Farmers in Gujarat have stopped bringing the groundnut crop to the market to sell to millers because they expect prices to grow further. As a result, oil mills are sitting idle.
A few weeks ago, the state government had alleged that an artificial crisis of groundnut oil had been created by millers in Gujarat, the second highest groundnut oil producing state in the country.
Millers' premises were raided and godowns sealed in retaliation. The move by farmers now has pushed prices higher in the oil market, with panchayat elections round the corner.
The groundnut shortage has rendered 1000 mills out of 1200 in the state idle in the last one week, of which 900 are in Saurashtra and the rest 300 elsewhere in the state.
"Earlier we had to close mills because of the raids, and now there is no raw material," said Ukabhai Patel, president of Saurashtra Oil Millers' Association.
Patel blamed the state government for favouring farmers for political reasons. "As panchayat elections will be held in the state in the first fortnight of February, the government cannot afford to put pressure on farmers," he said.
As the marriage session has started in Gujarat, groundnut oil prices have surged. Bhogilal Patel of Ahmedabad, whose son is getting married, said, "With groundnut oil prices nearly Rs 1000 per 16-kg tin or double of last year's level, more cottonseed oil will be used for cooking the food to be served to invitees."
Retailers have passed the buck to millers and farmers. "We are buying loose oil at much higher rates from millers so we have to hike prices. Once wholesale prices come down, we will charge less," said Madhusudhanbhai Shah, a groundnut oil retailer in Ahmedabad.
Prices of cottonseed oil and palmoleine also have increased. "A 10-kg tin of palmolein costs Rs 400 against Rs 200 a week back while cottonseed oil prices have also increased because of the groundnut shortage," said Patel.
A senior leader of Bharatiya Kisan Sangh, the farmers' wing of ruling Bharatiya Janta Party in Gujarat, said, "When the prices go up why should only millers make money? There was drastic cut in groundnut production this year causing misery to farmers, so if they now try to make some money, no one should blame them. The government should have taken precautions much before but it failed to do so."
