Perishing stocks of areca worries traders in DK

By Our Staff Correspondent

MANGALORE, SEPT. 23. The simmering heat generated by the plummeting prices of arecanut has left the industry gasping for breath.

The soaring prices last year (prices from Rs. 70 a kg to Rs. 160) had a cascading effect and the price stabilised at Rs. 120 to Rs. 130 by the end of 1999. Buoyed by the rising prices last year, traders piled up stocks of areca and the Cocoa and Arecanut Marketing and Processing Cooperative Society Limited (CAMPCO) had 2,400 bags in stock, which was double the quantity it held under normal circumstances.

This glut encouraged grey market operators, who sold small quantities at prices ranging from Rs. 60 a kg. The major operators, who were apprehensive, did not release their stocks. Even as they adopted a "wait and watch" strategy, there were reports that in many godowns, including the warehouses of the CAMPCO, the stocks were perishing.

Mr. Ahmad Bawa, a trader, told The Hindu that arecanut was a perishable commodity. It had limited market applications and at present its use was restricted to "chew and spit". However, wily traders from north India started playing in the market by quoting high prices in 1999 on a day-to-day basis anticipating big returns. Instead, the market assumed an artificial price line that never stabilised. Those traders now suffered losses and those who speculated had collectively lost over Rs. 10 crores.

Mr. Bawa said the production cost of one kg of cured arecanut was Rs. 45 and even if a trader sold it at Rs. 80, he would net in Rs. 20 profit after the overhead costs.

Mr. Muralidhar Ramani, President of the Kanara Chamber of Commerce and Industry, said the price rise in 1999 was artificial. The in-built price mechanism that had been governing the areca market was broken leading to unprecedented price increase. Mr. Ramani said areca prices should have never crossed Rs. 70 or Rs. 80 a kg.

But the other market operators are keeping their fingers crossed. On its part, CAMPCO persuaded the Centre to impose 100 per cent duty on imported areca. The traders and growers were now demanding that the Government appoint a nodal agency to act as a price regulator to prevent unscrupulous traders from once again causing havoc in the market.

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