Peanut Market News February 09, 2019
High minimum support price (MSP) for groundnut coupled with low production has sounded a death knell for nearly 200 peanut processing units, most of them located in Junagadh and Amreli districts.
On Friday, around 60 units in Amreli observed the last working day while those in Junagadh, which is the biggest centre for peanut processing, are working on a 20% capacity. The units are unable to procure the raw material (groundnut) for processing as farmers are unwilling to sell their produce to them at the market price, which is quite lower than MSP of Rs 1,000 per 20 kg. The market prices ranges between Rs 700 to Rs 800 per 20 kg.
The closure of processing units has affected the direct employment of nearly 7,000 people and indirectly of around 10,000 people.
Around 80% of the processed peanuts are exported while the rest are consumed domestically.
Jeetu Dudhatra, president of Junagadh Peanut Processing Units Association told TOI: “Just few units are working that too at less than 50% capacity due to lack of raw material. The government is procuring groundnut at high price and that stock is blocked in warehouses. Due to MSP, the prices are very high. We can’t afford to buy from the market because of tough competition in the international market which hits our margins.”
The Solvent Extractors Association of India (SEA) has already pegged the kharif groundnut production in Gujarat at 15.95 lakh tonnes, which is almost half of last year’s harvest of 31.45 lakh tonnes. Dudhatra said, “Last year, government also procured the groundnut at high price but the production was high and therefore there was stock available in the market. This year production is very less due to insufficient rains.”
Groundnut from all over Gujarat is processed in Junagadh and Amreli. If the crop in neighbouring states like Maharashtra and Rajasthan is good, it is also sent here for processing. According to rough estimates, the processing units in Junagadh and Amreli process three lakh tonnes groundnut in one season of 7-8 months. This year, the number has come down to 75,000 to 90,000 tonnes.
Kumud Gajera, who has a processing unit in Junagadh’s GIDC-2 said, “The government should deposit the difference of MSP and market price in farmers’ account and let them sell in the open market. It will be good for our industry and help exports. The stock procured will be sold next year and this affects the quality.”
Sanjay Patel, a processing unit owner in Amreli, said: “The processing season is normally six to seven months, but this year we have raw material is unavailable.”
Gujarat was the largest exporter of groundnut according to Agriculture and Processed Food Products Export Development Authority (APEDA) in 2017-18. The state had exported 3.22 lakh tonnes, which is expected to be around 2.5 lakh tonnes this year.