White arecanut prices coming down

AJ Vinayak Mangaluru | Updated on December 16, 2019 Published on December 16, 2019

Prices of new stocks of white arecanut have been witnessing a declining trend for the past one week. The price of new stocks, which was hovering around ₹265 a kg till a week ago, is now ruling at ₹250 a kg, leading to a decline of ₹15 a kg in a week’s time.

Sources in the arecanut market told BusinessLine that the recent increase in the domestic price for white arecanut is indirectly leading to the legal import of the commodity in the country.

Fall in demand

They said private traders, who were buying the old stocks of white arecanut at ₹310 a kg till a week ago, have stopped buying it now. Meanwhile, the Central Arecanut and Cocoa Marketing and Processing Cooperative (Campco) Ltd, which was buying it at around ₹305 a kg till a week ago, is purchasing it at around ₹300 a kg from growers now.

Growers were selling the year-old stocks of white arecanut at ₹275 a kg in October. The price went up to around ₹290 a kg by November-end before reaching ₹305 a kg till a week ago.

When the prices for old stocks of white arecanut crossed ₹300 a kg, it indirectly helped the traders to buy the imported commodity from Myanmar through the legal route, as that works out cheaper for the traders than the domestic stocks, they said.

(It may be mentioned here that the Directorate General of Foreign Trade, in a notification dated January 17, 2017, had increased the minimum price for import of arecanut from ₹162 a kg to ₹251 a kg following complaints of large-scale imports. At that time, farmers were getting around ₹180-190 a kg for new stocks.)

Cheaper imports

Sources said that there was demand for domestic stocks in the major arecanut-consuming markets such as Uttar Pradesh, Kolkata, and Nagpur till a week ago. However, these traders are now getting imported stocks.

They said that although the importer makes the invoice for the consignment at around ₹180 a kg, he pays an import duty on ₹251 a kg. That means a duty of 40 per cent on ₹251, which works out to around ₹100 a kg.

At present, the landing cost of the domestic arecanut for a trader will be around ₹340 a kg in the Ahmedabad market. In the case of imported stocks, the landing cost will be around ₹280-290 a kg in the same market.

With this, the trader gets a margin of around ₹50 a kg, if he imports it legally, they said.

Appeal against panic sale

Expressing hopes of an uptrend in the domestic market demand and price, Mahesh Puchcheppady, Secretary of the All-India Areca Growers’ Association, urged farmers not to resort to panic selling of the commodity.

He told BusinessLine that the quality of white arecanut from the domestic market is superior to the imported ones. Consumers in places such as Gujarat prefer Indian stocks to the imported ones, he added.

Published on December 16, 2019
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