Onions, sugar, rice: Why India’s food staples have gotten costly

Which staples became more expensive, and by how much did onion, sugar, and rice prices rise compared with last year?

Onion prices rose the most sharply among the staples discussed. In September, a kilogram of onion cost 93% more than during the same month last year. Sugar prices increased 28%, while rice prices rose about 8% on average. These figures come from ISignal’s Food Price Watch dashboard, which uses Department of Consumer Affairs data.

The onion increase was especially severe because prices had been unusually low. The average retail price reached Rs 52.8 in September, compared with Rs 27.4 a year earlier. Prices had more than doubled since May. Farmers had reduced onion cultivation and storage after several years of poor returns, tightening supplies when demand continued.

The broader setting also matters. India was approaching the end of the monsoon with rainfall 13% below normal, in a year with the fourth-lowest rainfall since the century began. Sugar prices reflected several pressures, including lower production, demand, crop damage, global supplies, speculation, and hoarding.

Why did onion prices rise so sharply after being low for several years?

Onion prices rose sharply because earlier low prices changed farmers’ decisions. For two or three years, prices were sometimes so weak that farmers could not recover harvesting, transport, and market costs. Some therefore turned away from onion cultivation. Production and stored supplies became less able to absorb a later shortage.

The cost of bringing a kilogram to market also increased, from about Rs 10 to at least Rs 12.5. Many farmers did not store onions after last year’s low prices. Stocks were consequently lower not only in Maharashtra, but also in Madhya Pradesh, Gujarat, and Rajasthan. This reduced supply between harvest periods.

The new crop added further pressure. Onion trader Ritesh Poman expected its arrival to be later than last year and its quantity much lower. September’s average retail price reached Rs 52.8, compared with Rs 27.4 a year earlier. The government released buffer onions, but the trader said they had made little difference locally.

What is the monsoon, and why can a 13% rainfall deficit push up food prices?

The monsoon is a seasonal pattern of winds that brings much of India’s annual rainfall. It matters because crops depend on timely and sufficient rain for growth. A rainfall deficit can reduce harvests, delay planting or arrivals, and leave less produce available for markets. Prices can then rise if consumers still need similar quantities.

This year, India was nearing monsoon withdrawal with a 13% deficit. The article describes the year as having the fourth-lowest rainfall since the turn of the century. It also links extreme climate events, including drought, heat, rain, and cold, with agricultural risk and food-price spikes around the world.

Rainfall is only one part of the price story. Onion farmers had already reduced cultivation and storage after years of low prices. Sugar prices also reflected crop damage, lower-than-expected production, demand, global supply conditions, speculation, and hoarding. A dry year can therefore intensify shortages created by earlier decisions.

How did low onion prices affect farmers’ decisions about planting, harvesting, and storing onions?

Low prices weakened the incentive to grow onions. Farmers sometimes earned less than the cost of harvesting, transporting, and taking onions to market. According to researcher Sominath Gholwe, bringing one kilogram to market now costs at least Rs 12.5, up from about Rs 10. Some farmers therefore stopped cultivating onions or reduced their commitment to the crop.

Storage decisions changed too. Ritesh Poman said many farmers did not store onions after last year’s low prices. Stocks were lower in Maharashtra, Madhya Pradesh, Gujarat, and Rajasthan. The crop normally arrives in three seasons: rabi from March to May, kharif from September to November, and late kharif from January to February. Lower stored stocks made gaps between arrivals more difficult to manage.

Harvesting also became important because the new crop was expected later and in smaller quantities. The government procured 121,000 tonnes for its buffer, below a 200,000-tonne target. That supply helped, but Poman said it had made little difference in his market.

How large are India’s onion and sugar supplies, and why can small changes in production cause large changes in retail prices?

The article reports onion production of 30.74 million tonnes in 2025-26, almost unchanged from 30.77 million tonnes the previous year. Sugarcane production rose from 454.6 million tonnes in 2024-25 to 500 million tonnes in 2025-26. These are huge national supplies, but retail prices still depend on where, when, and how much produce reaches markets.

Onions show the mechanism clearly. Farmers had stored less after several years of low prices, so available stocks were lower even though total production estimates were similar. The expected new crop was also later and smaller. Since onions are perishable, limited shelf life and vulnerable supply chains can make shortages quickly visible in prices.

Sugar prices reflect a different mix. The government cited lower-than-expected production, demand, weather damage, tightening global supplies, speculation, and hoarding. Sugarcane output increased, but that did not remove market pressure. Retail sugar reached Rs 59.2 per kilogram in September, 51% above its 2019 level.

What can the government’s onion buffer stock and sugar stock-holding rules do to limit price spikes?

A government onion buffer stock is a reserve that can be released when market supplies tighten. By adding onions to markets, it can moderate shortages and reduce sudden price pressure. The government procured 121,000 tonnes of rabi onion for its 2026-27 buffer, against a 200,000-tonne target, and began releasing onions at Rs 35 per kilogram.

The article gives mixed evidence about the buffer’s immediate effect. Trader Ritesh Poman said it had made little difference in his market because stock was being moved from Lasalgaon to markets such as Mumbai and Azadpur. Researcher Sominath Gholwe said earlier releases by the National Agricultural Cooperative Marketing Federation helped keep prices stable as farmers’ stocks ran down.

For sugar, revised stock-holding rules aim to curb hoarding, discourage speculative trading, and prevent dealers from accumulating stocks. Such rules can make more sugar available and reduce artificial scarcity. Their impact depends on enforcement, the amount released, and whether underlying production and weather pressures continue.

Why do weather, crop diseases, demand, speculation, and limited shelf life make food prices more volatile than prices for many manufactured goods?

Food prices are volatile because supply is biological and seasonal. Weather can damage crops or reduce yields, while diseases can spread through fields and cut usable supply. Demand can also change faster than farmers can produce more. Speculation and hoarding may further restrict what reaches markets, pushing prices higher even when total production has not collapsed.

The article’s onion example shows these pressures working together. Farmers reduced cultivation and storage after years of low prices. Stocks then fell across several producing states, while the new crop was expected later and in smaller quantities. Onions and other perishables also have limited shelf lives, so weak storage or transport can quickly reduce market supply.

Manufactured goods generally do not depend on a single growing season and can often be stored longer, although they can face price changes too. Food systems are more exposed to simultaneous weather shocks, disrupted supply chains, and rising demand. The article notes that extreme heat, drought, rain, and cold are causing food-price spikes across continents.

Key Facts:

📌 Onion prices rose 93% from last year.

📌 Sugar prices increased 28% in September.

📌 Rice prices rose about 8% on average.

📌 Farmers sometimes sold onions below their total costs.

📌 Many farmers stopped storing onions after last year’s low prices.

📌 The new crop was expected to arrive later and be smaller.

📌 The monsoon is a seasonal wind-and-rain system.