Arecanut prices stabilise on import tariff, duty hike; neutralise impact of ban on gutkha

KOCHI: Raising the import duty and fixing minimum tariff for imports for arecanuts have neutralised the impact of a ban on gutkha in 14 states in India. Shrinking imports have raised arecanut prices, bringing cheer to about two million farmers engaged in its cultivation mainly in Karnataka, Kerala and Assam.

The government had raised the base price for imports from Rs 35 to Rs 75 a kg in last August. The idea was to make imports unviable since there is already an import duty of 108%.

But some traders circumvented the restriction. Arecanuts from Indonesia and Malaysia still found their way illegally to India through Bangladesh, which has been exempted from import duty. Bangladesh is not a big producer of arecanuts. However, in the last couple of weeks, the imports have stopped.

"The Bangladesh government seems to have cracked down on the imports from South Asian countries as the duty exemption is granted by India only for commodities produced in Bangladesh," said M Suresh Bhandary, managing director of Central Arecanut and Cocoa Marketing and Processing Cooperative (Campco), based at Mangalore. According to him, nearly 63% of the total imports of around 70,000 tonne arecanuts had come through Bangladesh.

Consequently, the prices of both the white and red varieties are looking up. The price of red variety, used in gutkha, which dropped to Rs 125 per kg, is now hovering in the range of Rs 140-148 per kg. The prices of white variety, which account for 60% of the total arecanut production, had slumped to around Rs 120 per kg. "The growers are getting rates of Rs 185-195 for white variety now, which are good prices,'' said Bhandary.

Almost 50% of the red variety goes for manufacturing gutkha. "As the production has shown only a slight increase at 5.30 lakh tonne, the gutkha ban had impacted the red variety. But since the ban is not enforced in all the states, there is still demand," said Homey Cherian, director at Directorate of Arecanut and Spices Development.

The growers can take comfort from the fact that the demand for red variety has not waned completely. It is still being used in paan masala, where tobacco is not used, in parts of UP, Jaipur and Gujarat.