Senegal to end subsidy to peanut-oil producers amid record crop

by Drew Hinshaw

Senegal will end subsidies to peanut- oil producers as scheduled on May 7, even after purchasers sought an extension because of a record crop this year, the Agriculture Ministry said.

The West African nation is expected to produce 1.08 million metric tons of peanuts this year, Yoro Sarr, a spokesman for the ministry, said in an interview from the capital, Dakar. It’s the country’s biggest crop since 1975, when 1.2 million tons was harvested, Sarr said.

Peanut-oil producers have so far bought 300,000 tons of this year’s harvest and have indicated they won’t buy “significant” amounts more if the subsidy ends, he said.

“They say they’ve attained their desired tonnage, but that they could continue to purchase the crop if the government extended its subsidy,” Sarr said. “We’re going to say no.”

Peanuts account for 60 percent of Senegal’s agricultural exports, according to the U.S. Department of Agriculture. Shipments by Suneor, the country’s biggest peanut-oil processing company, account for as much as 50 percent of the world market, according to the USDA’s website.

The subsidy amounts to 45 CFA francs (9 cents) per kilogram (2.2 pounds), compared with the official price of 165 francs, and costs the Senegalese state 13 billion CFA francs a year, Sarr said.

Abdoulaye Ndiaye, head of communications at Suneor, didn’t answer his phone when called yesterday for comment. Closely held Novasen and Complexe Agro-Industriel de Touba also produce peanut oil in Senegal. A person who answered the phone at Complexe Agro-Industriel said the company had no comment, while calls to Novasen weren’t answered.

Peanuts not bought by processors are expected to be consumed by other countries in the region, Sarr said, without elaborating.

Sarr also said that Senegal will triple its horticultural exports by 2015, revising a previous deadline of 2012 set by the government. The program targets irrigation projects and farm- equipment financing, along the coastal Dakar-St. Louis corridor, which the government intends to use to make Senegal a food self- sufficient country in the coming five years.

In 2010, according to Sarr, the country is expected to export about 55,000 tons of horticultural products, including green beans, mangoes, melons and rice, principally to Europe. Last year, shipments totaled 17,000 tons, he said.

Business Week