Senegal: Groundnut sector performance at mid-June 2014
by Market Insider
Tuesday, 24 Jun. 2014
The following Market Insider analysis is based
on information from business and published sources, in particular the USDA/FAS
GAIN report "Oilseeds and Oils Annual 2014" issued on 16 June
2014.
Production
Groundnut planting area increased by 9%
in 2013/14, but the yield was lower than the previous season (922 kg/hectare
versus 943 kg/hectare) and the quality of the crop worse than the previous
season, chiefly because of insufficient rainfalls during the groundnut
reproductive phase and of the poor quality of seeds - most of which were not
certified. The Senegalese government estimates the in-shell groundnut
production at 710,000 tons for the marketing year 2013/14 starting in November
2013, i.e. a 2 % increase compared to the previous season. According to
estimates of industry and the United States Department of Agriculture (USDA)
staff based in Dakar, production may however not exceed 600,000 tons. For the
marketing year 2014/15, official forecasts put the groundnut output at 850,000
tons, while business sources and USDA staff in Dakar think that it will not
exceed 700,000 tons due to the poor quality of seeds.
It is noteworthy
that the production zones shifted south of the Kaolack groundnut basin,
towards Nioro, Tambacounda, and Velingara, which received more rains.
Farmers and processors asserted the quality of 2013/14 crop worse than the
previous year, with only 24 % oil content compared to 30 % in 2011/12, and a
low density of 50% (weight of the kernel within the shell). For this reason,
farmers are preferring to sell in-shell groundnuts instead of shelling the
product using additional labor (good quality kernels could be sold at better
prices). The Senegalese Union of Agricultural Cooperatives
(UNCAS) preferred not to participate in the 2013/14 marketing
campaign; the poor quality of groundnuts hinders its ability to distribute the
proceeds from sales equally to farmers. The reason is that the industrial
processors remove all in-shell low density groundnuts and waste from
deliveries by blowing and therefore the quantity of groundnuts purchased and
paid for by processors differs substantially from the quantities collected by
cooperatives from farmers.
The National Network of Seed Producers'
Cooperatives (RNCPS), comprising 26 cooperatives across the country,
produces groundnut seeds, but the production does not cover the national
demand. These cooperatives produced 1,600 tons of certified groundnut seeds in
2012/13 and 2,900 tons in 2013/14. The seeds are analysed by national seed
laboratories; this season they have shown a very low germination rate
averaging 30%, lower than the previous campaign (50-60%). As a result, the
farmers will need to use more poor quality seeds per hectare, i.e. 200 to 250
kg/ha instead of 100 kg/ha and their production cost should increase
accordingly.
The Government provided a subsidy of 18.6 million US$
for the purchase of 74,000 tons of planting seeds for the 2014/15 campaign, of
which 24,000 tons are certified. The subsidised price for improved quality
seeds has been reduced from 0.4 US$/kg in 2013/14 to 0.28 US$/kg in 2014/15,
while the subsidised price for certified seeds has been lowered from 0.4
US$/kg to 0.3 US$/kg. In addition to seed subsidies, the Government supplied
11,274 tons of fertilisers subsidised at 55%.
Marketing
The 2013/14 marketing campaign started with the disagreement between
farmers and processors over the pricing of in-shell nuts. In November 2013,
the National Inter-Professional Groundnut Committee (Comité National
Interprofessionnel de l'Arachide - CNIA) fixed the farm gate price for
in-shell groundnuts at 0.4 US$/kg.
The fixed price was acceptable to
farmers, who before November 2013 were selling their production to private
operators at 0.24 - 0.28 US$/kg. But the farmers over optimistically thought
that Chinese, Russian and Pakistani buyers who purchased large quantities of
groundnuts the previous season, would continue to buy the crop at the new
fixed price in 2013/14. Their expectations did not materialise, partly due to
the poor quality and aflatoxin infestation of groundnuts. Moreover, artisanal
processing (shelling of nuts, oil and meal extraction and the manufacture of
derived products such as groundnut butter and paste, soap, etc.) decreased due
to the low groundnut quality. Farmers preferred therefore to sell in-shell
groundnuts to processors who ended up being the only buyers, instead of
shelled nuts.
The fixed price was, on the contrary, not acceptable to
processors who considered it too high for two reasons: the poor quality of the
groundnuts (only 24 % oil content and 50 % density) and the continuous decrease
of international groundnut oil prices (from 2,400 US$/ton in 2013 to 1,160
US$/ton in 2014) because of the low demand. As a matter of fact, the quantity
of groundnuts with an oil content as low as 24% needed to produce 1 litre of
groundnut oil has to be increased up to 4 kg, rising considerably the
production and sales costs.
