As arecanut growers feel price drop heat, govt looks at possible MIS support

Prices dropped by half to over Rs 28,000 per quintal in two years

Government is planning to introduce Market Intervention Scheme (MIS) for arecanut growers, who are feeling the heat of drop in prices. Over the last two years the prices have come down to nearly Rs 28,000 per quintal from Rs 75,000.

Earlier, at a Regional Editors Conference held at Chennai, Minister of State (Independent Charge) in the Ministry of Commerce & Industry Nirmala Sitharaman said that the Centre is looking at options, including MIS and procuring from the farmers directly through a special purpose vehicle which will be floated by the Centre and state of Karnataka, which cultivates over 50 per cent of the country's arecanut.

 

Sources in the government and from the industry have confirmed that discussions were held to introduce MIS, for a limited period of time.

It was proposed that current production cost range from Rs 250 to Rs 337 a kg and the government needs to decide how much above additional it would give.

While welcoming the move, Suresh Bhandary M, managing director, The Campco Ltd, said that while MIS would address the issue in the short term, the government should look at curtailing imports, which are impacting the price.

"We have also tested samples from the imports and found dangerous quality," he added.

Coffee growers in Karnataka, who were feeling the pinch of a drop in production and price, are now feeling the heat from drop in arecanut, which had been a lucrative crop till last year. Prices have dropped from nearly Rs 75,000 per qunintal to almost Rs 25,000-30,000 now. This crop was a major intercrop for the coffee growers.

Growers are attributing the drop mainly to imports, which the government is trying to curtail.

While there are 14 states producing arecanut, around 50 per cent of the arecanut production takes place in Karnataka.

Total demand in the country is estimated at around 12 lakh tonnes, while production is estimated to be around 7.03 lakh tonnes in the country.

Most traders were importing arecanut from Indonesia, through Sri Lanka, by getting ‘Certificate of Origin’ from Sri Lanka by value addition and processing. Imports from Sri Lanka to India attract zero per cent customs duty under the India-Sri Lanka free-trade agreement (FTA).

'Rules of Origin' was permitted under the FTA with a provision that the exporting country was subjected to a minimum value addition of 25 per cent.

India imported 67,824 tonnes of arecanut worth $159 million in 2015-16 as against 1.10 lakh tonnes worth $229.96 million in 2014-15, according to the government.

In 2011-12, production area was 4.41 lakh ha, which was increased to 4.73 lakh ha in 2015-16, according to the Department of Agriculture, government of India.

Rohan Colaco, former executive committee member of the Karnataka Planters Association which is one of the major growers of the crop, said last year that the maximum and minimum price had a variation of three hundred per cent. Drastic price surges were seen between Rs 35,000 and Rs 75,000 for quintal of processed arecanut.

Now the price is hovering at around Rs 27,000-28,000 per qunital, said Colaco.

At the prevailing prices, it is extremely difficult to make a livelihood out of arecanut plantations, he added.