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Paradox: Though govt buys groundnut below MSP, farmers won't sell to mills

Farmers atre still hoping their produce will be procured at a higher rate by the state

Vinay Umarji  |  Ahmedabad 

Groundnut
Image via Shutterstock

Excess production of in has led to a steep fall in prices, which is affecting farmers. Moreover, with the bulk of the produce being procured by the government under minimum support price (MSP), mills are facing a shortage of raw material.

The government has so far procured close to 680,000 tonnes of at Rs 4,500 per quintal. However, there has been an apparent cap on procurement from each farmer. Moreover, the government is expected to continue procurement, albeit in a staggered manner.

Yet, farmers are reluctant to sell the to mills, leading to hiccups in raw material sourcing for the mills. According to industry sources, farmers are holding on to their produce in the hope it will be procured at a higher rate by the government.

"A bumper crop in has led to fall in prices to below at Rs 4,000 per quintal. However, the government is procuring limited quantity at Rs 4,500/ kg Hence, farmers are reluctant to sell at market prices lower than to mills," said B V Mehta, executive director, Solvent Extractors Association of India (SEA).

The (BJP) ruled government had in October announced procurement of at with market prices coming under pressure due to a bumper crop.

Solvent Extractors' Association of India (SEA) has estimated a record kharif production in this year, with the same expected to be around 3.14 million tonnes of this year as against 2.94 million tonnes last year kharif season.

According to SEA survey, is expected to harvest 3.145 million tonnes during kharif season, a record production, despite acreage under kharif in marginally decreasing to 1.6 million hectare, as reported by the Government.

In the wake of market prices of pressure, Nitin Patel, deputy chief minister of had reiterated last week of the government continuing to procure for Rs 4,500 per quintal, despite market prices being at Rs 3,500 per quintal.

"However, there is some raw material crunch with the mills due to farmers' reluctance to sell Farmers are waiting for the government to procure as much as possible. However, the situation should dissipate in the coming days," said

First Published: Tue, January 09 2018. 18:16 IST
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