Shortage fuels groundnut oil price rise as Saurashtra dries up

With the din of the Assembly elections now over, voices of discontent have once again started surfacing, especially in the Saurashtra region of Gujarat, where the spectre of failed crops is looming large on account of bad monsoon this year.

Prices of groundnut oil have predictably soared and are currently at new highs of R2,200 per 15 kg tin due to a shortage of groundnut for crushing. The prices of the oil are expected to soar further to R3,000 per 15 kg tin in the coming days. Mill-owners and exporters in Gujarat are expecting the prices to hit unprecedented levels.

Speaking to FE, Sameer Shah, president of the Saurashtra Oil Mills Association (SOMA), said: "I am surprised that hike in groundnut oil prices is making news considering that it is consumed by 2-5 per cent of the people and most of these belong to the well-to-do families."

Historically, groundnut oil has been the preferred choice for Gujarati people, but this is changing now. The annual consumption of edible oil in Gujarat is around 8-9 lakh tonnes with cottonseed and palmolein oil having a major share of the market now. Groundnut now has around 15-18% share. Apart from availability, price is also an important factor as cottonseed oil is about 30-40% cheaper than groundnut oil. While two years back 450 mills in Saurashtra were involved in groundnut crushing, this year this figure is down to only 30.

Further, the per day average production is 25 to 27 tankers (on tanker has a capacity of10,000 litres) from the normal average of 250-300 tankers this time of the year as December and January are best for crushing.

But while Shah feels that steep prices of groundnut oil may not affect the common man, he believes scant attention is being paid to the overall agriculture scenario in Saurashtra, which is reeling from acute lack of irrigation facilities compounded by failure of rains this year.

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