As the India–EU trade architecture evolves, Gujarat’s high-oleic groundnuts present a rare opportunity to transform a feed-grade export anomaly into a premium, traceable, and sustainability-aligned peanut butter value chain—reshaping India’s agri-export narrative from volume supplier to branded nutrition leader

India, despite being the world’s largest producer of groundnut, continues to export a substantial share of its produce to the European Union as low-value bird feed. In doing so, the country has inadvertently acquired the dubious distinction of being the EU’s leading supplier of feed-grade peanuts. This is not merely a commercial anomaly; it reflects a deeper strategic, ecological, and economic failure in India’s agri-export orientation.

With the India–EU Trade Agreement on the horizon, India—led by Gujarat—has a narrow but decisive opportunity to reposition groundnut as a premium human-nutrition product. Peanut butter, in particular, offers a natural upgrade path if India leverages its ecological advantages, flavour profile, food safety potential, and traceability.

Ecological and Agro-Climatic Advantage of Gujarat Groundnuts

Gujarat represents the largest contiguous groundnut ecosystem in the world, with cultivation spanning nearly two million hectares. This scale is matched by ecological uniformity. The predominantly semi-arid and low-humidity climate naturally suppresses aflatoxin-producing Aspergillus fungi, a critical concern for EU food safety regulators. Long sunshine hours combined with sandy loam soils enhance oleic acid synthesis, which is directly associated with nutty aroma, oxidative stability, and shelf life—key attributes for peanut butter.

The state’s proximity to the Arabian Sea moderates night temperatures and creates high diurnal temperature variation. This agro-climatic condition promotes the formation of Maillard precursor compounds such as free amino acids and reducing sugars, which are essential for the roasted flavour profile expected by European consumers. The logic is no different from terroir-based differentiation used in olive oil, wine, or cocoa.

Groundnut is also ecologically sustainable by design. It fixes between 60 and 120 kilograms of nitrogen per hectare, reducing dependence on synthetic fertilizers. Its water requirement is 30–40 percent lower than rice or sugarcane. Organic production systems, already piloted in parts of Saurashtra, reduce pesticide residues—critical under EU MRL norms—while improving soil carbon and climate resilience. Gujarat groundnut is therefore not only scalable but inherently aligned with EU sustainability and climate objectives.

Why Exporting Groundnut as Bird Feed Is a Strategic Mistake

Exporting groundnut as bird feed amounts to exporting nutrition at feed prices. This is economically irrational and reputationally damaging. The “bird feed” classification reinforces negative perceptions of poor quality, weak post-harvest handling, and aflatoxin risk. Over time, this stigma undermines India’s credibility and negotiating position in high-value food trade.

The opportunity cost is substantial. Every container shipped as feed-grade peanuts displaces potential exports of value-added peanut butter, locks farmers into low and volatile prices, and prevents India from shaping EU consumer perception. A deliberate policy shift is therefore required to phase down feed-grade exports to the EU and redirect supplies into food-grade processing clusters.

Peanut Butter as the Natural Upgrade Path in the EU Market

The EU peanut butter market already exceeds $ 2 billion and is growing annually at 6–8 percent, driven by rising demand for plant protein, clean-label foods, and vegan and fitness-oriented diets. Current suppliers include the United States and Argentina, neither of which enjoys ecological advantages superior to Gujarat.

India’s differentiation lies in flavour rather than mere protein content. Gujarat groundnut delivers a naturally nutty taste rather than a bland protein paste. High-oleic stability eliminates the need for hydrogenation, while organic and aflatoxin-safe production addresses the EU’s most stringent concerns. Short supply chains from farm to port further strengthen traceability and cost efficiency.

Proven Model: The Saurashtra–Rajkot Pilot

A pilot model in the Saurashtra–Rajkot region demonstrates the feasibility of diversified, high-value product streams. Organic, high-oleic peanut butter meeting aflatoxin levels below 2 ppb has been developed without added sugar or palm oil, tailored specifically for EU markets. Cold-pressed “Kaccha Ghani” groundnut oil retains natural aroma and lends itself to nutraceutical positioning in ethnic and health segments. Extra-bold table groundnuts with high protein and lower oil content serve the premium snack and roasting market.

Key learnings from this experience are clear. Aflatoxin control is achievable at the farm level rather than relying solely on export inspection. Organic systems in semi-arid Gujarat are commercially viable. Above all, sensory quality consistently outperforms price competition in discerning markets.

Gujarat’s Readiness Across the Value Chain

Gujarat is already prepared across the entire value chain. High-oleic and bold seed varieties are available. Post-harvest infrastructure for drying, grading, blanching, and sorting exists. Processing capacity includes modern roasting, grinding, and cold-pressing units. Ports such as Kandla and Mundra offer the shortest transit times to the EU. NABL-accredited laboratories make EU-compliant quality assurance feasible, and a strong MSME base is already exporting groundnut oil and snacks.

The missing link is not capability but policy direction—specifically, a clear signal to reorient exports away from feed-grade channels toward food-grade, branded nutrition.

Trade Complementarity: A Win–Win EU–India Equation

A restructured trade relationship can be mutually reinforcing. India can export peanut butter, cold-pressed groundnut oil, and organic table peanuts, while importing olive oil, canola oil, and sunflower oil. For India, this reduces palm oil dependency, improves the edible oil basket, stabilizes farmer incomes, and boosts value-added exports. For the EU, it ensures access to a reliable plant protein source, a sustainable supply chain, and deeper access to India’s expanding edible oil market. This represents trade symmetry rather than imbalance.

Policy Pathway for Action

Policy intervention must begin with export reclassification by discouraging groundnut exports as bird feed to the EU and incentivizing food-grade processing through GST rationalization and PLI-type support. A dedicated Peanut Butter Export Mission, with Gujarat as the lead state, should promote cluster-based organic sourcing supported by shared aflatoxin control infrastructure.

Mutual recognition of aflatoxin testing protocols and fast-tracking of organic equivalence with the EU are essential. Finally, Indian groundnut must be branded explicitly as “Gujarat High-Oleic, Nutty Flavour Peanut,” supported by terroir-based GI positioning comparable to Darjeeling organic tea.

Positioning India as a Lead Supplier of Peanut Butter to the EU

The EU peanut butter market is currently valued at around $ 1.6 billion and is projected to reach $ 2.5 billion within five years. India’s present export presence, at roughly $ 30 million, is disproportionately small given its production base. With focused and coordinated policy intervention, exports could realistically scale to $ 250–300 million over the medium term.

Conclusion: A Trade Reset, Not Merely a Trade Deal

India does not urgently need entry into the EU peanut butter market; it needs to correct its export mindset. By shifting from bird feed peanuts to branded nutrition, Gujarat can anchor a new chapter in India–EU agri-trade—one that is ecologically sound, economically rational, and reputationally transformative.