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Groundnut exports: Dilemma of plenty

• India’s groundnut production is expected to reach 6.1 million tonnes this year a growth of 40% YoY.
• The bumper production implies good avenues in the export market, even as prices are anticipated to remain stagnant.
• But Indian exporters are facing problems on standards in key markets like EU and US, especially on the level of aflatoxins.
• Quality enforcement is necessary across the value chain. Besides this, India should take a firm stand on harmonization of standards in such products.

With a nation-wide groundnut acreage of about 38,90,000 hectares in the kharif season in 2018, India is the world’s second largest producer of groundnuts after China. It is also the world’s second largest peanut exporter after Argentina. Thanks to the ample amount of rainfall this year, there has been a bumper groundnut production, which is good news for groundnut exporters. The government has estimated the country’s groundnut production to be around 6.1 million tonnes as against 3.73 million tonnes last year. This 40% yoy rise in production generates tremendous scope for exports, albeit there are apprehensions of the price of groundnut staying stagnant.

 

While the country’s groundnut exporters are faring quite well in international markets, there are quite a few domestic & international challenges that they face. On the domestic front, groundnuts are cultivated in marginal & small farms. A majority of groundnut farmers (51-67%) own farmlands that are smaller than two hectares, according to APEDA’s Groundnut Survey Report, 2018. Besides that, the kind of inputs & technology employed by farmers is also quite basic. For instance, given the fact that most of the farming is rainfed, farmers are prone to the whims and fancies of weather vagaries. Moreover, instead of hi-tech modern farm equipment, a lot of these farmers still do everything from the preparation of land to harvesting manually.

Moreover, owing to the lack of awareness about GAP standards in the farming community, the practice of balanced use of fertilizers (chemical/organic) and micro nutrients is devoid in groundnut cultivation in the country, thereby affecting the overall production. The groundnut processing industry, too, doesn’t fare too well when it comes to adhering to proper quality standards. This is attributed to the industry being highly fragmented & unorganized, and food standards not being stringently enforced across the domestic supply chain.

These issues associated with the domestic production practices of groundnut are beginning to spill over in the international realm too. One of the most significant challenges faced by Indian exporters is the high level of aflatoxins. Aflatoxins are a group of mycotoxins produced by four Aspergillus species such as Aspergillus flavus, Aspergillus parasiticus, Aspergillus nomius and Aspergillus tamari. These poisonous  substances are said to have deleterious consequences for health such as delayed development, stunted growth, liver damage, and liver cancer.

While the level of aflatoxins permissible in the European Union is 4 parts per billion (ppb), the US allows its presence in food substances till 20 parts per billion (ppb). But a study conducted by Icrisat found out that the level of aflatoxin in Indian groundnut is 40 times more than permissible limits. This is probably why, while merely 1 in 1000 consignments coming from US is checked for food contamination in Europe, about 20% of Indian shipments are subjected to testing in Europe. This however, is not to rule out the arbitrariness applied in the process of sampling in Europe. For instance, there are variations in laboratory checking practices in different parts of EU – say Netherland’s Port of Rotterdam & UK’s Port of Flexistowe.

In order to overcome these challenges, efforts must be made to bolster productivity through investing in technology and facilitating the mechanization of groundnut production. Opening of better market avenues and improving the efficiency in the processing sector is important. Adoption of better cropping systems like rice-groundnut, rice-mustard etc, is also an economical option to combat food contamination by aflatoxins. In situ (in field) water management techniques, which enable the crop to avoid moisture stress at critical stages are also vital to prevent aflatoxin build up.

At the same time, Indian exporters have also from time to time contended that the tolerance limits imposed by the EU should be enhanced. India should also make a case at international forums to usher in harmonized global food standards for such products, which otherwise take the form of daunting non-tariff barriers to trade.

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