| Rajkot |
Published: August 5, 2020 4:30:08 am
As the novel coronavirus has forced Indians to eat more home-cooked food —eateries haven’t fully reopened, while the ban on weddings and social functions remains — it is also showing up in the pattern of edible oil consumption.
On the one hand, imports of palm oil —the predominant frying medium used by hotels, restaurants/dhabas, canteens and caterers as well as namkeen and mithai makers — have fallen by almost 40% year-on-year during April-June. On the other, oils directly used in home kitchens — whether soyabean and sunflower or indigenous mustard, groundnut, coconut and sesame — have reported no decline, if not increase, in consumption.
The groundnut rally
One example of “consumer-facing”, as opposed to “institution-consumed”, oils faring well in lockdown/unlockdown India is groundnut. According to the Union Agriculture Ministry, production of this oilseed in 2019-20, at 93.47 lakh tonnes (lt), was more than the previous year’s 67.27 lt and the highest since the record 97.14 lt of 2013-14. Yet, it is currently trading in Rajkot’s wholesale market at Rs 5,300-5,400 per quintal, as against Rs 4,900-5,000 a year ago and the government’s minimum support price (MSP) of Rs 5,275. The oil is also fetching around Rs 130/kg, up from Rs 105-110 last year at this time.
“Groundnut oil prices had been rallying since early this year in line with other vegetable oils. But unlike, say, palm oil, its consumption and prices have remained steady even post lockdown. In Gujarat especially, people had to switch entirely to eating at home and they chose groundnut oil, which is their traditional cooking medium,” says Sameer Shah, president of the Jamnagar-based Saurashtra Oil Mills Association (SOMA).
But it’s not just oil.
An equally significant factor that is keeping groundnut prices firm is exports. In 2019-20 (April-March), India exported 6.64 lt of groundnuts – both kernels and in-shell — valued at Rs 5,096.38 crore, compared to 4.89 lt worth Rs 3,298.33 crore the previous fiscal. These shipments were mainly to Indonesia, Vietnam, Philippines, Malaysia, Thailand and China.
An interesting fact about groundnut is that its importance as an oil source has diminished vastly in recent times. Till the mid-seventies, groundnut accounted for over 50% of India’s edible oil consumption. But today, more than half of the country’s groundnut kernels are used for table consumption or exported, leaving little for oil extraction. That makes it more of a dry fruit than an oilseed. B V Mehta, executive director of the Solvent Extractors’ Association of India (SEA), estimates annual groundnut oil consumption at 4 lt, which is hardly 2% of the country’s edible oil demand and below even other indigenous oils such as cottonseed and rice bran (see table).
That situation could, however, change this year with farmers substantially expanding the area sown under groundnut. Acreage under the oilseed in the ongoing kharif planting season has already touched 45.45 lakh hectares (lh), up from last year’s corresponding 30.54 lh. The coverage in Gujarat, at 20.38 lh, is an all-time-high, way above the normal planted area of 15.18 lh and surpassing the previous best of 19.72 lh for the crop in 2002-03. The other states to have recorded a surge in plantings so far are Andhra Pradesh (from 2.43 lh to 6.78 lh) and Rajasthan (5.26 lh to 7.06 lh). These figures are likely to go further in the coming days.
Behind the comeback
So, what accounts for this comeback, especially in Gujarat where the crop is mainly grown in the Saurashtra region?
One reason, of course, is prices expected to remain firm, supported by rising home consumption of the oil post-Covid and steady export demand for the kernels. SOMA’s Sameer Shah is confident that domestic groundnut oil rates will not fall way below the present levels of Rs 2,000 per 15-kg tin.
But prices apart, there are also the comparative returns vis-à-vis other crops. In Saurashtra, where the major groundnut-cultivating districts are Rajkot, Junagadh, Jamnagar and Devbhoomi Dwarka, the competing crop is basically cotton. Saurashtra farmers this time have sown just 14.87 lh area under cotton, as against the 16.50 lh under groundnut. The latter has clearly gained at the former’s expense.
For farmers, groundnut can be harvested in 90-110 days by October-November, whereas a full cotton crop cycle can take up to 180 days over 3-4 pickings. The shorter duration gives the flexibility to plant wheat, chana (chickpea), jeera (cumin) or coriander during the rabi winter-spring season. Not only are groundnut cultivation costs lower, their stems are very good fodder for cattle and buffaloes. Yields per hectare, at 10-20 quintals, are more or less similar both for kapas (raw un-ginned cotton) and groundnut-in-shell. Yields of the fibre crop have actually fallen in the last 5-6 years due to repeated pink bollworm attacks.
What has really tilted the balance, on top of the above, is prices. These, in the case of groundnut, hit a record Rs 6,000/quintal early this year, overtaking the average Rs 5,000 levels for kapas. Regular MSP-based procurement by government agencies has further boosted farmers’ confidence to plant. The National Agricultural Cooperative Marketing Federation of India or Nafed procured 2.16 lt of the oilseed from Gujarat alone in 2016-17, which rose to 8.28 lt, 4.25 lt and 5 lt in the following three cropping years.
Gujarat is, incidentally, also the country’s largest cotton producer. But procurement of kapas through the Cotton Corporation of India hasn’t been on the scale of groundnut purchases undertaken by Nafed.
If the monsoon remains normal — Saurashtra, Andhra Pradesh, Karnataka and Tamil Nadu have received excellent rains – and there is no damage from pests and diseases (white grub insect, leaf spot and rust fungi, etc), a record groundnut crop is in the offing. And that, according to SEA president Atul Chaturvedi, could also restore its status as an oilseed and not just dry fruit.
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