·The Hindu·15 marks·250–350 words

Discuss the structural deficiencies in India's agricultural storage and marketing infrastructure that undermine price stabilisation measures like the Price Stabilisation Fund.

In this answer
  1. Storage deficit at the farm gate
  2. A buffer too thin to move the market
  3. Concentrated production, fragmented markets
  4. Trade policy substituting for infrastructure

The Price Stabilisation Fund (PSF) lets NAFED and NCCF buy onion directly from farmers to build a buffer against price spikes [2]. But a fund can only stabilise what the physical system can store and move — and it is here that India's structural gaps bite.

Storage deficit at the farm gate

  • Post-harvest losses stay high for want of pack houses, cold chains and farm-gate storage; the Agriculture Infrastructure Fund, launched in 2020-21 precisely to bridge this gap, had sanctioned ₹56,334 crore for 92,393 projects by January 2025 [3].
  • Onion needs ventilated, low-humidity storage. Operation Greens under PMKSY offers 50% transport and storage subsidy for the tomato-onion-potato chain [4], yet capacity still lags the producing clusters.
  • Consequently farmers must sell at the harvest peak, and procurement arrives only after prices have collapsed.

A buffer too thin to move the market

  • Buffer targets of about 5 lakh tonnes [2] are marginal against rabi onion output estimated at 227 lakh tonnes in 2024-25 [6]. Small buffers smooth extremes; they cannot anchor the price line.

Concentrated production, fragmented markets

  • Maharashtra alone grows about 43% of national onion and Madhya Pradesh 16% [1], so a regional glut becomes a national shock and long-haul logistics decide farmer realisation.
  • Price discovery remains mandi-bound: e-NAM has integrated only around 1,200-odd mandis [5], leaving most trade in fragmented APMC yards with asymmetric information.

Trade policy substituting for infrastructure

  • Export prohibition (December 2023), then MEP with 40% duty, cut to 20% in September 2024 and withdrawn from 1 April 2025 [6] — churn that destabilises sowing decisions.

Storage, logistics and transparent markets are the load-bearing walls; the PSF is only the roof. Scaling AIF-funded farm-gate storage, extending Operation Greens capacity into producing clusters and deepening e-NAM would let buffers act pre-emptively rather than as post-collapse relief, making remunerative and predictable prices a structural outcome rather than an annual rescue.

Sources

  1. 1PIB — Centre directs NAFED and NCCF to intervene in the market for purchase of Red Onion (Kharif) amid falling pricesMaharashtra ~43% and Madhya Pradesh ~16% share of onion output
  2. 2PIB — Government directs NCCF and NAFED to procure 5 lakh tonnes of onion for the buffer directly from farmersPSF buffer mechanism, procurement agencies and buffer size
  3. 3PIB — Evaluation of Performance of Agriculture Infrastructure FundAIF objective of bridging post-harvest storage gaps; sanctions as on January 2025
  4. 4PIB — Operation Greens under Pradhan Mantri Kisan SAMPADA Yojana for enhancing value realisation and minimising post-harvest losses50% transport and storage subsidy for TOP crops
  5. 5PIB — National Agriculture Market (e-NAM)extent of mandi integration and price-discovery reach
  6. 6PIB — Centre withdraws 20% duty on onion export effective from April 1st, 2025export duty sequence and rabi onion production estimate of 227 LMT

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