Farmers protest as arecanut prices stay low on high stocks

A section of farmers in Karnataka staged a protest on Monday against the decline in the prices of commodities such as arecanut and coconut.

In the case of arecanut, the price fall is more for the red variety being cultivated in the Malnad region and the plains.

(There are two varieties of arecanut, based on the processing. White arecanut is prepared by drying the ripe arecanut in the sun and dehusking it. Red arecanut is prepared by dehusking green arecanut, and then boiling and drying it.)

White arecanut is produced in coastal Karnataka and some parts of Kerala, red arecanut is produced in Shivamogga, Davangere and Chitradurga districts of Karnataka. The red variety is mainly used in the manufacture of ‘paan masala’, and the white variety for ‘paan’ preparation.)

It was in 2014 that growers had earned more than ₹500 a kg for the red variety of arecanut. In some markets, it even reached ₹800 for a brief period.

Sources in Campco (Central Arecanut and Cocoa Marketing and Processing Cooperative Ltd) told BusinessLine that the farmers did not release an adequate quantity of stocks of the subsequent crop (after the peak). Expecting more, they held back more than 50 per cent of the stocks with them.

Since consumption cannot be stopped in such a scenario, the producers of ‘paan masala’ opted to import arecanut and turned to white arecanut to meet their requirements. The retaining of the stock created a buffer stock in the market. Had the farmers released the stock in regular intervals at each fall, they would have averaged out the price, they said.

Sources said that even the ‘paan masala’ manufacturers have been witnessing decline in consumption over the last few years. The buffer stocks available in the market, coupled with the reduction in consumption, started exerting pressure on prices of the red variety.

One of the main grouses of the growers is that the import of arecanut is affecting the market. That was also an issue for them during Monday’s protest.

While there is no denying the fact that imports had made an impact on prices of the commodity over the last few years, they have come down significantly in the last two years (see table). From a level of 99,700 tonnes in 2012-13, imports have come down to around 12,000 tonnes in the first half of 2016, sources said.

It is essential for farmers to release the commodity in regular intervals to get price advantages, they added.

On Monday, the ‘Rashi’ stock in the red variety of arecanut quoted a maximum of ₹241 a kg in the Channagiri APMC. The price of the stock stood at ₹225 in the Davangere APMC, ₹233 in Chitradurga, ₹231 in Sagar, ₹253 in Shivamogga and ₹230 in the Tumakuru APMC on Friday.

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