25% price rise brings cheer to Arecanut growers

Price up 25 per cent after three years of fall, users likely to absorb burden

After a continuous decline in prices for the past three years, arecanut farmers have finally got some good news. The price of the commodity has gone up nearly 25 per cent during the past three months, to touch around Rs 348 a kg.

The price increase comes on the back of a decision taken by the government to increase the minimum input price (MIP) for arecanut and address a demand supply mismatch in the market.

Suresh Bhandary M, managing director, The Central Arecanut and Cocoa Marketing and Processing Co-operative Limited (CAMPCO), said that starting from January 2017, priceve has been rising steadily.

The price of red variety arecanut rose by nearly 25 per cent to Rs 348 a kg from Rs 282 a kg, while the white variety rose to Rs 235 a kg from Rs 185 a kg.

One of the reasons Bhandary attributed to this rise was the Centre's decision to increase MIP of arecanut to Rs 251 a kilogram from Rs 162 in January.

This came after growers in the domestic market urged the government to take stringent measures to control arecanut imports into India. They said the influx of imported arecanut was continuously destabilising the local market, causing great distress to domestic farmers.

Due to the price increase, exports have reduce substantially. "In fact we can even say there is no export," said Bhandary.

"Since the production is coming down and demand is going up, price is also increasing. Now that domestic price is also increasing and is coming close to import price, this would lead to opening up of import again," said an industry official.

Meanwhile the user industry -- mainly Gutka and mouth freshners -- are yet to increase the prices of the end product. An official from a south-based company, which has been in this industry for over four decades, said that unlike in other industries, the price increase is mostly based on the demand for the final products, not on raw material price.

"We are yet to decide whether we need to pass on the price increase. In the past when prices fell, we did not drop our prices but increased it due to which we do not feel the heat now," said an official.

Rohan Colaco, former executive committee member KPA and one of the major growers in Karnataka region and a major supplier of arecanut, said that in the past three months the industry has seen an increase in offtake.

"We were holding back half of our produce thinking that price will further increase, now it is time to clear the stock since storage and packing will be a challenge, besides import will also start," he said.