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India's groundnut oil production is expected to be low this year on account of poor crop output.
Reduced production, according to industry sources, is expected to drive the prices higher, forcing people to divert to other edible oils.
Country's groundnut oil availability for 2014-15 has been estimated at 240,000 tonnes by The Solvent Extractors' Association of India (SEA). It is down by 170,000 tonnes or 41.50 per cent from last year's 410,000 tonnes.
"Worldwide, groundnut crop has been estimated lower. Millers, as a consequence, will face scarcity of groundnut for crushing during the year, ultimately resulting in low groundnut oil production," said Samir Shah, president, Saurashtra Oil Millers' Association (SOMA).
Loose groundnut oil is currently priced between Rs 820 and Rs 825 per 10 kg in Saurashtra's wholesale markets. Rate has gained Rs 30 per 10 kg in this month and millers expect it to go up to Rs 900 per 10 kg in the next one month.
Retail price also rose by Rs 40-45 in this month to touch Rs 1,455-1,460 per 15 kg.
Citing decline in groundnut production as the main reason behind drop in oil production, B V Mehta, executive director, SEA said, "Lower projection of groundnut oil production is based on decline in production of groundnut, the main raw material required for it. Poor returns from groundnut last year shifted farmers to other crops resulting in decreased production."
As per SEA estimates, groundnut production in India will be around 3.30 million tonnes this year as against 4.71 million tonnes last year.
Suresh Kaneriya, managing director, Kaneriya oil industries, said, "Groundnut oil price will surely improve this year and it may shift people to other edible oils. Nearly 25 per cent people may divert to other oils this year from groundnut oil."
