Lack of storage slows Gujarat govt's groundnut procurement

Gujcomasol had started groundnut procurement from Nov 8, 2013 even as prices fell below the MSP at around Rs 650 for 20 kg

Groundnut procurement in Gujarat has ground to a halt owing to insufficient storage capacity. Gujarat, the first state to begin procurement in a bid to offer better prices to farmers, has collected about 72,000 tonnes of groundnut through the Gujarat State Co-operative Marketing Federation (Gujcomasol) for the past two months.

It has now stopped procurement as it doesn't have room to store any more quantity  of the commodity. "Currently, groundnut procurement is almost nil since we do not have enough storage capacity to store the commodity," said Govind Patel, state agriculture minister.

He added the state government is taking steps to address the situation. "We plan to increase the storage capacity for which the state government has also given an in-principle approval to the expansion," said Patel, adding that most of the expanded capacity will come up in godowns at Agriculture Produce Market Committees (APMCs) and the agriculture department's own land.

Gujcomasol had started groundnut procurement from November 8, 2013 even as prices fell below the minimum support price (MSP) at around Rs 650 for 20 kg. Gujcomasol procured groundnut on behalf of the National Agricultural Cooperative Marketing Federation of India (Nafed).

The procurement of groundnut began in 17 centres, which later on extended to 47 across Gujarat.  Prices of groundnut have declined in the recent past to Rs 600-700 for 20 kg currently. Prices fell by almost Rs 50 for 20 kg over the past month due to weak export demand and higher supply.

A Rajkot-based groundnut trader said there is no export demand for groundnut. "Mostly, the stock has been consumed by groundnut oil mills in Gujarat."

According to government estimates, groundnut production in the state is likely to be about 2.60 million tonnes.

Meanwhile, Nafed's procurement operations in other groundnut-producing states such as Uttar Pradeh, Maharashtra, Rajasthan and Karnataka are also on a slow track due to its own financial problems. Nafed had decided to cut salaries by 10 per cent at its board meeting on December 30, 2013. It also sought government help to tide over the financial crisis.