The prices of arecanut, which witnessed a slump in the run-up to the rollout of the Goods and Services Tax (GST), have risen by around 15% in the last one week.
The price of rashi idi variety, which was ₹37,000 on July 7, has gone up to ₹43,000 now. There has been a similar enhancement in the prices of gorabalu, saraku, bette varieties also during this period.
Earlier, owing to confusion on GST, there was a decline in the volume of the produce traded and also its price.
It is said that the owners of firms were focused on clearing the stock at their disposal prior to the rollout as they feared that the margins on this stock would decline under the GST regime.
In addition, many merchants were also focused on clearing their inventories purchased outside the taxation net, prior to the enforcement of GST.
Hence, there was not much interest in making new purchases resulting in the decline in the volume of the trade as well as the price of the produce.
After the GST rollout, the transaction at the arecanut market at the Shivamogga Agriculture Produce Marketing Committee(APMC) had come to a standstill from July 1 to 10.
Kadidal Gopal, president of Shivamogga Arecanut Merchants' Association, said that trading resumed from July 10 and the prices also started to recover.
The quantum of trade continues to be less but the northward movement in the prices has created an optimistic mood in the market, he said.
D.M. Shankarappa, president of Shivamogga District Chamber of Commerce and Industries and an arecanut merchant, told The Hindu that by the time GST was enforced arecanut firms in north India cleared the stocks at their disposal.
The firms then made fresh purchases resulting in the enhancement in the demand for the produce and its price. He said that, further escalation in the prices is expected in August.