Arecanut prices up 26% in 5 months

After a lull in the trade for about three months, the arecanut market has been reactivated in Karnataka with renewed interest from major buyers. The north Indian buyers, mainly gutkha manufacturers and exporters, have shown interest, to buy arecanut resulting in upward movement in the prices. These have shot up by 26-40 per cent in the last few months.

The price of white arecanut (chali) have more than doubled to Rs 14,000 a quintal as against Rs 6,000 a quintal in December 2010. The red variety are up by 26-40 per cent to touch Rs 14,500 a quintal yesterday in major markets of the state as against Rs 11,500 a quintal in February this year.

 

Davanagere, in central Karnataka, has been witnessing arrival of about 5,000 quintals every day, where the red variety is sold in large quantities. Mangalore, on the west coast, has been seeing huge demand for the white variety.

According to traders, the rise in prices is attributed to shortage of crop this year and fall in import. The import had been halted after the imposition of severe restrictions and closure of borders in eastern India due to recent elections in West Bengal. Traders in north India import arecanut from Indonesia, via Nepal.

“As gutkha makers mainly prefer red variety of arecanut, prices had crashed as a result of the court orders. Subsequently, farmers had stopped selling red arecanut owing to low prices. This led to short supply and the gutkha makers had no choice but to procure white arecanut,” A S Bhat, managing director, Central Arecanut and Cocoa Marketing and Processing Cooperative Limited (Campco) told Business Standard.

The price of red arecanut had dropped to around Rs 10,000 a quintal to Rs 11,500 a quintal, depending on the quality, in February this year following the Supreme Court order on banning the use of plastic sachet by gutkha manufacturers.

Traders also attribute the rise in prices to limited stocks of older crop. This has helped farmers fetch higher prices for the new crop.

“After the ban on use of plastic in packing gutkha, a lot of consumers are turning to chewing arecanut. This sudden demand for white arecanut has resulted in the price rise. Of an estimated crop size of 500,000 tonnes, white arecanut accounts for about 30 per cent in Karnataka,” Bhat said.