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Low yield forces groundnut farmers to switch to cotton
M Suresh Babu, a business analyst, says the edible oil prices are likely to witness a 50 percent rise in the next few months compared to January this year following geopolitical tensions and Indonesia's decision to ban crude palm oil exports
Anantapur-Puttaparthi: Edible oil prices have been climbing unabated globally and in India since the onset of the Covid pandemic.
Meanwhile poor sowing, lower yield and price crash hit the groundnut sowing in Anantapur. A majority of black soil farmers in Anantapur and Satyasai districts have begun migrating from groundnut to cotton crops after a groundnut seed variety, KL-1812, which was promoted by the Andhra Pradesh government, fell out of demand during the kharif 2022. The KL-1812, developed at the Agriculture Research Station,Kadiri, was touted as one that could withstand both drought and excess rainfall. At a time when the country is facing shortage of edible oils, the KL-1812 promised to increase the total yield and give more oil as it has 51 percent oil content compared to 48 percent of its predecessor K-6, which is phased out officially in 2020. The quantity of seeds given on subsidy in Anantapur, too, has decreased. While it was 2.3 lakh quintals in 2021 kharif, it came down to 1.8 lakh quintals this time.
Farmers, who purchased KL-1812 even for Rs 22,000 per quintal last year, do not come forward to take it under the government subsidy scheme now.
Moreover farmers are not going for diversification by sowing Gujarat Junaghad, Tag and Swarnandhra. Other varieties are not used for daily consumption. K6 is used for chutneys, chikkis and Peanut powder. But, the demand drastically fell for the variety as farmers are preferring cotton, whose prices are ruling high in the market.
Last year the state government has given fair compensation Rs 20,000 for cotton and only Rs 1,800 for groundnut. As a result, 2,000 quintals of KL-1812 variety seeds are left in the godowns. Low-crop yields and higher price of cotton, are making farmers move from groundnut to other cash crops.
M Suresh Babu, a business analyst, told The Hans India that edible oil prices are likely to witness a 50 percent rise in the next few months compared to January this year, following geopolitical tensions and Indonesia's decision to ban crude palm oil exports, according to a report. India Ratings and Research (Ind-Ra) said Indonesia's decision in April 22 to include crude palm oil (CPO) in the scope of its export ban starting April 22 has affected both supply and prices of edible oils globally.
The move could remove about 2 million tonnes of palm oil supply from the global market every month, which is nearly 50 per cent of the global monthly trade volumes, leading to an increase in substitution demand for other oils and thus a widespread rise in edible oil prices.
The ban puts half of India's palm oil supply under a cloud while also increases consumer inflation, Ind-Ra said in the report.
The rise in price has been so steep that the Indian government had to take several measures to rein in the increase in prices.
The government interventions taken so far are not going to be enough as the supply of edible oils such as palm oil, sunflower oil and groundnut oil is interrupted again. The governments have no control over the market.
Neither the state nor the Central government check the climb and reason why the rise yet again. This will definitely impact the FMCG industry and end consumers. India will be hit harder than others as 90 percent of the country's sunflower oil imports are from Russia and Ukraine. The top producers and exporters of sunflower oil, has created supply crunch in the market, leading to even high prices.
CPO prices hit a decadal high of over USD 1,200 in 2021 as production continued to lag consumption growth for three consecutive years (2018-19 to 2020-21), leading to a reduction in inventories.
Price rose to an all-time high of USD 1,900 per tonne in March 2022 as the Russia-Ukraine conflict severely impacted the availability of crude sunflower oil, since Ukraine and Russia account for over two-thirds of the global sunflower oil. Besides, there is impact of a drought in South America on soybean production leading to a potential of a large substitution demand, the report said.
