In today's FirstScroll, we break down why onion prices swing so wildly every year, and why the same crop can be worth ₹1 in May and ₹50 in September.
The Story
Picture a farmer in Paithan, in Maharashtra's Marathwada region. He loads more than a tonne of onions onto a vehicle, drives to the mandi, and waits for the auction.
When the paperwork is done, he has not earned a rupee. The market fee is bigger than the sale, so he walks home owing money.
This is not a story from a drought decade. It happened this May, when onions in several Maharashtra mandis fetched as little as ₹1 a kg in some mandis. Some farmers simply burned their crop.
Then, the same onion turned expensive. Average retail prices across India rose from ₹29.5 to ₹56.1 a kg between 1 June and 10 September, a jump of about 90% in just over three months.
And here is the strange part. India's onion output barely moved at 307.37 lakh tonnes in FY26, almost the same as the year before.
So here's the question: if India grew about the same amount of onions, why did the price go from farmers dumping them to families rationing them in a matter of months?
You see, the problem is not how many onions India grows. It is when they arrive, and how many survive the wait.
India harvests onions in waves. The kharif crop comes in after the monsoon and rots quickly. The rabi crop, harvested around April, is the one that stores, and it has to feed the country through the long gap until the next kharif harvest.
Think of the rabi crop as a water tank filled once a year. Summer's glut fills it, and the months from August to October slowly drain it. If the tank springs a leak, the country runs dry before the next refill.
This year, the tank leaked. Unseasonal rain damaged Maharashtra's rabi crop, and damaged onions do not store well.
By mid-September, traders estimated only 30% to 40% of last season's crop remained, with its quality slipping fast. The same report said fresh red onion arrivals were running a month or more behind schedule.
Now add the second ingredient: onions are what economists call price inelastic. When a vegetable is in almost every meal, people keep buying it even when it gets costlier. So a small shortfall does not trim demand, it simply pushes the price up hard.
Geography makes it worse. Maharashtra and Madhya Pradesh together produced 57.7% of the FY26 crop, so bad weather in one region ripples into kitchens everywhere.
Now, onions are one vegetable, so why should you care? Because food prices feed straight into inflation, and onion inflation jumped to 48.27% in August from 22.54% in July. That shapes how the RBI thinks about rates, as we saw in our [RBI monetary policy 2026 explained](INTERNAL: rbi monetary policy 2026 explained) story.
So who wants what here? The farmer wants a price that covers the cost of growing, while the household wants cheap onions.
And the government? It wants both at once, especially before an election.
This is where the buffer stock comes in. The government keeps a reserve of onions and releases it when prices climb, selling at ₹35 a kg through outlets in dozens of cities.
But here's the twist. The buffer is tiny compared to the market it is meant to calm.
The government held 1.21 lakh tonnes of onion in its buffer this year. That is roughly 0.4% of what India grows in a year, which is enough to send a signal but not enough to fill the tank.
And the fix can create the next problem. In an earlier season, heavy buffer releases pushed Lasalgaon prices below the cost of production, hurting the very farmers who grow the crop.
That creates a loop economists call the cobweb cycle. A crash makes farmers plant less next season. Less planting brings a shortage, a shortage brings high prices, and high prices bring a planting rush that sets up the next crash.
Exports add one more swing. India's onion shipments to Bangladesh, once a big buyer, fell to just 12,000 tonnes last year from about 7.24 lakh tonnes in FY24. When a market that size disappears, the glut stays at home and prices collapse.
Now to be clear, the government is not standing still. Wholesale prices have fallen about 9% in the last nine days, and officials expect the new kharif crop from mid-October to ease the pressure further.
The deeper fix is storage. Better warehouses would let more of the summer glut survive until autumn, which would lift farm prices in May and cool kitchen prices in September at the same time.
So, is the onion problem about farming? Not really. It is about storage, timing and a supply chain that runs through a handful of districts.
India already grows enough onions. Whether it can learn to keep them until they are needed is something only time will tell.
Until then…
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