Arecanut remains stable on Campco’s purchases

Some decisions by the Central Arecanut and Cocoa Marketing and Processing Cooperative (Campco) Ltd on arecanut purchase from growers after the demonetisation of ₹500 and ₹1,000 currency notes seem to have helped stabilise the market.

The price of the commodity has remained stable, though arrivals have come down.

Growers, who were getting around ₹250 a kg for new stocks of white arecanut prior to the demonetisation, were expecting a fall in the prices of the commodity post-demonetisation. This was because a major portion of the commodity is being traded by private operators. (Of around 7 lakh tonnes of arecanut production in the country, Campco procured 51,142 tonnes in 2015-16.)

Sources in Campco told BusinessLine that the decision to purchase arecanut to a maximum limit of ₹20,000 per member, per week (which was increased to ₹24,000 subsequently) and to retain the price at the pre-demonetisation level helped stabilise the market.

They said that some private operators tried to bring the market to a level of ₹210/kg for new stocks of white arecanut immediately after demonetisation. However, Campco decided to buy the commodity at the pre-demonetisation price in a bid to boost farmers’ confidence. This came as a blow to private traders, a majority of whom were evading tax, said a source in Campco.

Asked about the cap of ₹24,000 per member per week, they said the farmer can withdraw only ₹24,000 from the bank even if he had sold commodities worth ₹1 lakh. Had there not been a cap on selling, farmers would have resorted to panic selling and flooded the market.

This would have led to a drastic fall in the price of the commodity, they said.

The co-operative’s efforts in maintaining the pre-demonetisation price for the commodity has helped improve the confidence level of the growers, they said.

To a query on arrivals of white arecanut, they said that the co-operative is now getting 40 per cent of what was coming in before demonetisation. Fixing of the upper limit for buying could be a reason for this, they said, adding that this has helped in stabilising the market.