Groundnut oil exports could take a hit over high domestic prices

Groundnut in short supply despite good output; farmers hold on to stocks as they seek better prices

While the government has allowed bulk exports of groundnut oil, edible oil companies are finding it difficult to make a dent in the export market. This is because groundnut oil prices are ruling at about $1,550 a tonne in the international market, while the price of the commodity in India is about $1,815 a tonne. According to players in the edible oil industry, domestic prices are high due to short supply of groundnut, which in turn has made Indian groundut oil prices unviable for exports.

“At the current rates in the domestic market, export of groundnut oil from India is not viable. Indian groundnut oil prices are higher than those prevalent in the global market, due to which finding demand is difficult,” said Kamlesh Patel, executive director, N K Proteins Private Limited, which sells edible oils under the brand name Tirupati and Pankaj.

Last year, India had exported about 10,000 tonnes of groundnut oil in consumer packages. According to the Solvent Extractors Association of India (SEA), the country produces about 300,000-350,000 tonnes every year, and has potential to export about 40,000-50,000 tonnes in bulk. China is the biggest market for Indian groundnut oil.  

The Government of India allowed bulk export of groundnut oil in March this year. Prior to that, exports were allowed only in consumer packs of up to five kg each. Currently there is little demand for Indian groundnut oil but producers are hopeful of a revival after some time.

Jayesh Patel, managing director, Vimal Oil and Foods Limited, says, “Once domestic prices go down, demand for Indian groundnut oil will arise -- hopefully after two or three months.”

According to oil millers, despite good groundnut production this year, farmers are not selling the commodity in large amounts, in order to fetch better prices. The agriculture ministry estimates groundnut production this year will reach 8.47 million tonnes, up 26 per cent from last year’s 6.73 million tonnes.

“We produce about 300,000-350,000 tonnes of groundnut oil every year and export just 10,000 tonnes in consumer packs. The country can export 30,000 tonnes a year. Arrival of groundnut is a bit slow for crushing as farmers are not selling,” said Samir Shah, president of Saurashtra Oil Mills Association (SOMA).

Wholesale prices of groundnut oil in various markets across India are ruling between Rs 11,800-12,300 per quintal. Prices have gone up by 3-4 per cent in April.