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Groundnut prices on the rising curve despite glut in market

Gujarat accounts for around half of India's groundnut production and the state government estimates the size of the crop to remain around 40 lakh metric tonnes annually.

Written by Gopal B Kateshiya | Gondal |
November 30, 2021 12:41:49 pm
Groundnut prices, APMC, Gondal Agriculture Produce Market Committee, farming news, Indian expressGroundnut is the second most important cash crop of Gujarat after cotton. (File)

At the Gondal Agriculture Produce Market Committee (APMC), labourers weighing and packing the groundnut brought by farmer Vajubhai Viradiya halt the process as they are unable to seal the 30-kilogram bag with the automatic sewing machine. On some pleading, contractor Ashwin Gohel suggests that the farmers themselves sew the filled bags. Viradiya returns with a thread and needle and settles down with a share cropper to sew the bags filled by the labourers.

The APMCs trading groundnuts are flushed with produce as modal prices of groundnut that slid to around Rs 5,200 late October are rising, thanks to the rise in prices of de-oiled groundnut cakes which rose from Rs 38,000 per tonne to Rs 45,000, and the demand for groundnut oil despite the high price of Rs 2,400 per 15 kg tin, says Paresh Vadodariya, a leading groundnut trader at Gondal APMC.

From the farmers that The Indian Express met, it emerged that farmers with lesser land holding preferred selling in the open market where remittance was immediate while the bigger farmers sold to the government, where produce goes through a quality check and payment is also delayed.

Gujarat accounts for around half of India’s groundnut production and the state government estimates the size of the crop to remain around 40 lakh metric tonnes annually. However, this year a bumper crop coincided with good market prices. APMCs such as Gondal, Rajkot, Jasdan and Jamnagar have allowed farmers to download their groundnut only twice a week as APMCs are unable to auction the huge quantities in a day. On Sunday, Gondal recorded arrivals of 52,500 quintals of groundnut. Labourers and traders in Gondal are handling an average 10,500 quintals daily and yet prices are on the rising curve.

“This is largely because the domestic supply pipeline is empty. Oversees demand is also supporting the domestic market,” Vadodariya says.

Viradiya, 48, a 20-bigha farmer from Nagadka village of Gondal taluka, says, “It is a tough job to sell to the government. But it is worth the toil as government gives an assured price and proper invoices. I have been selling my groundnut to the government for the past five years.” On another part of the marketing yard, auction of groundnut brought in by the farmers for the open market, goes on. Bids range from Rs 4,500 to Rs 6,200 per quintal for Java varieties (groundnut with smaller kernel size) and from Rs 4,000 to Rs 6,100 per quintal for the bold varieties (having larger kernel size) with modal price being in the range of approximately Rs 5,500 to Rs 5,400 per quintal. The government’s minimum support price (MSP) for the Bold variety is Rs 5,550 per quintal.

“The groundnut that meets FAQ norms fixed by the government can easily get price higher than the MSP in open auction. The variation in the market price is due to huge variation in quality of groundnut,” says Tarun Panchani, secretary of Gondal APMC, the largest wholesale yard of groundnut in the state.

Haresh Radadiya (32), a 15-bigha farmer from Devalki village in Amreli district, who auctioned eight quintals of GJG-32 variety for Rs 5,705 per quintal, says it does not make sense to sell good quality produce to the government.

However, Lalit Raiyani (26), a 60-bigha farmer from Dhudasiya village in Gondal taluka, who had sown groundnut in 15 bighas, finds MSP procurements attractive. “In auction, there is no guarantee that one will realise price higher than the MSP,” says Raiyani, a commerce graduate who is also a civil work contractor. His total harvest is 105 quintals this year.

At the procurement centre for Padadhari taluka of Rajkot, Parsottam Mungalpara (60), a farmer from Khajurdi village, has come with his fourth consignment of 25 quintals of GJG-32 variety. “GJG-20 generally gives good price but there is no certainty about the price one will get in auction, hence my decision to sell to government,” says Mungalpara who has no formal education.

It takes up to two months to receive payment after selling to the government. “But the difference is the interest that I would have earned on the money that I get after selling in the open market,” says Parakramsinh Jadeja, a 50-bigha farmer from Pipardi village of Lodhika taluka of Rajkot.

Groundnut is the second most important cash crop of Gujarat after cotton. Farmers planted this oilseed crop in more than 19 lakh hectare in Kharif season 2021.

Ankit Patel of Hitesh Trading, a leading groundnut trader in Halvad APMC in Morbi, says the market is going through a supply glut. “But oil mills are crushing groundnut big time and groundnut export is keeping the domestic market steady,” says Ankit.

Jivabhai Chikhaliya (73) with a 60-bigha holding, from Nagajar village in Jamnagar district, after selling 25 quintals to the government a week ago, went to the open market to auction 39 quintals at Rs 6,075 per quintal in Rajkot APMC on Thursday. “I wasn’t sure about getting such a good price in APMC,” says Chikhaliya.

Less than 10 per cent of farmers who registered for government procurement have actually turned up since the process began on November 9, according to official data. Only 2.65 lakh farmers registered this year, of which over 37,000 were blocked for duplication, non-submission of required documents, etc. That left only 2.28 lakh farmers eligible to sell their groundnut to government.

“The turnout ratio is the highest in Vinchhiya taluka and Gondal. But we have 90 days to run the procurement operations and we will procure from all eligible farmers,” says an officer of GSCSCL, a state government entity running procurement operations in Gujarat on behalf of Nafed.

Some farmers like Anil Kanjariya who cultivates 14 bighas on lease at Navi Vegadvav village in Morbi district preferred to sell at lower rates than MSP (Rs 4,910 per quintal) in the open market through Halvad APMC as he needed finance. “I had to pay Rs 70,000 due to labourers and needed around Rs 50,000 more to purchase seed and fertiliser for Rabi crops,” said Kanjariya.

Halvad APMC allows arrivals of average 5,000 quintals in a day. The APMC has also persuaded traders to allow auction of groundnut loaded in vehicles to save the labour of unloading. “The idea is to give farmers the option of assessing market price before he takes it to the government procurement centre. The auction gets over within a few hours and if farmer gets bids higher than MSP, he can sell in our APMC,” says Mahesh Patel, secretary of Halvad APMC.

Khuman Limbola, 20, of Ghanshyamgadh village of Halvad taluka, was able to cart his 25 quintals to the government procurement centre immediately after he was offered a price lower than the MSP (Rs 5,450 per quintal). “The money that government transfers to the bank account helps save, as cash paid by APMC traders tends to get spent”, says Limbola.

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