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Production of groundnut oil may cross 700,000 tonnes this year in India following a bumper output. In addition, lower export of peanuts have diverted the crop to crushing, which has increased the oil production.
According to industry sources, India produces on an average 3,00,000 tonnes of groundnut oil every year, but in this year, production of groundnut oil is likely to exceed 700,000 tonne.
"It is a fact that groundnut oil production has increased due to higher availability of groundnut for crushing. Production of groundnut has almost doubled this year," said B V Mehta, executive director of Solvent Extractors Association of India (SEA).
He said that over 700,000 tonnes of groundnut oil production is possible as most of the groundnut crop has been diverted to mills for crushing.
Availability of both groundnut and groundnut oil has resulted in fall in prices of groundnut and it may decrease further in the coming days, according to traders.
Mehta said, "Groundnut oil price has decreased constantly this year. We have asked the government to allow export of the oil and are hopeful that the government will agree with us. Export will give some stability to the market and farmers will get good price for their commodity." If government allows export, India can export nearly 50,000 tonnes of groundnut oil.
In the past three months, price of groundnut oil has decreased by Rs 100 to Rs 690-695 per 10 kg in Gujarat. While, in retail market, price of groundnut oil (new tin) has declined by Rs 160 to Rs 1,275-1,280 per 15 kg.
Also, growth in consumption has given some relief to the groundnut mills of Gujarat which are functioning normally. The reduction in prices of groundnut oil by around 36 per cent has resulted due to rise in demand.
Suresh Kaneria, managing director of Kaneria Oil Industries said, "With fall in prices, people who had diverted to other edible oils, mainly cotton seed oil, are now back to groundnut oil. This has increased the consumption of the oil by 50 per cent in this year." There are about 200 groundnut oil mills in Gujarat. However, over the last two years, hardly 40-50 mills were operational because of low production of groundnut, high prices and reduced demand of the commodity.
Moreover, good export demand for peanuts had created scarcity of groundnut for crushing. With rise in demand, more than 150-175 mills are in working condition.
The Solvent Extractors' Association of India recently issued kharif crop estimate of the Central Organization for Oil Industry & Trade. The report stated kharif groundnut production for 2013-14 would be 4.71 million tonnes as against last year's 2.62 million tonnes. According to industry sources, low export is also one of the reasons for higher production of groundnut oil.
A Junagadh based groundnut trader and exporter said, "Overall demand in international market for groundnut is very poor. India's export has declined because of weak demand from China. Moreover, some changes in export rules for groundnut has also depressed the export demand from India."
As per Indian Oilseed and Produce Export Promotion Council (IOPEPC) data, during April-September 2013, India exported 1,89,867 tonnes groundnut. In the corresponding period previous year, India had exported 5,35,670 tonnes groundnut.
According to exporters, this year India's groundnut export could be around 4,50,000 tonnes.
