ARECA NUT PRODUCTION AND MARKETING- Some

Issues

Dr. T.S. Raghavendra

Department of Economics
L.B. and S.B.S. College, Sagar

Areca Catechu Linn, commonly known as Areca nut or betel nut is the product of palm. It
is well known for its consumption as a masticator in India and in the middle and Far East. The
use of Areca nut and its cultivation constitute a distinct Agricultural feature scarcely less
important than other economic crops.
Areca nut is mainly grown in nine Asian countries. India is leading the race in terms of
area under cultivation (365.04 thousand Hectares), followed by Indonesia, Bangladesh, China,
Myanmar and so on. In India areca nut is grown in twelve states, most of which are either
southern part of the country or in the north-eastern region. In India Karnataka is leading state in
terms of production. The share of Karnataka is 40.87 per cent in terms of area under cultivation
to the total area under cultivation. It is followed by Kerala, Assam, Meghalaya, W.Bengal, Tamil
Nadu, Andaman and Nicobar.
Though India is a premier grower of areca nut, the areca nut is imported to our country.
In the era of globalization no country can restrict the import of any item; hence, areca nut is not
an exception to this. The import of areca nut for the year 2005-2006 stood at 53,272 tons. It
adversely affected the areca nut market in India. It resulted in the unexpected variation in the
prices of areca nut and affected adversely the traditional marginal and small areca nut growers.
The objective of this paper is to analyse the impact of price variation on marginal and small
traditional areca nut growers of Western Ghats region.
Salient Features of Traditional Areca nut Growers:
From the beginning it was believed that areca nut garden can be developed only in valley
region. In other words, the maidan or flat land is not suitable for the cultivation of areca nut.
Therefore, in ancient days farmers selected valley region for the erection of areca nut garden
particularly in malnad region of Western Ghats. Majority of the gardens in Malnad taluks of
Karnataka which is situated in Western Ghats are having 400 years of history. They practiced
almost natural cultivation or organic farming. Until recently even the scientists are unaware of

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using flat land for the cultivation of areca nut. In this region due to the heavy to very heavy rain
fall areca nut growers suffered a lot. For these farmers growing of areca nut is a way of life.
They never thought in terms of commercialization. When price of areca nut started to rise,
attracted by the price hike farmers tried to grow areca nut even in the maidan region or flat land
with lower cost of production and it is resulted in the higher production of areca nut. This
increased production along with imported areca nut created havoc in the life of traditional areca
nut growers of this region.

Some Views:
Bhale Rao and others conducted a study on processing, grading, storage and marketing of
areca nut in Jalpaiguri district of west Bengal. The study revealed that grading is not usually
done by growers, however, the wholesalers grade the produce but not on any scientific basis.
Grading is done on the basis of size, colour and quality. The study also indicated that the
growers received 61 per cent of the price paid by the consumer. The study suggested cooperative
action for the further improvement of marketing system in the region.
Das (1982) observed that the facilities provided by CAMPCO Ltd, to areca nut
growers of Kerala and Karnataka states motivated them to adopt scientific crop management,
thereby resulting in an increase in the productivity of areca nut in the areas served by the
CAMPCO Ltd.
Subba Rao, in his study concluded that an evaluation of the sound performance of the
co-operative, its high growth and growth rate, a deep impact on areca nut markets, its success
in achieving the objective of its establishment and the confidence of the areca nut growers it
has earned within a short period after its establishment are clear manifestations of the
exemplary performance of the CAMPCO Ltd., He further reported that to protect the producers
from the exploitation of private intermediaries, co-operative marketing can certainly be an
effective solution and it can replace superfluous middlemen in trade, thus reducing the price
spread entailing the welfare of both the producers and the consumers.
Gajanana et.al, studied the impact of the CAMPCO Ltd, on prices of areca nut in
different markets of Karnataka. The study indicated that the establishment of CAMPCO Ltd
had salutary effects in stabilizing the areca nut prices in Karnataka. The prices in all the
markets indicated a tendency to increase vis-à-vis those observed prior to CAMPCO ltd,

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 period. A considerable amount or reduction in the variability of prices was observed during the
CAMPCO Ltd, period.

