If the supply situation did not improve by September, the Delhi traders see the prices of best quality groundnut rising to Rs 2,800 per quintal -- an increase of Rs 300 per quintal as against the existing price of Rs 2,500 per quintal for top variety. A severe shortage of rain faced by many groundnut producing states in 1997 has affected the crop position, reducing it by nearly half of last year, if information at trade circles in Delhi were to be correct.

Delhi-based SVK Foods' Rakesh discussed some crucial aspects of the groundnut trade with The Financial Express.

On the price trend of groundnut kernels and groundnuts with shells

As for prices of groundnut kernels, there have not been much fluctuations in the past three to fouryears. Groundnut kernels prices have been ruling between Rs 2,000 and Rs 2,300 per quintal at times showing marginal up or down trend while remaining within the band of Rs 2,000-2,300 per quintal.Superior quality kernels from Tamil Nadu may fetch Rs 2,500 per quintal but there is not much stock coming in.

Groundnuts with shells have been ruling around Rs 1,500 per quintal.On the production trend and reasons for shortfall

Groundnuts are produced in about eight or nine states in India. Superior quality groundnuts come from Tamil Nadu. Other coastal states like Andhra Pradesh, Maharashtra, Karnataka, Gujarat and Orissa are also groundnut producing states. These states raise two crops per season.

Other states like Rajasthan and Madhya Pradesh raise only one crop of groundnuts a year. General lack of rains in groundnut producing states during 1997-98, particularly in Tamil Nadu and Andhra Pradesh, has affected both sowing and plucking operations. The shortfall of production this year may be up to 50per cent of normal production.

On demand trend

Generally, top demand season for groundnuts is between the months of Dusserha and Holi festivals. However, usually, winter crops arrive during these months and as such the festival demand need not necessarily jerk up prices as a matter of rule.

A case for tax exemption on groundnuts

In Delhi there is a three per cent sales tax on groundnuts. Considering that groundnuts are common people's consumption item, there should be no tax on groundnuts or at the most there could be a one per cent tax.

The case for tax exemption on groundnuts gets all the more strengthened because there is no tax on foodgrain items.

Even the rich man's items like dry fruits got a tax reduction from seven per cent to three per cent in Delhi over the past year or so. These are all the more reason for groundnut trade to get sales tax exemption.

On the closure of some mills in Delhi

There used to be some groundnut oil extraction mills in and around Delhi afew years back like the ones at Narela, Lawrence Road, and Azadpur. However, these groundnut oil extraction mills, over the years, got closed due to various reasons including rising cost of production and labour problems.

The main reason for closure was, however, the fact of double taxation by the Delhi government. There used to be tax on both groundnut kernels and the finished product, that is, the oil extracted from the same nuts on which three per cent tax was already paid.

However, the closure of groundnut oil extraction mills in Delhi has not affected the demand for groundnuts as such. At worst, the closure may have affected the Delhi government revenue position because the impact of these mills were only marginal so far as groundnut trade was concerned.

On the export prospects

We are not in the export line. However, this year exporters may find it difficult to get export quality groundnut kernels because lack of rains have affected the quality of the produce by and large.