Arecanut prices look up after 5 years

The price of arecanut in the major markets of Karnataka is on the rise due to both a supply shortfall and rising demand. The price of white arecanut (chali variety) has touched Rs 75 per kg in the Mangalore market. This compares with Rs 40 a kg about five years ago. The red variety has touched Rs 180 per kg in Shimoga market.

The crop has fallen about 30-40 per cent in Malnad and coastal districts and up to 50 per cent in Kerala due to the heavy rainfall. The withdrawal of a ban on gutkha by the Maharashtra government and an increased demand from supari makers in North India as well as exports to Pakistan have buoyed demand.

The present trend in prices is being seen after about five years, thereby bringing respite to growers. However, most of them will not benefit as they sold their produce at an early stage when prices hovered at Rs 120 per quintal. Arecanut prices had declined to as low as Rs 25 in 2000.

Manchi Srinivasa Achar, president, All India Areca Growers' Association, told Business Standard that the price of white arecanut is likely to remain in the range of Rs 75-80 a kg for some time as there has been shortage in arrivals.

The price had reached Rs 175-200 a kg in 1999. From 2000, the price remained at Rs 40 a kg, he added.

An official of the Mangalore Agriculturists' Souharda Sahakari (MASS), a co-operative, said that the highest price paid by MASS this season for arecanut was Rs 87 a kg. A few private traders at Puttur had purchased the commodity at rates of up to Rs 90 a kg. The price may remain at Rs 85 a kg in the near future because of a shortfall of stock, the official said.

He said that growers should not expect the price to rise further. If they fail to release the produce, it may give scope for more imports of arecanut as there would be a shortage.

According to A S Bhat, general manager, Central Arecanut and Cocoa Marketing and Processing Cooperative Limited (Campco), main reasons for higher prices this year is the loss of crop in Kerala and parts of Uttara Kannada district, where the growers suffered losses due to a attack of the yellow leaf disease and 'kole' disease.

The disease hit due to an excess rainfall in the growing areas. As the prices were not remunerative over the last five years, the growers had neglected their areca gardens, which led to fall in the production.

He said that the arrival of the commodity has been less this year as the carry forward stock was less. Carry forward stocks of arecanut (like "pathora'' and "sippe gotu'' grades) in the market have been cleared and imports have been stemmed. Gujarat, Rajasthan, Uttar Pradesh and Bihar are the main markets for white arecanut, known as "Mangalore chali" in north India. The demand for white arecanut in Gujarat has gone up this year.

Campco is purchasing the white variety at Rs 72-78 per kg and the red variety at Rs 140-65 per kg from farmers directly. This year till now it has procured 3.5 lakh quintals, Bhat said.

Private players dominate the Rs 5,000-crore arecanut market and co-operative institutes in the organised sector constitute only 25 per cent of the market. However, there is no accurate data available on the production in the country.

According to an estimate, 50,000 tonnes of arecanut is imported each year. The area under arecanut cultivation in the country has not seen any major expansion in recent years and the production has almost stagnated. However, imports have affected sales, growers say.

The import of arecanut, which was stopped between 1974-75 and 1993-94, resumed in 1994-95. Its impact has been felt in recent years.