Fear of cheap imports triggers fall in prices of arecanut

The price of arecanut has declined by around 8% in past two months owing to the apprehension that the produce will be included in the list of commodities for free trade under the Regional Comprehensive Economic Partnership (RCEP) pact between the Association of Southeast Asian Nations (ASEAN) and six other countries, including India.

The price of Rashi Idi variety of arecanut, which was at ₹36,900 a quintal in the second week of August, has declined to ₹34,000. The price of other varieties has also witnessed a similar slump.

Arecanut merchants fear that if arecanut is listed as a commodity for free trade under the RCEP pact, it will result in large-scale imports from Indonesia, Myanmar, Thailand and Malaysia, where arecanut is grown on large tracts of land. High volume of imports could result in decline in demand and price of the locally grown produce. As the RCEP pact is likely to be finalised shortly, fearing volatility in the market, the local mandi merchants have reduced the volume of purchase from farmers, resulting in a corresponding fall in price as well.

Ramesh Hegde, president of the Shivamogga Zilla Adike Belegarara Sangha, told The Hindu that arecanut prices are sensitive to policy decisions and trade agreements. Low import duty charged under the South Asia Free Trade Area (SAFTA) trade pact in the past had resulted in the import of large volumes of arecanut, owing to the which the price of locally grown produce declined. Responding to a request from arecanut growers, when the Director General of Foreign Trade enhanced the base import price of arecanut in May 2013, June 2015 and January 2017, there was an immediate enhancement in the price of the produce in the domestic market, he said.

Mr. Hegde said that as Karnataka contributes nearly 63% of the domestic production of arecanut, MPs from the State should request the Centre not to include arecanut in the list of free trade commodities under the RCEP pact. Rubber growers have already apprised the Centre about their apprehension regarding RCEP, he said.

Along with apprehensions related to the RCEP agreement, factors such as the ban imposed by the Rajasthan and Bihar governments recently on pan masala products containing magnesium carbonate and the ban enforced by the Uttarakhand government on sale of tobacco in sachets with pan masala have also contributed to the slump in the price of arecanut. “Adulteration of arecanut with harmful chemicals and tobacco is an offence and should not be allowed. A crackdown by the governments on such unlawful business practices paves the way for rumours that sale and consumption of arecanut itself would be banned, resulting in price crash,” said a mandi merchant from Sagar.


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