Yuan devaluation pulls down groundnut, sesame seed exports by 24%

Vietnam's move to halt imports from India also affected exports

The devaluation of the Chinese yuan along with crisis in the European Union have pulled down groundnut and sesame seed exports by around 24% (in volume terms) during the April to August period of the current financial year.

In value terms, however, exports have risen marginally owing to the depreciation of the Indian currency. 

Industry players believe that currency fluctuation, tight money supply and overcautious banks in terms of lending have also added to the current downfall in export of both these commodities. 

Export of groundnuts from India during April-August, 2015 have decreased to 180,552 tonnes in comparison to 237,202 tonnes during same period in the previous year, a dip of 24%. However, in value terms, groundnut exports increased marginally to Rs 1,465 crore in comparison to Rs 1,461 crore, mainly due to depreciation of Indian currency.

“Depreciation of Chinese currency with weakness in EU and other international factors has led to downfall in groundnut and sesame seed export from India during current financial year. Moreover, Vietnam’s move to suspend groundnut imports from India has also affected the exports”, said Sanjiv Sawla, chairman of Indian Oilseeds and Produce Export Promotion Council (IOPEPC).

As per the Agricultural and Processed Food Products Export Development Authority (APEDA) data, India had exported 708,386 tonnes groundnut in 2014-15, up by 198,722 tonnes from 509,664 tonnes of 2013-14. 

Vietnam is one of the most important markets for Indian groundnuts, accounting for nearly 26% of India's exports in FY15. During 2014-15, India exported about 1.83 lakh ton peanuts to Vietnam valued at Rs 1,251.57 crore. 

Vikram Duvani, managing director of Rachana Seeds Industry said, “Crop size was lower last year and domestic consumption was good which increased the groundnut price. Competitor countries are offering cheaper rates. All this translated into lower export from the India."

Competitor countries Africa, Argentina, Brazil and USA offer groundnut at about $1,150-1,300 per tonne while India’s peanut price is ruling at $1,350-1,475 per tonne in international market.

Export of sesame seed was also affected during the first quarter of the FY16 due to volatile prices in domestic as well as international market.

According to IOPEPC data, sesame seed exports declined both in value and volume terms. Exports from India was at a level of 65,828 tonne valued at Rs 693.68 crore during April-June, 2015 in comparison to 86,732 tonne valued at Rs 1,189.26 crore during April-June 2014. Exports, this declined by 24%.

A Gujarat-based exporter said, “Prices of sesame seed have remained volatile since the last one year due weak demand and higher production in India and internationally. Moreover, importing countries like China and Korea have good stock position which reduced the demand from global market that also translated into fall in exports from India.”

Competing countries continue providing huge incentives to their exporters. On the other hand, India has withdrawn the earlier support extended to exporters. The cost of power in India is also highest amongst its competing countries, allege exporters. 

Sawlva said, “The exporters in competing countries are given capital at much lower cost, whereas the interest rate subvention in India has been discontinued.”