Betel nut price doubles on low crop

The shortage has particularly affected the chewing tobacco industry

Poor weather conditions have led to an acute shortage of arecanut, also known as betel nut, leading to a near-doubling of prices in 2014 (calendar year) compared to 2013. This has particularly affected the chewing tobacco industry, encompassing products such as gutkha, khaini and zarda, which have arecanut as a key component.

In 2014, prices were Rs 350-450 a kg, against Rs 200-250 a kg in the previous year at the wholesale level.

“In 2013, we had sold betel nut for Rs 150 per kg. In 2014, the same variety was sold at Rs 300 per kg, as production was much lower due to low rainfall,” said Gopinath Pramanik, a  farmer at Purba Medinipur in West Bengal. There was a 30 per cent reduction in India’s production in 2014, according to informal estimates.

India ranks first in terms of both area (47 per cent) and production (47 per cent) of arecanut. The other producing countries are Bangladesh (21 per cent in area and nine per cent in production), China (six per cent in area and 20 per cent in production) and Indonesia (16 per cent in area and six per cent in production), according to data from the Central Arecanut and Cocoa Marketing and Processing Co-operative Limited.

India's annual areca nut production is close to India 330000 metric tons, grown over 290000 hectares, according to a report by CRN India. This year, India's total production of areca nut is expected to be close to 230000 metric tonne, according to informal estimates. The annual demand is for areca nut in India alone is pegged at around 320000 metric tonne.

Notably, the demand for areca nut has been increasing, despite a ban on sale of gutkha and pan masala products in several states. As of June 2014, 26 states and five union territories had implemented a ban on the sale, manufacture, storage and distribution of gutkha and pan masala. These states included Madhya Pradesh, Bihar, Haryana, Chhattisgarh, Himachal Pradesh, Jharkhand, Maharashtra, Gujarat, Rajasthan, Andhra Pradesh and Tamil Nadu, according a report, Smokeless Tobacco in India, published by Euromonitor India. Karnataka is the latest state to ban Asian-style chewing tobacco.

In the international markets, the prices of areca nut are ruling between 800-1000 per metric tonne, whereas in India the prices are close to $4000 per metric tonne.

"The domestic market is giving us better returns, as the Indian betel nut is not competitive this year. There is a huge demand for products like khaini and gutkha in India," according to a betel nut trader based in Tamil Nadu.