Farm Distress. Low prices, delayed procurement, bumper crop put Karnataka’s groundnut farmers in a spot

“I had purchased the groundnut seeds at around ₹8,000 per quintal in June for sowing. But now I am not even getting half of that price for these nuts that I have grown over the past four-five months,” laments Bomiah, a farmer in mid-thirties from Budnatti village near Challakere, the key oilseed growing region in Karnataka.

Bomiah had grown about 20 bags (of 30-40 kg each) of groundnuts from his 2.5 acres, of which he had brought 16 bags to the Challakere APMC market. However, the prices are way below his expectations and the minimum support price of ₹4,450 (including a bonus of ₹200) announced by the Centre.

The market arrivals are on the rise, while the prices are on a declining trend. Though the State has announced that it would start procurement centres, but it would take a few more days to actually start the operations. “I have spent close to ₹30,000 on cultivation. At the current prices of ₹3,600 per quintal, I don’t have any option but to take a hit,” Bomiah adds. “If only the government had begun purchases under MSP on time, I could have been benefited and my losses could have been reduced,” he adds.

Market arrivals have commenced at Challakere since early November and are seen gaining pace. Challakere, located in Central Karnataka and closer to the Andhra border, also attracts groundnut farmers from the neighbouring State.

“We had reaped a good harvest of groundnuts after a long time and were hoping to settle our dues. But the low prices have dampened our hopes,” rues Reddihalli Veeranna, a farmer leader of Karnataka Rajya Raitha Sangha.

Veeranna had led couple of sporadic farmer protests at the Challakere market seeking early government intervention to avoid farmers resorting to distress sale. “We will continue to fight,” he adds.

Last week, the State announced it would start procurement centres to purchase groundnuts. “We have begun the process of registering the farmers and expect to start purchases in about 40 centres in a couple of days,” said J Ramanand, Managing Director of the Karnataka Oilseeds Federation (KOF), which is supporting Nafed in procurement operations across the State.

Farmers said the registration process for procurement was rather slow as KOF been seeking details such as Aadhar and bank account numbers and mapping them to land record details. Also, the quality parameters for procurement are rather stringent and the quantity of purchase has been restricted to 15 quintals per farmer.

“Knowing fully well that the State was headed for good crop, the government should have geared up with the registration process long back. The State has already started thinking about the elections which are six months away. But they don’t even have time to think of farmers who are facing crisis. The State is insensitive to the farmers plight,” Veeranna said.

It’s not just a bumper crop in Karnataka that’s influencing the prices of the oilseed. Higher output in other producing States such as Gujarat, Rajasthan, Andhra Pradesh and Tamil Nadu is also weighing on the prices of groundnut in Karnataka. While the average rates are hovering around ₹3,500-3,600 a quintal in Karnataka and Andhra, the prices are slightly better in Tamil Nadu at over ₹4,000.

The Challakere region once thrived upon the groundnut economy and had as many as 130 crushing units about two decades ago. But there are hardly a handful now, Veeranna rues. The onslaught of cheaper imports of palm oil and other soft oils such as sunflower and soyabean has hit the groundnut economy the most.

“It is simply not viable to crush groundnuts anymore. There is a plentiful supply of cheaper oils such as palm, sunflower and soyabean. The cost of producing a kilogram of groundnut oil now hovers around ₹150, while the edible oils are available in the market starting from ₹60-65 onwards. As a result, the consumer has moved away from groundnut oil to cheaper alternatives,” said a crusher.

The Centre has recently hiked duty on edible oil imports, but the move has not helped lift the sentiment in the markets.

Traders said that exporters have stayed away from the market this year due to delay in GST refund issues.

“We are having a good crop in the past 10 years. The absence of buyers has led to the collapse of the market. The government should look at subsidising exports of groundnuts, which could help stabilise the prices,” said Ramesh Babu of Vishnu Trading in Challakere.

This is the seventeenth in the series on Farm Distress. The first article appeared on November 16. The previous article appeared on December 8, on Karnataka’s maize growers.