It’s peanuts, for Gujarat groundnut farmers

It’s peanuts, for Gujarat groundnut farmers

Despite low groundnut output, the oilseed is being sold way below the MSP in Gujarat mandis.

Gujarat, Gujarat farmers, Gujarat groundnut farmers, quality of groundnuts, average quality ground nuts, groundnut crop, government procuring groundnut, indian express
The projected procurement is almost a quarter of Gujarat’s estimated groundnut production of 19.48 lakh tonnes in 2018-19. It means farmers will have to sell more than three-fourths of their produce in APMCs, where prices are ruling below MSP. (Express photo by Gopal Kateshiya)

Even as government procurement of groundnut for the current 2018-19 kharif marketing season is about to end, the oilseed continues to sell in various APMC (agricultural produce market committee) mandis of Gujarat at way below the official minimum support price (MSP). This, despite a much lower crop output due to drought in the country’s largest groundnut producing state.

As of February 5, the National Agricultural Cooperative Marketing Federation of India (Nafed) procured 4.04 lakh tonnes (LT) or 40.37 lakh quintals of groundnut worth Rs 2,021.33 crore from 2,00,357 farmers in Gujarat. The nodal procurement agency is paying an effective MSP of Rs 5,000 per quintal for groundnuts-in-shell, which includes the Centre’s Rs 4,890 rate and a Rs 110 bonus declared by the state government.

Manish Bhardwaj, the managing director of the government-run Gujarat State Civil Supplies Corporation that buys from farmers on Nafed’s behalf, said one more week is left for procurement. “Around 38,000 farmers are waiting for their turn to sell. We expect the total procurement to end up at around 4.5 LT,” he says.

The projected procurement is almost a quarter of Gujarat’s estimated groundnut production of 19.48 LT in 2018-19. It means farmers will have to sell more than three-fourths of their produce in APMCs, where prices are ruling below MSP.


Hitesh Nakum, a one-hectare farmer from Kunda village of Jamnagar district who sold 22 quintals of groundnut at the Rajkot APMC on Monday, could get just Rs 4,275 for a quintal. For him, this was a double whammy. For the last two years, his production has been half of the normal average. While this year, the villain was drought, in 2017-18, excessive rains brought down production.

Nakum’s isn’t an isolated case. The average modal (most frequently-quoted) price of groundnut in Rajkot APMC, one of the country’s biggest wholesale markets for the oilseed, was Rs 4,250 on Wednesday. The striking part about the below-MSP market prices is that this is notwithstanding production falling by over 39 per cent compared to last year’s output of 32 LT, and low arrivals in APMCs.

Jignesh Ghodasara, a groundnut trader at the Rajkot APMC, attributes the paradox to the government’s record procurement of 8.29 LT in 2017-18. “They (Nafed) have some 3 LT of carryover stocks. Also, not much export of peanut (shelled groundnut) is taking place. And there isn’t any increase in domestic consumption of groundnut oil. So, it is not surprising that market prices are nowhere near the MSP, even after a poor crop,” he said.

Last year, too, the effective MSP of groundnut was Rs 4,500 per quintal (Centre’s Rs 4,450 plus Gujarat government’s bonus of Rs 50), whereas prices in APMCs hovered around Rs 3,500. The government had to undertake large-scale procurement, more so as mandi arrivals coincided with state assembly elections in December 2017.

In groundnut-in-shells, Gujarat accounts for about half of India’s production of 65-70 LT. Around 60 per cent of the kernel output (72.5 per cent of the total weight) is retained for direct consumption as snack or exports. Only the balance 40 per cent surplus is used for crushing and extraction of oil. “Consumption of groundnut oil is not rising because of competition from much-cheaper cottonseed oil. The price difference between the two oils is Rs 20/kg,” said Sameer Shah, the president of the Saurashtra Oil Mills Association (SOMA), a Jamnagar-based body of oil millers and groundnut traders.

India’s production of washed cottonseed oil, at 12-13 LT, is more than the 7-8 LT of groundnut oil — thanks to Bt cotton technology.

The government has been trying to support groundnut growers through MSP-based procurement, but traders believe it has killed the market for groundnut kernel exports. “Our prices are currently in the region of $ 1,000 per tonne, while the same product from Senegal, Sudan, Brazil and Argentina is available at $ 800. There is no doubt that Indian peanuts fetch a premium because of better flavour and higher oil content. But when the price difference becomes too wide, the buyers start turning to alternative suppliers,” said a Rajkot-based exporter.

Niraj Adhiya of DNS Agri Brokers, another export firm from Rajkot, also blamed the government policy. “Around 50 per cent of our peanut exports are to Indonesia, Vietnam, Philippines and Malaysia, with the remaining being accounted for by China, Russia Ukraine and United Kingdom. The former markets, in particular, do not demand the quality standards (mainly relating to fungal aflatoxin and moisture levels) set by the Agricultural & Processed Food Products Export Development Authority (APEDA). Yet, APEDA does not allow us to export even to these countries if these specifications are not met. Besides, the government is not providing any incentive for export of groundnut de-oiled cake, for which there is a potential international demand,” he said.

According to APEDA data, India’s groundnut kernel exports during April-December 2018 amounted to 3.57 LT, valued at Rs 2,394 crore. This was lower than the corresponding figures of 3.88 LT and Rs 2,647 crore. Total shipments in 2017-18 (April-March) stood at 5.04 LT and worth Rs 3,386.30 crore.

SOMA’s Shah said the government and industry together should take steps to boost consumption of groundnut oil. “At one time, it was India’s most-consumed oil. Today, annual consumption is not even 10 LT, even as we are importing over 150 LT of edible oils to meet our domestic demand. We need to dispel false perceptions about groundnut oil among consumers, which can be done through formation of a groundnut promotion council. Also, if incentives are given for export of DOC, which has a niche market, the industry will be able to offer better prices to groundnut cultivators,” he said.