Agri Business

Rising demand, decreasing output push up groundnut prices

| Updated on February 20, 2011

Need of the hour: India needs to develop varieties that are high yielding and promising in less-fertile and moisture-stress condition.

Groundnut also known as peanut (Arachis hypogaea) is an important oilseed crops worldwide due to its nutritional values and trade significance. Groundnut is believed to have originated in the South American continent, primarily in the tropical areas of Peru, but domestication of the crop was done in Paraguay. It was introduced into India during the first half of the sixteenth century from Pacific islands of China.

Groundnut is an annual plant herb belonging to pea family or Fabaceae. The crop is suitable for cultivation in tropical areas of the world. It prospers well in a light, sandy loam soil. However, it is also known for its ability to survive in less favourable agro-climatic conditions. The pod needs duration of 4-5 months to ripen.


Groundnut contains high quality edible oil (50 per cent), easily digestible protein (25 per cent) and carbohydrates (20 per cent). It is also a valuable source of vitamin E, K and B. Groundnut oil is primarily used as a cooking agent but it also has industrial uses for manufacture of paint, varnish, lubricating oil, soap, furniture polish etc. The oil cake meal is used as an animal fodder and fertiliser. With proper processing, oil cake is also used to make biscuits and baby foods.

Global output

In 2009, global groundnut production was about 34.5 million tonnes with China leading the production at 14.3 mt, followed by India at 7.17 mt. Other regions where groundnut is produced includes sub-Saharan African countries and central and southern America. While India has the largest acreage of groundnut in the world, the US leads in productivity with a yield of 3.54 tonnes/hectare.

World exports

The leading groundnut exporting countries are the US, Argentina, Sudan, Senegal, and Brazil accounting for 71 per cent of the world exports. Recently, the US has become leading exporter of groundnut surpassing Argentina. The major groundnut importing countries are the European Union and Japan accounting for 78 per cent of the world imports.

Producing states

In India, groundnut is most important oilseed followed by mustard and soyabean. It contributes to nearly 45 per cent of total oil seed production in the country and most of the crop is cultivated as kharif. Gujarat, Andhra Pradesh, Tamil Nadu, Rajasthan and Karnataka are the leading producers accounting for 86 per cent of the total domestic output. However, area under groundnut cultivation in the country has gradually decreased from 6.7 million hectares in 2005-06 to estimated 4.9 mha in 2010-11. Total production has also declined from 8.0 mt in 2005-06 to estimated 5.6 mt in 2010-11.

In spite of being the second largest producer of groundnut in the world, India does not feature as a dominant player in global trade since domestic demand accounts for 30 per cent of the world's total groundnut consumption. Further, decreasing production coupled with rising demand has shot up the prices of groundnut in the country. This has resulted in ban on exports of major edible oils including groundnut till September 30.

Trade centres

Domestically, the major trading centres of groundnut and its derivatives are Rajkot, Ahmedabad, Gondal, Junagarh, Mumbai, Indore, Delhi and Adoni.

It is also traded in major national commodity exchanges such as NCDEX, NMCE, MCX, Rajkot Seeds oil and Bullion Merchants'Association Ltd and Bombay Commodity Exchange Ltd. While the acreage of groundnut in India is huge, productivity (at 1.2 tonnes/ha) is one of the lowest in the world.

Therefore, there needs to be a major thrust on developing varieties which are high yielding and promising in less-fertile regions and moisture stress conditions.

Advanced high yielding technologies such as introduction of transgenic groundnut (containing gusA gene) designed to tolerate dry weather and salinity need to be fast tracked so as to improve productivity of the crop in India.

Source: YES Bank

Published on February 20, 2011

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