Two years ago, farmers in Gujarat would grow castor only if they could not grow anything else, especially cotton or groundnut. That was because they hardly got Rs 400 for a maund of 20 kg of castorseed.
Today, the situation has changed. Castor seems to be the first choice, with cotton the second and groundnut the third option. The main reason is that castorseed now fetches nearly Rs 1,000 for a maund .
In fact, spot castorseed prices had touched Rs 5,300 a quintal in July before dropping to Rs 4,694 now mainly on speculation that monsoon has been beneficial and will lead to higher production.
Not surprisingly then, a record 11.56 lakh hectares (lh) have been brought under castor this year against last year's 7.67. In Gujarat, the area has nearly doubled to 7.21 lh from 4.05 lh a year ago. Andhra Pradesh is another State where the coverage has increased to 2.33 lh from 1.86 lh a year ago.
“Farmers have moved from groundnut to castor this year in Gujarat because of good prices in some areas,” said Mr B.V. Mehta, Executive Director, Solvent Extractors Association of India.
That seems to have happened in parts of Andhra Pradesh, too.
“Late rains seem to have induced farmers to go in for castor,” said an analyst from Rajkot. “Had the monsoon come on time, farmers would have gone in for groundnut, cotton or sesame,” the analyst said.
But Mr Mehta differed in his view. “Castor is a sturdy crop and the productivity in the country is the highest in the world at 1,700 kg a hectare,” he said.
Farmers could have been encouraged to go in for castor after its prices touched nearly Rs 6,000 a quintal in the futures market. September contracts that closed at Rs 4,767 a quintal on Thursday had touched a high of Rs 5,760 towards June-end.
According to the Solvent Extractors Association, castor coverage has gone up significantly in Rajasthan, too, to 1.77 lh (1.26 lh).
India accounts for 12.5 lakh tonnes of the total 15 lakh tonnes castor produced in the world. It enjoys 80 per cent share in castor-oil production and dominates the export market.
Castor oil has various uses including as hair oil, for cosmetics, skin problems, laxative and various other health disorders.
With rising income levels within the country and demand for cosmetics and hair oil increasing, castor supply is unable to match demand, leading to prices more than doubling in the last two years.
Unstable market
Meanwhile, heavy downpour in Gujarat has led to drop in interest in castor futures. According to Rajkot Commodity Exchange, the daily turnover in castor futures has dropped to Rs 20 crore from Rs 32-35 crore a couple of weeks ago.
“The market lacks stability and no one is sure if the rain will benefit the crop or not. Therefore, trade turnover has dropped,” said an official.
Meanwhile, the Solvent Extractors Association in a statement said that oilseeds coverage this year has increased to 176.83 lh against 171.65 lh a year ago with soyabean acreage a record 103.27 lh. Acreage under groundnut and sunflower has dropped, while area under sesamum and niger has increased.