The Government had to reach an agreement
with the processing companies in order to solve the disagreement, providing
for the subsidisation of losses they incurred after sales of their groundnut
oil and derived products in the international market, as well as for the
guarantee of loans provided by banks to processors to finance the marketing
campaign. The National Agricultural Bank, for instance, injected about 17.6
million US$ into the campaign. Two to three month later, once the guarantee of
loans was in place, the processors started buying the crop and become more
confident in purchasing large stocks.
In the Council of Ministers of
June 12, 2014, the Minister of Agriculture and Rural Equipment stated that
313,836 tons of groundnuts have been collected across the country and supplied
to processors by the beginning of June, valued at 81.93 million US$ (53% to
SUNEOR SA, 36% to COPEOL SENEGAL SA and 11% to TOUBA AGRO-INDUSTRIAL COMPLEX
(CAIT). About 30% of the groundnuts collected are expected to be sold as
edible kernels and 70% to be crushed to oil and meal.
Processing
It is difficult to determine the current amount
of groundnuts processed informally because the traditional processors are not
registered with the government; industry sources estimate it at 40 - 45% of
the total crop.
The three major industrial groundnut processors are:
- SUNEOR SA - the dominant groundnut processor and edible oils
manufacturer and trader. The company, which has been privatized in 2005
(former the public company SONACOS), is now wholly owned by the French group
ADVENS. SUNEOR has a 70% share in the Senegalese market and exports about 98%
of the groundnut oil produced by to EU, USA and China, being believed to be
one of the world's largest exporters of groundnut oil. Its annual processing
capacity of about 300,000 tons is only partly utilized. The crushing
activities have been sealed in particular over the past 2 years, since the
groundnut market has been opened to foreign buyers including Chinese, to whom
the farmers preferred to sell their crop. In 2011/12 the company was able to
collect less than 10% of its groundnut input needs. In 2013, two of its five
industrial sites remained closed throughout the year and the other three were
operating for only two month for the same reason. According to SUNEOR's General
Manager, the turnover of the company collapsed, from 207 million US$ in 2011
to 118 million US$ in 2012 and 62 million US$ in 2013. The company is heavily
indebted and in a critical social situation;
- COPEOL SENEGAL
SA - a joint holding of the French brewer CASTEL and the group SOFIPROTEOL
(major French agro-food group owner of LESIEUR OILS), has been set up in 2012
in Kaolack, to process groundnuts into crude groundnut oil. COPEOL SENEGAL took
over the assets of the former second largest groundnut processor NOVASEN, while
SOFIPROTEOL acquired the same year the SENEGALESE EDIBLE GROUNDNUTS AND OILS
CO. (SENRAH);
- TOUBA AGRO-INDUSTRIAL COMPLEX (CAIT) -
processes groundnut since 2009 and imports up to 20,000 tons of vegetable oil
per year. Its annual installed capacity of 35,000 tons has never been fully
used. The refined groundnut oil produced is partly distributed in Senegal and
partly exported to Switzerland.
An agreement has been announced
in March this year between the Kaolack Chamber of Commerce, Industry and
Agriculture and the Chinese company Qingdao Golden Rock Nuts Co, concerning
the investment of 4 million US$ for the promotion of groundnut production and
the construction of a groundnut processing plant. No news about the progress
of this joint venture is available since this date.
Groundnut
balances - estimates of USDA staff in Dakar on 16 June 2014
|
2012/13 (MY begins Nov. 2012)
|
2013/14 (MY begins Nov. 2013)
|
2014/15 (MY begins May 2014)
|
Area harvested, 1000 ha
|
709
|
540
|
630
|
Beginning stocks, 1000 tons
|
63
|
8
|
8
|
Production, 1000 tons
|
673
|
600
|
700
|
Imports, 1000 tons
|
0
|
0
|
0
|
Total supply, 1000 tons
|
736
|
608
|
708
|
Exports, 1000 tons
|
28
|
10
|
50
|
Crush, 1000 tons
|
300
|
300
|
350
|
Local food use, 1000 tons
|
225
|
200
|
210
|
Local feed use, 1000 tons
|
175
|
90
|
90
|
Total local consumption, 1000 tons
|
700
|
590
|
650
|
Ending stocks, 1000 tons
|
8
|
8
|
8
|
The
estimations of the groundnut balance posts made by the USDA staff in Dakar for
the 2013/14 marketing year differ from the official USDA estimates prevailing
at 16 June 2014. The groundnut area harvested is considered lower by 30%,
groundnut production is 15% lower, groundnut exports are lower by 80%,
crushing is higher by 30%, the total domestic consumption is 11% lower and the
ending stocks doubled. For the 2014/15 marketing year, USDA staff in Dakar
estimated the groundnut area harvested 18% higher than the official USDA
estimates, the groundnut production 3% higher, crushing 1% higher, the total
domestic consumption 4% higher and the ending stocks doubled.