Groundnut exports from Gujarat have been affected badly after the Centre’s move to ban high-value currency notes prompted farmers, who prefer cash payments, to postpone sales.
Rajkot-based trader Niraj Adhiya said, “About 70% of farmers are dependent on cash for their sales and most of them are refusing to sell their produce without cash. It is just impossible for exporters to give payments in cash to farmers. As a result, 70% of groundnut processing factories have become inoperational and the trade is seriously hampered.”
Gujarat is home to 1,200 groundnut processing factories whereas the neighbouring state of Rajasthan has 800 such units.
Speaking about exports to Pakistan, Adhiya said, “Each year about 40,000 metric tonne of groundnuts are exported to Pakistan. This year, only about 15,000 metric tonne has been exported as of yet. And it will take time before the situation improves.”
The demonetisation drive has also affected the regular functioning of the APMCs in the state. APMCs are the first destination for farmers wishing to sell their produce, and they are usually paid in cash by traders who then transport the produce to other parts of the state.
“While most APMCs shut shop after the November 8 announcement, 50% of them still continue to stay shut. Arrivals of groundnut have dropped to 50,000 bags as against 2.5 lakh bags during this time of the year,” Adhiya stated.
The production of groundnut oil in the state has also fallen. However, exports of groundnut oil from India is almost negligible, owing to the high cost of packing.
“Export of groundnut oil is only allowed in consumer packages, which becomes very expensive. Additionally, exporters are deterred because several times, there is breakage of the container during transportation, which causes oil to leak out and results in huge losses for the exporter,” said Sameer Shah, president, Saurashtra Oil Mills Association.