Prices of local varieties have gone up from Rs. 130 a kg to Rs. 320

Arecanut prices have more than doubled in a year bringing cheer to growers. Factors such as gutka ban and the rumours on a possible ban on arecanut itself have not affected the optimistic mood prevailing in the market.

D.B. Shankarappa, director, Shimoga Arecanut Merchants’ Association, told The Hindu that the decision taken by the Centre to hike the minimum import price of arecanut and the decline in production owing to climatic changes were the reasons for the sharp increase in the prices.

The price of rashi, idi, api and chali varieties of arecanut, which was around Rs. 130 a kg during the same period last year, is now Rs. 320 a kg. The price of saraku variety that was around Rs. 180 a kg last year is being traded at Rs. 370 now.

The Central government decided on May 13 last year to hike the minimum import price of arecanut from Rs. 75 to Rs. 110 a kg. This decision triggered an upward movement in the prices of locally grown arecanut. The prices of rashi, idi, api and chali varieties that was at Rs. 130 a kg in the first week of May last year reached Rs. 180 a kg by the end of the month.

The growers were under the apprehension that the prices might crash following the decision taken by the State government on May 31, 2013, to ban gutka. However, after the ban, gutka entered the market in a new avatar.

As mixing of arecanut with tobacco was banned, firms engaged in the production of gutka began selling arecanut and tobacco in separate pouches. Even after the ban, the prices continued to rise. The prices of rashi, idi, api and chali varieties reached Rs. 210 a kg by the first week of August and remained stable for six months after.

In September 2013, Union Ministry for Health and Family Welfare wrote to the Food Safety and Standards Authority of India to examine the scientific evidences on the harmful effects of arecanut on human health, with a view to classify it as an injurious substance and prohibit its use as an ingredient in food products.

A section of growers saw this as a first step to ban arecanut. The protests and debates that happened in January this year over the issue again led to the concern that the prices may fall. Interestingly, the prices remained insulated from these developments. The prices of arecanut began to move northwards again from the first week of February this year.

Owing to heavy rain that lashed the Malnad region and coastal Karnataka in the 2013 monsoon, more than 50 per cent of arecanut plantations were infected with kole roga, also known as fruit rot disease. The yield declined by more than 30 per cent resulting in a mismatch between the demand and supply for arecanut, owing to which the prices increased since February. Arecanut merchants here anticipate a further increase of 10 per cent in the prices by the end of this month.

source: http://www.thehindu.com / The Hindu / Home> News> Cities> Mangalore / by Veerendra P.M. / Shimoga – May 02nd, 2014