The GST regime is expected to help streamline markets for commodities such as arecanut and copra, bringing more buyers and sellers into the organised market, while reducing off-market transactions.
Both arecanut and copra — the ball variety produced in Karnataka — attract 5 per cent GST as against 2 per cent VAT earlier, making them a bit expensive in the new regime.
They also continue to attract a market fee of 1.5 per cent and commission of 2 per cent in Karnataka, where they are largely grown.
Trade sources feel that the uniform tax and the fear of increased vigilance and penal provisions may bring in more buyers, mainly from the northern states, into the regulated markets.
To avoid taxes in the earlier regime, a section of buyers used to stay away from the organised markets and source their requirement from growers and agents through off-market transactions. Unconfirmed estimates suggest that the off-market transactions in these two commodities are estimated to be as high as 40-50 per cent.
Unprepared for shift Trading in these commodities has taken a hit in the past couple of days over lack of preparedness, the cautious stance adopted by the traders and also due to the absence of any buying interest from consumers, mainly from North India.
Ball copra or edible copra is mainly used for making sweets, while arecanut is used for making pan masala.
“Trading didn’t take place for the second day on Tuesday. Traders are not geared up with the new billing/invoice formats and also there’s some confusion over the e-way bills. Besides, buyers, mainly the pan masala makers in North India, have stayed away from making any deals,” said a trader in Shimoga, the largest market for arecanut.
A clearer picture on demand is expected to emerge over the next week to ten days as buyers have been clearing old stocks, the trader said.
In Tiptur, the largest market for the edible copra or ball copra, traders are likely to return to the auctions and place their tenders on Wednesday, sources said. On Saturday, tenders had stayed away from placing their bids citing confusion over the new tax structure and nomenclature of the product. A section of traders in Tipturhas already raised invoices incorporating the new tax and may force others to follow suit on Wednesday.
TN Prakash Kammaradi, Chairman, Karnataka Agricultural Prices Commission, said GST will help reduce off-market transactions and streamline the arecanut and copra markets in the state.
Suresh Bhandary, Managing Director, CAMPCO (Central Arecanut and Cocoa Marketing and Processing Co-operative), also felt that the GST will streamline the arecanut market with the simpler tax structure. As a result, more arecanut will come to the structured market, which was not the case earlier.
CAMPCO started purchasing arecanut from farmers on Monday after upgrading its software. Campco is also purchasing arecanut through primary agricultural credit societies in some villages in arecanut-growing regions.