Duty hike does not impact fall of Arecanut prices

KOCHI: Arecanut prices have dipped after peaking to an all-time high a few weeks ago, triggering speculation as to whether the increase in the excise duty of pan masala and gutkha has led to the decline.

The red arecanut prices had zoomed to around Rs 850 per kg, almost three-fold increase vis-a-vis last year. The white variety too went past Rs 300 per kg for the first time. The spurt in prices has been attributed to supply crunch and lower imports.

Increasing the import tariff from Rs 75 to Rs 110 per kg and the crop loss in the South East Asian countries squeezed the inflow of overseas arecanuts into the country. "With imports coming down, the local pan masala makers began using good quality red and white arecanuts from the domestic market. We have to wait and see whether the excise duty hike has affected the prices," said Suresh Bhandary, managing director at the Central Arecanut and Cocoa Marketing and Processing Co-operative (Campco).

Though gutkha has been banned in most states in the country, arecanut has found use in certain products similar to gutkha sans tobacco and other substances that are said to be harmful to the body. The government had hiked the excise duty on gutkha by 10 per cent to 70 per cent.

However, the growers say that duty increase will have only a marginal effect on the arecanut prices. “The consumer base using arecanut is so large that duty increase will not affect the demand.

The farmers are getting good prices from cooperatives also,” said Manchi Srinivasa Achar, the president of All India Areca Growers Association. UttarPradesh and Gujarat , where pan chewing is popular, are the top buyers of arecanut.

According to him the prices are likely to remain at a high level as the carryover stock is almost exhausted.