The good monsoon in the Saurashtra region of Gujarat this year following the onset of rains a week ahead of schedule on June 21 would lead to a bumper groundnut crop, traders predicted.
The region Saurashtra was the largest groundnut producing area in the country.
The groundnut crop shrank drastically in 2002 as rains were far below normal. Even then, about 75 per cent of the crop was grown in Rajkot, Jamnagar, Junagadh and Amreli districts of Saurashtra.
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Nitinbhai Dhankecha, a senior member of the oilseed trade, said the groundnut crop is expected to one of the highest ever this year. Groundnut from Bhavnagar in Kutch wer also expected to arrive in the market by the end of September 2003.
Haribhai Patel, president of the Rajkot Seeds Oil and Bullion Merchant Association, went a step further and claimed that the crop would be large enough to meet the entire domestic demand for edible oil.
India has had to import more than a third of its edible oil requirement in recent years.
The size of the crop of oilseeds as well as oil bearing nuts had been far short of requirement in recent years. Production of edible oil this year will be so high that very little edible oil may have to be imported this year, he claimed.
The monsoon rains besides being adequate were also well spaced out. This type of rain would also lead to sharp rise in the oil content in groundnut.
Extraction would yield larger quantities of oil than in a normal area, prushing up the production of edible oil, he added.
Gujarat accounted for 70 per cent of groundnut exports from the country as well, most of which was Saurashtra as the region produced the best quality in groundnut.
The output of this premium type of groundnut would also go up, said Ukabhai Patel, president of the Saurashtra Oil Millers Association (SOMA).
Patel said the government should immediately raise the import duty on edible oil. Otherwise, the large edible oil production on account of the bumper groundnut crop would lead to a glut in the market.
Large imports of edible oil will cause prices to crash and land oilseeds cultivators in trouble as the crop would fetch very low prices.
Traders appeared confident of a bumper groundnut and oilseeds crop because the monsoon indicators in the Saurashtra region and overall rainfall had been excellent.
In response to the good rains, prices of edible oil have already started to fall. Prices fell by nearly Rs 30 per tin of groundnut oil and Rs 20 per tin of cotton seed oil in recent weeks.
Groundnut oil prices had flared up to record highs in the pre-monsoon months. Patel of SOMA said traders were also clearing out groundnut stock held in godowns in response to the large size of the 2003 crop.
The high price of groundnut oil in the pre-monsoon months had forced a large body of price-sensitive consumers to switch over to other types of edible oil. Groundnut oil had become too expensive for many middle-class buyers.
Branded edible oil makers and stockists were rushing to sell stocks in the market as well. Heavy selling was also taking place in response to news that four shiploads of edible oil would arrive at Indian ports from overseas markets by the second week of September 2003.
Prices of edible oils were likely to remain under pressure till end of September, said edible oil trader. Natubhai Kanasagra. Prices would stabilise only in October, he added.
The drought of 2002 pushed up prices of groundnut oil to Rs 1000 per tin just two months ago. The price of groundnut oil had since decreased by more than Rs 15 per kg and was still falling. Forward trading in groundnut had also started.
Export of groundnut from Saurashtra region had declined sharply in 2001 and 2002 owing to a bad monsoons, falling to 40,000 tonnes in 2002-2003 from peak levels of 2.5 lakh tonnes.