Import duty hike on arecanut fails to help growers

Import duty hike on arecanut fails to help growers

A mandi worker pours arecanut in a warehouse in Shivamogga. DH file photo

Despite the Centre fixing Rs 25,100 import duty on arecanut per quintal, arecanut price has been crashing in the last few years.

The price ranged between Rs 38,000 and Rs 42,000 per quintal over the last two years. Now, it has come down to
Rs 34,839. 

The average price of rashi (red arecanut) in Shivamogga market was Rs 34,839 per quintal on June 18. It was Rs 1 lakh per quintal four years ago. Since the farmers had already sold their produce, the record price did not fetch any benefits. 

Soon, the price dipped and hasn’t touched Rs 50,000 price in the last four years. Import of substandard arecanut from Srilanka, Malaysia is viewed as the main reason for price decline. Farmers and co-operative societies have sought enhancement of import duty on arecanut.

The Centre yielded to the demand and fixed Rs 251 import duty per kg in January 2017. However, the decision hasn’t benefited farmers much. 

Shivamogga Areca Merchants Association President Kadidal Prakash told DH: “Due to heavy storage of arecanut in warehouses, merchants are unwilling for price enhancement. As checkposts ceased to exist after GST introduction, there is increasing tax evasion resulting in price crash.” 

Malnad Areca Marketing Co-operative Society Vice-President Subramanya Yadagere said: “Growers should sell the produce either through co-operative societies or market so that demand for the stock may be ascertained and price fluctuation may be assessed.”

The Centre had favoured the purchase of arecanuts grown in different parts of the state under market intervention scheme.

It had asked the state government to direct arecanut co-operative societies to procure the produce without middlemen. However, the support price scheme for arecanut has hit the road block after two years.

Crop in Malnad region

Around four lakh tonne arecanut is grown in various parts of the state including malnad, coastal and arid region-Shivamogga, Davangere, Uttara Kannada, Udupi, Chikkamagaluru, Chitradurga, Tumakuru districts. 

Around 60% of areca is grown in three districts-Davangere, Shivamogga and Uttara Kanna districts. It is grown on 52,000 hectares of land in Shivamogga district alone and 75,000 tonne is produced per year.

Shivamogga is contributing 24% to total production in the state. The area of arecanut cultivation is increasing every year and it has affected demand and supply. 

 After the implementation of GST, the government is imposing 5% tax on sale and the growers have to pay 1.5% APMC cess. So, many growers are selling off their produce locally and not in the market.

Six months average price chart

January: Rs 38,799

February: Rs 37,109

March: Rs 36,199

April: Rs 35,800

May: 35,300

June: 34,500