Groundnut prices in Gujarat declined sharply following a bumper harvest. Consequently, farmers are holding on to stock, hoping that the government will acquire it at the minimum support price (MSP), which is higher than the market price. This, in turn, has led to a shortfall of raw material for oil mills.
Till now, the government has acquired nearly 68,000 tonnes of Groundnut.
Announced by the government in October last year, the procurement will be done in a staggered manner. “Hence, farmers are reluctant to sell at market prices lower than the MSP to oil mills," the Solvent Extractors’ Association of India (SEA) said.
The SEA has estimated the kharif Groundnut production in Gujarat this year is a record of sorts, at 3.14 million tonnes. In the last kharif season, it was 2.94 million tonnes. Of this, roughly 50 per cent of produce has already been sold in the market by relatively small farmers who didn't have enough holding capacity.
This bumper crop has been cultivated despite the acreage under Groundnut production in the state going down marginally to 1.6 million hectares, from 1.64 million hectares last year. “The situation for oil mills is likely to improve in the coming days,” SEA said.
Apart from the bumper crop, there are an estimated 110,000 tonnes of carry-forward stock with Nafed, and about 50,000-60,000 tonnes with farmers and traders in the state.
Moreover, according to industry sources, the export of Groundnut is expected to be lesser than last year, despite higher output even as export of Groundnut oil might not find the international market due to the disparity.