G Chandrashekhar

Peanut to perk up

G Chandrashekhar | Updated on July 13, 2014



A looming harvest shortfall will likely keep prices firm

Despite being high in oil and protein content, groundnut (peanut) has lost out to other oilseeds in the complex, such as soyabean and canola in the global oilseed market in recent years.

Support in terms of policy, investment and research for this oilseed has declined. No wonder, global peanut production has been languishing at around 39-40 million tonnes in recent years, a mere 8 per cent of aggregate world oilseeds production versus, say, soyabean that accounts for a whopping 60 per cent. Foreign trade in meal is 6.5-7.0 million tonnes while that in oil is about 5.5 million tonnes. Trade in kernels is negligible at about 2.5 million tonnes.

Not just in the world market, in India too, groundnut has lost its pride of place among major oilseeds. Until the late 1990s, groundnut oil used to be the kingpin among edible oils and held a major share in the country’s vegoil basket; but not any more as its production has slipped far below that of rapeseed oil and soyabean oil.

Use of groundnut meal or de-oiled cake as animal feed has also shrunk around the world, including in our country, because of the problem of aflatoxin, a carcinogenic fungus that colonises the kernels.

As food safety standards tighten steadily, it is necessary for the processing and consuming sectors to be aware of aflatoxin contamination and take remedial measures such as detoxification to address the problem. Because of its high dependence on the south-west monsoon, groundnut production in kharif season has fluctuated from year to year depending on spatial and temporal distribution of rains, while rabi harvests have held fairly steady at 15-16 lakh tonnes.

More on the table

But the food use of the oilseed is expanding rapidly. Bold varieties (usually hand-picked selected kernels) are now being increasingly diverted for food use or as table nut in the company of almond, cashew nut and pistachio; or consumed as roasted, salted or coated nuts.

It is estimated that out of the kernel production of 50-55 lakh tonnes, food use currently stands at an estimated 12-13 lakh tonnes or about a quarter.

Fluctuating production from year to year has also meant volatile market conditions.

India exports 2-3 lakh tonnes of groundnut kernels every year not to the traditional premium markets in Europe, but to the less fastidious markets in South-East Asia.

The minimum support price for groundnut in-shell stood at ₹4,000 a quintal in 2013-14, having been raised successively from ₹2,300 a quintal in 2010-11. However, the increase has not triggered any productivity gains as yields still languish at about one tonne per hectare while the world average is higher at about 1.6 t/ha.

For 2014-15, groundnut in-shell production target is 90 lakh tonnes comprising 72 lakh tonnes for kharif and the rest for rabi season.

MSP for kharif season has been kept unchanged at ₹4,000 quintal. Dry conditions in the principal growing States of Gujarat and Andhra Pradesh the whole of June means there is risk the kharif target may not be achieved.

In view of a looming harvest shortfall, industry and trade (oil mills, exporters, local traders) dealing in groundnuts and its derivative products have to exercise caution. Prices are likely to remain firm and potentially move well above the MSP.

Published on July 13, 2014

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