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‘Weak demand’: Price of groundnut below MSP in Gujarat

Modal price, the price at which most of the groundnut is sold in a day, has slid below the MSP of Rs 5,500 per quintal in Gondal agricultural produce market committee (APMC), the largest wholesale market of groundnut in the state.

Written by Gopal B Kateshiya | Rajkot |
Updated: November 9, 2021 3:12:32 am
The dip in the market prices in Gujarat, which accounts for almost 50 per cent of groundnut production of the country, comes in a year when the state is expected to harvest a bumper crop.

Even as the marketing season of Kharif groundnut is heading towards its peak, the price of this oilseed of Gujarat has slid below the minimum support price (MSP) fixed by the Centre. Traders ascribe the phenomenon to a weak demand of its edible oil in the domestic and overseas markets.

Modal price, the price at which most of the groundnut is sold in a day, has slid below the MSP of Rs 5,500 per quintal in Gondal agricultural produce market committee (APMC), the largest wholesale market of groundnut in the state. A similar scenario has been seen in Rajkot APMC, another major market of the oilseed.

“The prices have slid by an average Rs 300 per quintal,” said Gonal APMC secretary Tarun Panchani. The modal price for groundnut in both the APMCs has been around Rs 5,250 for the past 10 days even as they closed on Wednesday for Diwali. The modal price used to be as high as Rs 6,000 till the first half of October.

The dip in the market prices in Gujarat, which accounts for almost 50 per cent of groundnut production of the country, comes in a year when the state is expected to harvest a bumper crop — the state government’s First Advanced Estimate has pegged groundnut production at 39.94 lakh tonnes. The Solvent Extractors Association of India (SEA) estimates the state’s crop size to remain around 38 lakh tonnes.

But traders say multiple factors are at play, putting prices under stress. “The groundnut price has come down to around Rs 5,000 as there are quality issues with the crop. Demand for groundnut oil has also gone down in the market and this, in turn, is making oil-millers hesitant to purchase groundnut in large quantities. Our groundnut oil prices are not competitive in the international market either so there aren’t many overseas shipments either. All these factors have put pressure on groundnut prices in APMCs,” said Bharat Gondaliya, a groundnut trader based out of Gondal APMC.

About the quality issues, he said, “Due to monsoon behaviour this year, some groundnut was damaged by rain. Some groundnut has oil content in the range of 25 per cent to 30 per cent as against the norm of 40 per cent to 45 per cent as it didn’t rain when the crop required moisture.”

While the edible oil prices continued to remain firm, the Centre slashed import duties on palm oil, soya oil and sunflower oil in September. The cut in import duties coinciding with the beginning of the marketing season of domestic oilseeds has resulted in some softening in prices of edible oils in the domestic market. Major oilseed processors and edible oil refiners, who are members of SEA, announced a price cut in the range of Rs 4 to Rs 7 per kg in the wholesale prices on Tuesday.

“Last year, the prices were high at this time of the season since China was aggressively importing edible oil from India. On top of that, traders from Andhra Pradesh were also purchasing groundnut from Gujarat market in large quantities. But this year, neither is China importing nor are the Andhra Pradesh traders as bullish,” Gondaliya said, adding, “We are expecting the quality of groundnut to improve gradually when APMCs reopen post-Diwali. Oil mills are also expected to increase crushing of oilseeds after the Diwali holidays. That may help farmers.”

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