Ban on sale of gutkha in plastic sachets, drop in production led to price rise.
Arecanut prices are skyrocketing in Karnataka after a gap of over a decade. The prices of white arecanut (Chali variety), which went up by around 40 per cent two months ago to Rs 14,000 per quintal (100 kilograms), are now ruling at Rs 17,500 per quintal, a growth of 2.9 times over the December 2010 levels.
On the close of trading in Mangalore market, the main centre for white variety, the commodity was traded at Rs 17,500 per quintal for the old stock, while the new stock (2010-11 crop) was sold at Rs 17,000 per quintal. Just about 8 months ago, the arecanut growers had witnessed a severe drop in the prices and sold their produce at Rs 6,000 per quintal.
“The present rise in prices is attributed to a ban on sale of gutkha in plastic sachets following a Supreme Court order in February this year. Subsequently a major shift is seen towards consumption of pan, which contains white variety arecanut. A gradual shift in the diversion of arecanut cultivation towards rubber plantation owing to shortage of labourers is also seen as a reason for the rise in the prices,” A S Bhat, managing director, Central Arecanut and Cocoa Marketing and Processing Cooperative Limited (Campco).
He said the last time when the prices of arecanut witnessed historic high was in 1999, when the product prices touched Rs 16,000 to 16,500 per quintal.
The prices of white arecanut had touched an all time low, just two years ago and traded at around Rs 3,500 a quintal.
Presently, the prices of old stock called stood at Rs 17,500 and new arrivals at Rs 17,000.
“After the ban on use of plastic sachets for selling gutkha, the consumers turned to consumption of fresh pan, which is an alternative to chewing gutkha.
And this sudden demand for white variety, which is in short supply resulted in record price rise,” he explained.
The arecanut production is estimated at around 500,000 metric tonnes, of which white variety constitutes 40 per cent annually. However, during 2010-11 season, the white variety production had dropped to around 25 per cent and was in short supply, he said.
Bhat said the farmers are uprooting their arecanut trees and going for cultivation of rubber, as the prices for rubber are better than arecanut.
Presently, the rubber is traded at Rs 205 to Rs 225 per kg, up from around Rs 70 a year ago. The diversion to rubber is also due to shortage of labourers in arecanut gardens.
Arecanut is grown in Sirsi, Kumta, Sagar, Shimoga and Chitradurga districts (red variety) while only 40 per cent is grown in coastal region, including Vittal, Puttur and Sullia (white arecanut).
This year, the farmers are also experiencing fruit rot disease in several growing areas of Dakshina Kannada district, which is quite normal during the monsoon season.
“We have been experiencing heavy rains this year in many growing areas. If the rain does not give a break during the daytime, it would be difficult for farmers to spray copper sulphate to curb the pest attack. And this will affect the production this year as well leading to further rise in the prices for the next arrivals,” Bhat added.