Consumption growth gives relief to groundnut oil mills

Growth in consumption has given some relief to the groundnut mills of Gujarat which are back to functioning normally after almost two years. The reduction in prices of groundnut oil by around 36 per cent has led to the growth in demand.

According to industry sources, the price difference between groundnut oil and other edible oils has reduced and as a result consumption has increased almost 40-50 percent in past two months.

"Due to higher groundnut production in Gujarat, availability of raw material for crushing has improved for groundnut oil mills which, in turn, decreased the price of the oil almost 36 per cent as compared to last year", said Samir Shah, president of Saurashtra Oil Mills Association (SOMA).

Last year, at this time, refined groundnut oil was traded at Rs 2,250 for a 15 kg tin, an all time high price.

At present, however, groundnut oil price is ruling at around Rs 1,440-1,450 for a 15 kg tin, which is a drop of around 36 per cent or Rs 800 per tin in a year's time. Similarly, loose groundnut oil prices have decreased from Rs 1,310 per 10 kg to Rs 775 per 10 kg.Samir Shah said, "With the drop in prices, people who had diverted to other edible oils, mainly cotton seed oil, are now back to groundnut oil. This has increased the consumption of the oil in past two months."

Before Diwali, hardly 50-70 tonnes were traded per day and now demand has crossed over 250 tonnes per day.

There are about 200 groundnut oil mills in Gujarat. However, since the last two years hardly 40-50 mills were in working position due to lower production of groundnut and higher prices reducing the demand of the commodity. Moreover, good export of peanuts had created scarcity of groundnut for crushing.

With increase in demand now more than 150-175 mills are in working.

Ravjibhai Mandanaka, president of Gondal Oil Mills Association said, "Main reason for higher consumption is price difference between groundnut oil and other edible oils."Difference between groundnut oil and cotton seed oil is about Rs 350 per 15 kg tin now which was about Rs 1160 per 15 kg earlier. The industry insiders said that average groundnut oil production is about 200,000 tonnes per annum which may increase to over 300,000 tonnes per year because of good groundnut production. SOMA has predicted 2.40 million tonnes kharif groundnut production in Gujarat for this year which is almost three times higher as compared to last year's 800,000 tonnes.