Oil millers in Gujarat seek relaxation in NAFED norms to buy more groundnut

As the groundnut procurement operations under price support scheme of the Central government came to an end in the state, NAFED started selling groundnut through tendering early in April this year.

By: Express News Service | Rajkot | Published: May 26, 2018 6:30:55 am
Oil millers in Gujarat seek relaxation in NAFED norms to buy more groundnut Oil millers at a meeting held in Rajkot on Friday. (Express photo)

Nearly a month after the National Agricultural Cooperative Marketing Federation of India Ltd (NAFED) started auctioning groundnut it procured in Gujarat, oil millers of the state sought relaxation in NAFED norms to purchase more groundnut at a meeting held in Rajkot on Friday. The meeting was jointly organised by NAFED and the Gujarat government at the Agriculture Produce Market Committee (APMC) in Gondal town of Rajkot district on Friday. NAFED chairman Vaghjibhai Patel, Gujarat Agriculture Minister Ranchhod Faldu, Gujarat Food, Civil Supply and Consumer Affairs Minister Jayesh Radadiya, principal secretary in agriculture, farmers’ welfare and cooperation department of Gujarat, Sanjay Prasad, other top officers of NAFED and state government and around 250 oil millers and industry chamber representatives attended the meeting.

The meeting in Gondal comes after three incidents of fire at godowns where groundnut procured was stored since January this year. The fire incidents have damaged groundnut worth scores of crore, with opposition Congress alleging that the incidents of fire were conspiracies to “cover irregularities in groundnut procurement operations”.

“We told NAFED and the state government that we were ready to purchase more groundnut speedily if the state government helps increase the market for groundnut oil, which is rich in protein and has other health benefits also. With our oil sales going up, we shall be able to process more groundnut from NAFED. We also demanded that the 10 per cent deposit was a little too high and it should be slashed by half. We also demanded that millers and traders should be allowed more time to take delivery of groundnut stock they have purchased so that market remains stable. We also suggested that instead of inviting price bids through tenders, NAFED can organise godown-wise open auction of groundnut stocks so that its sale operations gain momentum and millers also get raw material in quantity they require at fair price,” Samir Shah, president of Saurasthtra Oil Mills Association (SOMA) told The Indian Express.

SOMA is a Jamnagar-headquartered chamber of oil millers and groundnut traders of Saurashtra. NAFED is the apex agricultural cooperative marketing body of the country. On the instructions of the Central government, the agency had procured 2.10 lt of groundnut from farmers of Gujarat in year 2016-17 at the minimum support price of Rs 4,220 per quintal. Around half of the 2.10 lt was lying in godowns of the state till Kharif groundnut season came to an end this year. Meanwhile, NAFED procured record eight lt of groundnut in the 2017-18 season at MSP of Rs 4,500 per quintal, including Rs 50 bonus given by the state government. The Central government had directed to procure this eight lt of groundnut worth Rs 3,600 crore at the request of BJP-led state government in late 2017 as it sought to retain power during the Assembly elections last December. Thus, more than nine lt of groundnut was lying in the godowns of the state.

As the groundnut procurement operations under price support scheme of the Central government came to an end in the state, NAFED started selling groundnut through tendering early in April this year. The agency has sold around 50,000 tonnes of groundnut pods at an average price of Rs 2,900 to Rs 3,100 per quintal, much below the MSP of Rs 4,220 it has been procured. Official sources told The Indian Express that NAFED incurs average Rs 300 additional expenses on one quintal of groundnut towards procurement, transportation, storage etc before the stock is put on sale. Sources said that at the current rate of selling groundnut, it may take more than a year for offloading the entire stock of 8.5 lt and therefore, NAFED was under pressure from the state and the Central governments to ramp up its sale operations.

NAFED reviews price data of six APMCs which trade groundnut in high volumes for discovering base price of a stock of groundnut lying in a godown and which is to be put on sale. Then it invites e-tenders for purchasing groundnut at the base rate or above. The winning bidders have to purchase at least 100 tonnes of groundnut from the stock put on sale. The winning bidder has to also furnish10 per cent of the value of the quantity he wants to purchase at the price quoted by him towards deposit. Moreover, the purchaser has to take delivery of the quantity of groundnut he has bid for in a week after formalities are completed. The purchaser is liable to pay godown charges if he fails to take delivery of his consignment within a week. SOMA president said these norms need to be relaxed.

NAFED chairman said they would consider the demands. “The deposit is an insurance against purchaser backing out after agreeing to purchase certain quantity of groundnut. Allowing staggered delivery runs the risk of purchaser stopping to take delivery of groundnut should oil market and groundnut market witness any price shock. But we can consider these if the state government recommends such measures to the Union Ministry of Agriculture and Farmers’ Welfare and if the Ministry subsequently asks us to do so. However, organising open auction of groundnut procured by NAFED may not be a good idea as traders can form ring and manipulate the process to their advantage only,” said Patel.

The state government said the meeting remained positive. “The meeting was organised in a very positive atmosphere and oil millers gave a very good response. The state government has taken note of their suggestions and shall forward them to the Central government for appropriate action. While selling this stock of groundnut is the prerogative of NAFED, the fact remains that NAFED has procured this oilseeds from farmers of Gujarat and, therefore, it is the moral responsibility of the Gujarat government to help NAFED sale it at good price and speedily,” said Bharat Modi, director of agriculture in the department of agriculture, farmers’ welfare and cooperation department of the Gujarat government.

Gujarat is the largest producer of groundnut in the country. The state had harvested 32 lakh tonnes groundnut in 2017-18, thanks to good monsoon. Majority of groundnut cultivation is done in Saurashtra region of the state. While farmers realised average Rs 3,500 per quintal in APMCs of the state this season, the effective MSP was much higher at Rs 4,500. Even today, groundnut is trading at 3,250 to Rs 3,500 in APMCs in the state.

Shah said that groundnut oil production was likely to remain around six lt in Gujarat and around 10 lt total in the country this year. “But this is just 1.5 per cent of around 204 lt of total edible oil demand of the country. We are highly dependent on imports to meet this requirement despite there being scope for increasing production of groundnut oil. If government policies help increase consumption of groundnut oil, farmers and industry can benefit,” said Shah, adding that the prices of groundnut oil had stagnated at around Rs 1,400 per tin of 15 kg.

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