Arecanut slide hits coffee growers

Coffee growers in Karnataka, earlier pinched by a drop in production and price, are now feeling the heat from a crash in price of arecanut, a major intercrop (growing in alternate rows or sections in the same field) for them. The price of arecanut (better known as the source for the betel nut or supari) has dropped over a year from nearly Rs 75,000 a quintal to Rs 25,000-30,000 a qtl. Around two-fifth of the country's crop (India is the world's biggest producer and consumer) comes from Karnataka.

Last week, Baba P S Bedi, former chairman of the Karnataka Planters Association (KPA), said it was a lucrative crop for quite a while till last year. Total demand in the country is estimated at around 1.2 million tonnes; output is around 700,000 tonnes.

India imported 67,824 tonnes worth $159 million in 2015-16, from 110,000 tonnes worth $230 mn in 2014-15. Growers say prices have come down due to slowing in the export market, especially regarding Pakistan. And, imports have risen from Sri Lanka. Traders import from Indonesia, through Sri Lanka, by getting a ‘Certificate of Origin’ from the latter. Imports from Lanka to India attract zero per cent customs duty, under a free trade agreement (FTA) with that country. 'Rule of Origin’ is permitted under the FTA with a provision that the exporting country must do a minimum value addition of 25 per cent.

Related restrictions on sale of tobacco and supari is given as another reason for a drop in demand and, therefore, the price.

Buying of arecanut is predominantly by traders and stockists, who try to do so when prices are low.

Rohan Colaco, earlier a KPA executive committee and a major arecanut grower, says there had been a rise in output over the years. Since the crops of paddy and maize are labour-intensive, farmers shifted to arecanut in the western ghat region. Also, over the years, quite a few sugarcane growers had converted to arecanut. In 2011-12, sowing was on 441,000 hectares; in 2015-16, this had risen to 473,000 ha.

Last year, said Colaco, the price varied between Rs 35,000 and Rs 75,000 a qtl for procesed arecanut. It is now Rs 27,000-28,000 a qtl.