Factors Influencing Areca nut Marketing:

The important factors which are affecting the areca nut marketing include control of areca nut
market by 10-15 Gutkha Companies, heavy central tax on Gutkha, bill less trading by traders,
entry of the areca nut grown in Indonesia to local market, doorstep selling by the growers, poor
recovery of loans in private Mandis, the judgment of courts relating to gutkha, ;the problems of
co-operatives and their limited capacity in managing g the market, market malpractices,
;inferior quality of the areca nut, excessive production, vicious circle created by the merchants
themselves, unhealthy competition etc. In the present scenario co-operatives, Government,
growers and religious centers have to play their role in attaining sustainable development of
areca nut marketing system.
Traditional Growers:
Karnataka is the front runner in terms of area under cultivation and production. Earlier
production of areca nut was confined to Dakshina Kannada, Uttara Kannada, Shimoga,
Chikkamagalore and Kodagu Districts. The majority of the area in these districts is comprised
of traditional areca nut growers. A sudden rise in prices of areca nut in the last decade has
attracted the farmers, growing food crops in other districts of the state, towards this
commercial crop. Now areca nut is produced in 20 districts of the state. In the traditional areca
nut growing area the areca nut garden is situated in the valley. For these farmers growing of
areca nut is a way of life and they follow traditional method of cultivation. Heavy rainfall is
normal feature of these areas. Therefore, every year loss of production due to kole roga is a
common phenomenon which resulted in low income to the areca nut growers. The cost of
production is increasing continuously. About 80 per cent of the growers are marginal holders.

Cost of Production
Per Acre, In Rs.

No. Particulars Rs

A. Capital Expenditure

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1. Levelling and Drainage (open) 75,000
2. Pit 3,000
3. Seedlings 9,000
4. Labour 5,000
---------
Total 92,000
---------
B. Recurring Expenditure

1. Manure (Compost) 18,000

2. Bordo Mixture Rs. 6000X2 1,000
3. Labour Component
a) Drainage Maintenance 300
b) Weeding (2 times) Rs50X4 2,000
c) Harvesting
Peeling, drying, processing
Packing, Transportation 10,000 18,000
d) Spraying charges 1,000
---------
40,200

Source: Survey Data

It is very clear from table that the total cost of production is Rs 40,200. To
erect the one Acre of areca garden the required capital expenditure at present comes to
Rs.92, 000. The gestation period between initial investment and return is 6 years and
every year the grower should spend Rs. 20,000 of recurring expenditure. The possible
inter crops which can be grown in the areca nut garden are pepper, cardamom, banana,
betel leaves cocoa etc. However only few areca nut growers can undertake this venture if
their land is so fertile. The yield per acre and income in the traditional farming area is as
follows:
Yield and Income per Acre

Variety Yield per Acre Price per Quintal Total Income

Rs.
1. Kempu 6 Quintals 9,000 54,000
2. Chali 4 Quintals 6,000 24.000

Total 78,000

Source: APMC, Sagar

The calculation of Income and expenditure shows that the net income per acre of
areca nut garden is Rs.36,000. The average monthly income of an Areca nut grower family

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 is Rs.3000. The family of four members can not lead at least minimum comfortable living.
In the calculation of expenditure the interest on credit borrowed and minimum permanent
work on land has not been considered. The survey conducted by APSCOs revealed that the
extent of areca nut garden in Sagar Taluk is around 8000 acres and families’ owning this
land also comes about 8000. It can be inferred from this that the average land holding of
areca nut growers in Sagar taluk is only one acre. Therefore the dire need of the hour is to
protect these small traditional areca nut growers.
Revenue generated from Areca nut Purchase:
The market fees collected by all the APMCs in the state on the purchase of areca nut for the
available years are given below.
Year Amount
1990-91 Rs. 2.82 Crores
1991-92 Rs. 4.14 Crores
1992-93 Rs. 4.83 Crores
1993-94 Rs. 4.42 Crores
1994-95 Rs. 4.84 Crores
1995-96 Rs. 5.73 Crores
1996-97 Rs. 7.86 Crores
1997-98 Rs. 7.69 Crores
1998-99 Rs. 9.55 Crores
1999-00 Rs. 10.72 Crores
2000-01 Rs. 11.74 Crores
2001-02 Rs. 9.13 Crores
2002-03 Rs. 8.25 Crores
2003-04 Rs. 12.70 Crores
2004-05 Rs. 12.24 Crores
2005-06 Rs. 12.88 Crores
2006-07 Rs. 18.73 Crores

Source: Krishi Marata Vahini.

The data available from 1990-91 to 2006-07 indicates that the total market fee
collected from areca nut trade in the state was Rs.148.27 Crores. No data is available
regarding this earlier to 1990-91. However, @ Rs. 1.5 Crores on an average for a year, for
20 years from 1970-71 to 1990-91 about Rs 30 Crores were collected. In all from 1970-71
to 2006-07 about Rs. 178 to Rs.180 Crores were collected as market fee by the APMCs of
the state.
Keeping in mind the interest of the traditional areca nut growers of Western Ghats
region a separate support package should be formulated.

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 The CAMPCO Ltd, which is a very important co-operative institution for the areca
nut growers, should be strengthened. As of now this marketing agency is handling only 12
per cent of the total production. If it is possible for the CAMPCO to hold 50 per cent of the
market arrivals the market stability can be achieved. For this Rs 100 crores should be
allotted to the CAMPCO as market stabilization fund.