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NCDEX tips, Paradox: Though govt buys groundnut below MSP, farmers won't sell to mills
Farmers are still hoping their products will be procured at a higher rate by the state
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Excess production of groundnut in Gujarat has led to a steep fall in prices, which is affecting farmers. Moreover, with the bulk of the product being procured by the government under minimum support price (MSP), oil mills are facing a shortage of raw material.
The Gujarat government has so far procured close to 680,000 tonnes of groundnut at Rs 4,500 per quintal. However, there has been an apparent cap on procurement from each farmer.
Moreover, the government is expected to continue procurement, albeit in a staggered manner.
Yet, farmers are reluctant to sell the groundnut to oil mills, leading to hiccups in raw material sourcing for the mills. According to industry sources, farmers are holding on to their products in the hope it will be procured at a higher rate by the government.
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