Prolonged dry spell in Gujarat may see edible oil prices spike up

Although the late monsoon rains have drenched most of Gujarat now, solving at least the drinking water problem, the State is likely to lose over 90 per cent of its groundnut crop and groundnut oil in the coming months, leading to a sharp increase in prices of the one edible oil most people in this western State use in abundance as part of their daily meals and even snacks and porridge (khichdi).

Until a decade ago, the powerful oil lobby in Gujarat, led by the Patels of Saurashtra, called the shots in Gujarat’s politics, economy and other fields. Known as the ‘Telia Rajas’, the bigwigs also invested in setting up small and medium industries in diverse sectors.

But, with the cash crop of cotton slowly replacing groundnut in many areas, particularly in the Saurashtra region, things began to change, until this year Gujarat finds itself facing its own oil crisis.

Acreage-wise, Gujarat should have a normal 15,88,200 hectare (ha) under the groundnut crop each year. But, with the area under oilseeds falling each year, sowing was done only in 14,27,100 ha in the previous kharif season (2011). This year, it decreased even further to 11,87,600 ha, which is only 75 per cent of the normal acreage, a Government official said.

Even though the shortfall in acreage of groundnut is 25 per cent, the prolonged dry spell in the June-September period is likely to destroy more than 90 per cent of this oilseed crop.

By mid-September, when the Agriculture Department commences a review of the actual post-monsoon scenario, Gujarat would likely lose about 95 per cent of the groundnut crop.

“We would be lucky if we could save even 5-7 per cent of the crop still standing in the fields,” Samir Shah, President, Saurashtra Oil Mills Association (SOMA) told Business Line today.

This drastic fall in oilseed and edible oil production is likely to lead to a very sharp rise in price in the coming months, he said. On Tuesday, a 15-kg tin of groundnut oil was priced at Rs 2,150, he said.

Other oilseeds would fare no better, except soya bean, which, Shah said, has seen a good crop in neighbouring Madhya Pradesh and Maharashtra.

In Gujarat, the normal area under soya bean sowing, 85,700 ha, shrunk to 85,300 ha in 2011 and 82,800 ha this kharif season. The area under sesamum has also decreased from the normal of 2,08,800 ha to 1,73,100 in 2011 and only 55,300 ha this year. The area under castor, which had increased from the normal 6,14,900 ha to 6,81,400 in 2011, has reduced to 3,64,200 ha this year.

Overall, only 68 per cent of the normal acreage of oilseeds has been cultivated this year in the State. This 34 per cent shortfall may translate into an oil crisis.

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