlemen and those involved in hoarding and black marketing. "The sheer fear of government's readiness to step in has its impact on the market. Even the announcement of importing items have helped reduce market prices in the past. But now we have a system in place to take immediate step rather than waiting for procedural approvals to take such measures," a Krishi Bhawan source said.