1. Why Gujarat peanut processing units are facing scarcity of raw material

Why Gujarat peanut processing units are facing scarcity of raw material

Peanut processing units in Gujarat are facing scarcity of raw material as the state government is procuring groundnut at higher than market rates.

Ahmedabad | Published: January 4, 2018 1:53 AM
Gujarat peanut, Gujarat peanut processing, Gujarat peanut processing units, scarcity of raw material, groundnut market rate Peanut processing units in Gujarat are facing scarcity of raw material as the state government is procuring groundnut at higher than market rates. (Image: Reuters)

By Vimukt Dave

Peanut processing units in Gujarat are facing scarcity of raw material as the state government is procuring groundnut at higher than market rates. Because of this, more than 70% units have been closed while the rest are partially operational. According to peanut processors, farmers are not willing to sell groundnut to them as government is paying more. On the other side, processors are not in a position to offer high prices to the farmers as it is not viable. “This is season time for groundnut processors but as the state government is procuring at the rate of Rs 900 per 20 kg, farmers prefer to sell their produce to the government. In this condition about 70% of peanut processing units have been closed in this season in Gujarat,” said Mukund Shah, president of Gujarat Oilseeds Processors Association (GOPA). There are nearly 2,000 small and medium groundnut processing units in Gujarat and most of them are located in Saurashtra region. As the monsoon was good this year, the state government has estimated record 3.20 million tonne kharif groundnut production for 2017-18 which is about 9% more than 2.94 million tonne in 2016-17.

The Gujarat government has procured 647,737.75 tonne of groundnut so far and spent over Rs 2,882.43 crore. About 334,938 farmers have been benefited as on date. Peanut processors were also hoping for smooth supply of the groundnut but the state government has begun procurement at the rate of minimum support price (MSP) and this has created the supply crunch in the market. Kamlesh Badani of Badani Corporation from Junagadh said, “We are unable to pay the prices what the state government is paying to the farmers. Paying more than `800 per 20 kg is not viable for us as the exporters refuse to buy from us. Worldwide groundnut production is good this year and this has decreased the peanut prices in international markets.

In this scenario, exporters will not buy at the higher rates.” Due to tight supply of groundnut, most of the operational units are working part time. Moreover, these units are facing trouble to fulfil committed orders for domestic market. Dhaval Chaudhari, chief executive officer of Himatnagar-based Farmkart Foods, said, “I am running my unit two or thee days a week due to shortage of groundnut for processing. Even for sub standard quality, farmers are demanding Rs 900 which is not possible for me to pay. Many units across Gujarat are facing trouble get groundnut to fulfil their orders.”

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