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M.R. Subramani

Direct consumption of nuts affects its availability for oil crushing

Chennai June 24 What's increasing consumption of liquor in the country got to do with rise in prices of groundnut oil? Simple, consumption of peanuts during consumption of liquor is leading to more direct consumption and, thereby, affecting its availability for oil crushing.

Groundnut oil prices topped Rs 70 a kg last week and during the weekend it was quoted at Rs 72 in Mumbai. The oil prices have gained 23 per cent since the beginning of this year, while groundnut kernel, which was quoted at Rs 3,600 a quintal during the weekend, has also increased around the same level.

"The problem with groundnut oil is that mills are not getting kernel for crushing. One of the reasons is rise in direct consumption, including as snacks, especially for liquor consumption," says Mr B.V. Mehta, Executive Director of the Solvent Extractors Association of India.

Lower oilseed crop

The current oil year ending October has been witnessing a lower oilseed crop. Groundnut, in particular, is projected lower at 53.5 lakh tonnes against 62.5 lt last oil year.

On the other hand, the country has seen its citizens guzzle 105 million cases of beer during 2006 and 115 million cases of Indian made foreign liquor.

Liquor consumption has increased over 50 per cent since 2001 and annual rise in the offtake is seen between three and four per cent.

The scenario with regard to groundnut is that of the 53.5 lt projected output, 18.5 lt are crushed for yielding 7.4 lt of oil, while 19 lt are retained by the growers for sowing. The remaining 16 lt are assumed to be consumed directly. This season, availability of groundnut for direct consumption is seen lower by 2.5 lakh tonnes.

"Peanuts are preferred to be eaten during consumption of liquor as they are cheaper than cashewnuts. Also, rising income levels are seeing corresponding increase in consumption of almost all products, including liquor," say analysts.

Gujarat preference

The other reason for oil prices ruling high is that many people in Gujarat still prefer the "sweeter" groundnut oil, though lower and middle class people have switched over to cottonseed oil, says Mr Mehta.

The high prices for kernel and oil are unlikely to translate into an increase in groundnut sowing during the current kharif.

"Prices of almost all commodities are up and farmers will opt for crop with lower input cost, higher yield and good returns," says Mr Mehta. And there is no better proof for this than the fact that till June 22, area under groundnut was 2.53 lakh hectares against 3.97 lakh hectares during the corresponding period last year.

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