More than 80% oil mills would remain shut across Gujarat due to shortage of raw materials – groundnut and cotton – till the beginning of new season from mid-October.
Of the nearly 1,000 oilseed crushing units in Gujarat, more than 800 are already closed, said Samir Shah, president of Gujarat State Edible Oils and Edible Oil Seeds Association, adding, “Stocks of quality groundnuts and cotton seeds have almost emptied. National Agriculture Cooperative Marketing Federation (NAFED) is having stock of groundnut, but due to higher prices oil millers are refraining from purchasing. Similarly, inflated prices of cotton seeds, that too of inferior quality are unaffordable for crushing units.”
Big players including Adani having capacity to store raw-material in large quantities have continued operation, said a source in Adani Wilmar. By the end of current month, most of the remaining oil mills will have to discontinue operations except 20-25 big brands and wait for the arrival of fresh stock of raw materials once harvest season for groundnut and cotton would begin from mid-October, said a leading broker of edible oilseeds.
Avdhesh Sejpal, president of All India Cotton, Cotton Seeds and Cotton Cake Brokers Association, said that cotton growers sold their produce before March due to pandemic situation this year which resulted in shortage of raw material for cottonseed crushing units.
Besides, exports of cotton have jumped from nearly 30 lakh bales to as high as 55 lakh bales this year from Gujarat, said Sejpal, adding that, “At present prices of cotton have surged beyond Rs 57,000 per bale which is highest in the past 12 years. Generally, during the month of September cotton seed stock in Gujarat remains around 1.8 to 2 lakh tonne, but this year hardly 22,000 to 25,000 tonne of cotton seeds are stored with farmers that too of inferior quality, he added.
Prices of groundnut oil and cottonseed oil have surged by more than Rs 100 per 15 kg tin in a span of just one months, he says adding that with crushing activities having come to halt, prices may further increase.
As on Friday, groundnut prices are hovering around Rs 2,550 to Rs 2,600 per 15 kg tin. During the second week of August, prices of groundnut oil were around Rs 2,450 to Rs 2,480. Similarly, prices of cottonseed oil too have gone up from around Rs 2400 to as high as Rs 2500 currently.