Arecanut up on import restrictions, low output

Futures rose 8 per cent since the beginning of Feb.

The Centre, under pressure from south India-based growers and traders, has stopped import of arecanut (betel nut or supari) through Kolkata and Mumbai ports.

Instead, import will now be done through the Mangalore port. This has resulted in slowdown of imports, and thus a surge in prices of the commodity in both spot and futures markets.

Prices on the futures markets closed high on Friday at Rs 8998 a quintal for March delivery, a gain of 8.42 per cent over Rs 8,313 a quintal on February 1. Similarly, the commodity surged 10 per cent in the spot markets during the

period under consideration to settle on Monday at Rs 8,332 a quintal.

Arecanut hit the upper circuit on the Multi Commodity Exchange of India (MCX) with price gaining up to 6 per cent across all contracts on Thursday. The April and May contracts are quoted at Rs 9,140 a quintal and Rs 9,281 a quintal, respectively, on Friday compared with Rs 8,408 a quintal and Rs 8,562 a quintal in the beginning of the month.

June contract also perked up sharply on Friday to settle at Rs 9,600 a quintal as against Rs 9,100 a quintal at the launch on February 17. In the spot market in Mangalore today, red arecanut was quoted between Rs 175 and Rs 185 a kg while white arecanut was sold at Rs 85, double the price during the same time around last year.

"The Centre's decision to import arecanut only through Mangalore port is set to add to the existing cost not less than 20 per cent (including transportation cost and local taxes). Therefore, the price is expected to remain higher throughout this year," said a Mangalore-based trader.

Besides, restriction in imports, drop in output also added to the rising prices of the commodity. Equally distributed between red and white varieties, the country's total arecanut output is estimated to decline this year to 3.20 lakh tonne as against an average normal production of 3.50 lakh tonne. The low output this year can be attributed to showers at the time of flowering of the plantation crop, resulting in partial crop damage.

Karnataka (mainly Mangalore, Puttur and Semoya) is the largest producer of arecanut in the country with a total contribution of about 70 per cent while Assam shares 15 per cent. India imports arecanut mainly from Indonesia, Myanmar, Thailand and Sri Lanka while major consuming centres in the country include Kanpur, New Delhi, Mumbai and Nagpur.