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Saturday, November 27, 2021

Price Recovery: Not peanuts any more

Chinese demand has lifted fortunes of groundnut farmers, even as the coronavirus outbreak can be a spoiler .

Written by Gopal B Kateshiya | Rajkot |
January 30, 2020 4:59:14 am
Gujarat, Gujarat farmers, Gujarat groundnut farmers, quality of groundnuts, average quality ground nuts, groundnut crop, coronavirus, coronavirus cure, coronavirus prevention, government procuring groundnut, indian express Bagged groundnut at the APMC mandi in Rajkot. (Express photo by Chirag Chotaliya)

GROUNDNUT PRICES in the agricultural produce market committee (APMC) mandis of Gujarat have almost drawn level with the government-fixed minimum support price of Rs 5,090 per quintal, thanks to a pickup in export demand mainly from China.

Prices of bold groundnuts touched the Rs 5,000-per-quintal mark at the Rajkot mandi for the first time in the 2019-20 kharif marketing season (November-February) on January 11. Since then, they have remained firm, with the highest rate of Rs 5,085 quoted on January 25. The average modal or most-traded price on Wednesday was Rs 4,675 per quintal, as against Rs 4,250 on the same date a year ago and Rs 3,625 two years ago. A similar price recovery trend has been registered at the other benchmark APMC of Gondal, also in Rajkot district.

“This is the first time in three years that open market prices are ruling close to the MSP. Farmers may not mind selling in the mandis at these rates, as they would get payment the same day in cash. If they offer their crop to Gujarat State Civil Supplies Corporation (GSCSC), the payment, even if at the MSP, might take up to one and a half months,” says Atul Kamani, president of the Commission Agents’ Association of Rajkot APMC.

Groundnut is Gujarat’s most important cash crop, next to cotton. The state accounts for over 40% of India’s total production of this oilseed. During this kharif season, Gujarat’s farmers planted the crop in 15.52 lakh hectare (lh), of which nearly 82% was in the 11 Saurashtra region districts that included Junagadh (2.46 lh), Rajkot (2.33 lh), Devbhumi Dwarka (1.97 lh), Jamnagar (1.48 lh), Amreli (1.12 lh) and Gir Somnath (1.03 lh). Outside Saurashtra, the biggest groundnut acreage was reported from Banaskantha (1.13 lh) in North Gujarat. The Gujarat government has pegged groundnut output in the state for 2019-20 at 32.61 lakh tonnes (lt), up from last year’s 22.03 lt, but below the record 40.66 lt of 2017-18.

Gujarat, Gujarat farmers, Gujarat groundnut farmers, quality of groundnuts, average quality ground nuts, groundnut crop, coronavirus, coronavirus cure, coronavirus prevention, government procuring groundnut, indian express The prices of the oilseed have improved on the back of Chinese demand. (Express photo by Chirag Chotaliya)

Despite a good crop, groundnut prices have recovered primarily on the back of overseas demand. India exported 5.04 lt of groundnuts valued at Rs 3,386.31 crore in 2017-18 and 4.89 lt worth Rs 3,298.31 crore for 2018-19. Commerce Ministry data shows shipments during April-October 2019 at 1.90 lt (Rs 1,512.19 crore). “These have since then gone up even more. We are seeing rising demand from China, both for groundnut and groundnut oil,” claims Sameer Shah, president of the Saurashtra Oil Mills Association (SOMA), a Jamnagar-based body of oilseed processors and traders.

Sagar Chug, a groundnut exporter from Rajkot, concurs: “China’s buying has really helped boost our exports from October onwards. The country’s groundnut crop has been short this year, forcing it to import more”. The Chinese are now importing peanuts for crushing as well as crude groundnut oil for refining. “They are big consumers of groundnut oil and also have substantial refining capacity. When their own crop isn’t very good, they will obviously look to India,” points out Nimesh Badani, who is a leading exporter of shelled groundnuts and oil.

Interestingly, China has not been a significant buyer of Indian groundnuts in the past. Out of the country’s Rs 3,298.31 crore exports in 2018-19, much of it was to Indonesia (1,346.98 crore), Philippines (Rs 324.59 crore), Vietnam (Rs 269.19 crore), Malaysia (Rs 207.84 crore), Thailand (Rs 182.40 crore), Algeria (Rs 106.44 crore), Ukraine (Rs 94.64 crore), Russia (Rs 73.30 crore) and Iran (Rs 73.08 crore).

China’s entry couldn’t have come at a better time for Saurashtra’s groundnut growers – just when their crop was set for arrivals at the mandis. The region’s farmers largely cultivate the bold ‘G-20’ variety, whose reddish brown and oblong-shaped nuts have higher oil content and are preferred by Chinese importers. The ‘Java’ variety with pink skin and spheroid shape is used more as table food, while going as roasted peanuts to markets such as Ukraine and Russia.

The trade expects groundnut prices to remain firm till the end of this marketing season. “Domestic prices of expeller groundnut oil, too, are higher at about Rs 110/kg, compared to Rs 95 last year at this time. All edible oils — whether refined palmolein, soyabean, sunflower or rapeseed/canola — are selling above last year’s levels. That is great for farmers, as they are benefiting from higher prices and also harvesting a better crop,” notes SOMA’s Shah.

The improved market sentiment is also reflected in the government’s MSP-based procurement. The apex central agency National Agricultural Cooperative Marketing Federation of India (Nafed), which operates through GSCSC, has bought 4.38 lt of groundnuts at an MSP value of Rs 2,229.26 crore in the current marketing season from 2.15 lakh farmers of Gujarat as on January 29. This is marginally higher than the 4.25 lt procured in 2018-19 (from a much smaller crop) and way below the 8.28 lt of 2017-18 (which also saw an all-time-high crop). The 90-day government procurement window, which officially ended on January 27, has been extended till February 13.

The government has, in recent times, targeted purchases of a quarter of the estimated production in states such as Gujarat, Rajasthan and Andhra Pradesh, so as to prevent open market prices from crashing. This time, Nafed had not had to undertake large-scale procurement even in a bumper crop year. Moreover, it has an opportunity to offload 1.20 lt of stocks from the produce bought in the 2018-19 season.

It is the bigger farmers that are obviously seeking to take advantage of the changed market conditions. “There is a possibility that the APMC price will go above the MSP. I will sell when that happens,” states Hardevsinh Jadeja, who has harvested about 140 quintals of groundnut from 40 bigha of his total 200-bigha (32 hectares) holding in Rajsamadhiyala village of Rajkot district.

Harsukh Hirapar, who has grown groundnut in 1.75 hectares of his four-hectare land, isn’t as bullish. “There was unseasonal rain when I harvested my crop. As a result, the groundnut shells have turned blackish. Although the nut quality is intact, I am afraid that it will not fetch a decent price at the APMC auction. I am, therefore, waiting to sell my 30 quintals at the GSCSC procurement centre,” remarks this farmer from Sukhpur village of Junagadh district and taluka.

The one recent development that can spoil the party even for the likes of Hardevsinh Jadeja is the coronavirus outbreak in China. “This can potentially disrupt our exports. We hope that threat is not serious,” adds Chug.

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