A meeting of the Saurashtra Oil Millers Association (SOMA) was held at Rajkot on Saturday, and oil millers were in a mood to defy the restrictions while seeking legal protection.

SOMA president Ukabhai Patel said, ``If the government tries to prevent us from seeking protection, the millers will stop oil production.'' Some members alleged that under the cover of the restrictions, the government was sheltering some ``dishonest traders and millers''.

Market sources refuted fears that groundnut oil price would rise if movement of oil outside the state was freed, saying prices had not risen when the RJP government boldly lifted restrictions.

Traders are also worried about stocking groundnut or its oil. ``It has rained in Saurashtra till last week and therefore the groundnut available in market has moisture and contains more than one per cent ATSA, which should normally be less than 0.5 per cent. If the percentage reaches one per cent or more, the oil crushed from such groundnut cannot be preserved as the percentage increases as time passes and oil with 2.5 or 3 per cent ATSA the oil becomes inedible,'' said an expert.

Market sources said that due to this reason oil traders were advising their permanent customers not to buy groundnut oil at this stage and wait for twenty days or more. ``This is one of the reasons that the prices will not go up as there will not be demand from consumers who stock for the whole year.''

Farmers said last year there was a crop of about 20 lakh tonnes, and with the stock from Tamil Nadu, Andhra Pradesh, and Karnataka, it amounted to some 28 lakh tonnes. This year, Saurashtra harvested some 20 lakh tonnes, and other states the same amount -- a total of 40 lakh tonnes. The quality is better this year.

Thus production of oil is bound to be much more than that of last year. And since this year the moisture content is higher, exports are bound to be affected as importers do not accept groundnut with moisture content above certain level.

The sources said that if the government lifts the ban, may be some time there may be a reactionary hike in groundnut oil price, but this will be temporary. Prices will come down within fortnight, they claim.

If the restrictions are removed after a fortnight, when dried groundnut will come into the market, then also there will be a reactionary price rise, and this may cause panic purchase by consumers, furthering the price rise.