Groundnut prices: Gujarat govt steps in to stabilise market

With groundnut production expected to surge this year, the Gujarat Co-operative Marketing Federation Ltd (Gujcomasol) has started procurement to avoid a sudden fall in prices. It is doing so for the first time since 2001. Gujcomasol will buy on behalf of the National Agricultural Cooperative Marketing Federation of India Ltd (Nafed). It began last Friday, from 17 centres across the state.

"The decision (to procure) has been taken for groundnut farmers, as production is expected to be very high," said Govind Patel, the state's agriculture minister. Gujcomasol and Nafed aim to enter the market whenever the price falls below the Union government's minimum support price.

The MSP for groundnut is Rs 800 per 20 kg. At present, the price is Rs 600-750 per 20 kg in this state. The daily arrival is 80,000-85,000 bags (40 kg a bag) and will increase to 125,000 bags by the end of this month.

Patel said, "The purpose is to give a better price to groundnut farmers and balance the market." If the market price climbs beyond Rs 800 per 20 kg, Gujcomasol will stop procurement.

Various trade organisations have predicted a bumper crop in the country; it might even double, due to good monsoon and higher sowing. Gujarat accounts for about 45 per cent of total national output.

The Indian Oilseeds and Produce Export Promotion Council says production in the kharif season this year is estimated to be 4.91 million tonnes from five states - Gujarat, Rajasthan, Andhra Pradesh, Karnataka and Tamil Nadu - which account for close to 90 per cent of total output. This is higher by 2.1 mt as compared to Kharif 2012, when the crop was only 2.81 mt in these states, owing to monsoon failure.

The, Solvent Extractors' Association of India recently issued a kharif crop estimate of the Central Organization for Oil Industry & Trade. The report stated kharif groundnut production for 2013-14 would be 4.71 mt, against last year's 2.62 mt. For Gujarat, it has estimated production of 2.5 mt.

The rabi crop for groundnut is much lower, from 300,000-500,000 tonnes in a year. Gujarat accounts for the bulk of this.