Agri Business

Groundnut exports jump on strong Chinese demand

Rutam Vora Ahmedabad | Updated on December 20, 2019 Published on December 20, 2019

Gujarat farmers unhappy with slow pace of procurement by government agencies

India is sitting on a huge opportunity to capitalise on the Chinese demand for groundnut oil. India's groundnut oil exports has reportedly trebled at 40-45,000 tonnes so far over last year, with most of it going to China.

According to trade sources, China has huge internal groundnut oil requirement, apart from re-export of India's groundnut oil from China to other countries.

“China itself is a big-time producer and consumer of groundnut oil. China has a strong control over groundnut oil market across the globe. Looking at the trend of exports to China, we can say that it is not just for its internal consumption, but chances are China is re-exporting groundnut oil from India to other countries," Sameer Shah, President, Saurashtra Oil Mills Association (SOMA), told BusinessLine.

 

However, farmers are at a disadvantage even though exports to China are growing. The sluggish pace of government procurement under the price support scheme (PSS) and persistently low prices in the open market due to increased moisture in the seeds following extended rains are worrying farmers.

According to Nafed data, in Gujarat, which is expected to produce about 32 lakh tonnes in the kharif season, the procurement agencies are mandated to procure maximum 25 per cent of the crop size, i.e. 8 lakh tonnes at the minimum support price (MSP) of ₹5,090 a quintal.

However, the Nafed data revealed that till December 17, about 1.75 lakh tonnes of groundnut was procured. In Rajasthan and Andhra Pradesh, the procurement stood at about 69,000 tonnes and 882 tonnes, respectively.

Groundnut prices

Market prices have slipped below the MSP in Gujarat markets, hovering around ₹4,900 per quintal for better quality seeds. For the medium quality, prices hovered around ₹4,000 per quintal.

Farmers blame the government and the procurement machinery for the slow pace of procurement and increased instances of rejections.

“It is disappointing that the government agencies are rejecting the crop on the basis of moisture content, even if it is slightly higher. It is obvious that there would be some increased moisture because of excess rainfall in the growing region. The government should relax the norms. Fearing rejection, many farmers are not even registering themselves. Increased supply in the open market is further pulling down prices,” said a farmer from Rajkot APMC.

Procurement target

Trade sources believe that the government may not be able to procure even half of the mandated 8 lakh tonnes in Gujarat.

The crushing activity is in full swing and oil prices have also strengthened due to increased exports and higher demand from China.

But due to persistently low domestic prices of groundnut, the farmers are not able to capitalise on the benefit arising from the increased exports.

Published on December 20, 2019
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