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Nafed struggles to tame Gujarat

Peanut Market News June 08, 2018

Nafed struggles to tame Gujarat's groundnut mountain

Only 3,600 tonnes of 8.30 lakh tonnes bought by the coop in kharif 2017 have been sold.

Heavy losses, a huge stock pile-up and an uncertain demand scenario have raised concerns for the government, which has been aiming to dispose of groundnut stocks through the National Agricultural Cooperative Marketing Federation of India Limited (Nafed), which is likely to issue its first ever tender for groundnut crushing next week.

The process of issuing tenders for the initial one lakh tonnes of groundnut is underway. “We have involved Junagadh Groundnut Research Institute of the ICAR for finalising the detailing of the tender. Also, the price of groundnut oil and oil cake need to be decided after directions from the Centre. There are multiple layers in the entire process,” said a source at the procurement agency.

Low Sale, prices

Nafed has so far sold only 3,600 tonnes of the oilseed out of the total 8.30 lakh tonnes procured during kharif 2017 and stored in over 800 warehouses. The latest transactions have seen prices being quoted at ?3,400-3,550 a quintal as against the procurement price of ?4,500 (including a State government bonus of ?50 a quintal).

“There is going to be a huge loss. We procured groundnut by paying ?1,500 more than the prevailing market price. And, now we are selling at ?2,000 lower than what we procured at. Totally, we are losing ?3,500 on each quintal,” a Nafed source said.

Slack demand

However, more than the financial loss, the bigger concern for Nafed is the lack of demand for groundnut oil, which it plans to sell after crushing. “Gujarat is the largest producer of groundnut but consumes a negligible quantity. The biggest concern for us is: who will consume the groundnut oil?” the source said.

Groundnut oil trade body Saurashtra Oil Mills Association (SOMA) has already represented to the government to encourage groundnut oil consumption among the common consumers.

“We have urged the government to use groundnut in the Public Distribution System as well as in mid-day meal schemes. Unless efforts are made to increase the offtake of groundnut oil, there will be no relief from the huge stock pile-up,” said Samir Shah, President, SOMA.

Quality problems

SOMA, however, has raised concerns about the quality of groundnut stored at the warehouses. “We have demanded a separate auction at each warehouse depending on the quality of the groundnut. E-auction process can’t be applied to groundnut as there is a different quality in each godown. There can’t be a uniform price for the entire quantity,” said Shah. On the other hand, storage issues plague the procurement agency. All the warehouse capacities are already full with groundnut and some quantity of pulses. There will be a requirement of extra space for the crop from next kharif season. And the procurement agency sees no possibility to dispose of the entire 8 lakh tonnes within three months or before the new crop arrives.

Source: https://www.thehindubusinessline.com/economy/agri-business/nafed-struggles-to-nodisposesell-groundnut-stocks-in-gujarat-notame-gujarats-groundnut-mountain/article24106162.ece

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