Over time, arecanut has become one of the key cash crops of Karnataka, and semi-arid and arid regions are digging increasingly deep borewells to sustain this water-guzzling crop.

An arecanut plantation in Karnataka
news Agriculture Monday, January 03, 2022 - 16:38

Groundwater levels are in steep decline in the semi-arid parts of peninsular India. Despite numerous studies and hundreds of crores of rupees of investment in recharge schemes, the situation only seems to get worse.

Our preliminary research shows that a switch from traditional crops to commercial species, fuelled by the borewell revolution, is partly to blame. But if we are to understand how to reverse this trend, we need to get to the root of the problem. Why are farmers continuing to drill deeper, risking every last penny of their savings, chasing a source of water that could fail at any time? What is driving the madness?

In search of answers, we arrive at Chikkahejjaji in the Bengaluru Rural district of Karnataka. The village looks like any other in this part of the state; there is a series of huts and shops along the main road, surrounded by fields of paddy, ragi, flowers, maize and vegetables, and plantations of arecanut and coconut as far as the eye can see.

This village is an important stop along the arecanut trail, a chain of processes from cultivation to its sale in a thriving market, that we stumbled upon while researching agricultural water use in rural Karnataka. As groundwater levels deplete and a crisis of water scarcity spreads in agrarian belts, we wanted to understand how this water-intensive crop came to become one of the state's most important cash crops.

It was in Sira taluk in Tumkur district that we first met Deepak*, a farmer who specifically leased out a 2-acre areca plantation every year to ā€˜stabilise his incomeā€™. This was surprising, seeing that he already cultivated groundnut, ragi, coconut and various fruit and vegetable crops on different parcels of his own 5-acre land. Clearly, areca had an important financial role to play.

The areca gold rush

The next farm we visited in Sira helped further unravel the story. As we stood in Rajeshā€™s plantation, sheltered from the monsoon showers under the canopy of his decade-old arecanut trees, we learnt about just how profitable this crop is. Rajesh spoke about how his family converted their traditional ragi farm to an arecanut plantation as soon as they could afford their first borewell.

A typical arecanut plantation has about 400 trees per acre. Even the most conservative estimates for semi-arid regions like Sira taluk (rainfall of 600-700 mm/year) suggest that each arecanut tree needs 15 litres of irrigation each day for about six months of the year. This translates to about 350 mm/year of irrigation demand by arecanut plantations, in a place where groundwater recharge probably has an upper limit of 50 mm/year. This means that, over time, an arecanut plantation will deplete groundwater.

If groundwater levels are to be sustained, the only type of horticultural or agro-forestry plantations that semi-arid regions can support are those that require very minimal ā€œprotectiveā€ (not more than 50 mm/year) irrigation after the first 2-3 years.

Juxtaposed with arecaā€™s high water requirement is its financial lure -- the crop fetches an average of Rs. 4,50,000/acre/year compared to the paltry Rs. 60,000/acre/year for groundnut. While we did know that arecanut is a lucrative cash crop and that increasing land areas of Karnataka are being converted to areca plantations, it seemed hard to believe that there was such an immense difference in its selling price, compared to other crops cultivated in the region.

We were curious about where this massive demand was coming from, and if it could just be a bubble waiting to burst. Areca is being used by the paint and leather industries, in addition to supari and gutka manufacturers, but we were unaware of how much of the produced areca was going to different industries, how it was processed for various purposes and exactly why this water guzzler was fetching such exorbitant prices in the market.

The gutka-fuelled price surge

Back at our laptops the following week, we were able to follow the trajectory of arecaā€™s skyrocketing prices more closely. What started out as a traditional crop selling at Rs 700-800 per quintal in the 1970s experienced a surge in the ā€˜90s along with the expansion of the gutka industry. Prices have steadily climbed since, and it sells today at up to a lakh per quintal.

Over time, it has become one of the key cash crops of Karnataka, and village after village in semi-arid and arid regions are digging increasingly deep borewells to cash in on this water-guzzling money-spinner.

We saw that there was no secondary data on the market share of arecanut crops, and limited information on the costing of the crop. Our visits to other farmers in Tumkur and Bengaluru Rural districts corroborated with what we had already learnt ā€“ the annual profits from arecanut farming could be as much as Rs 5 lakh per acre, substantially greater than the average annual agricultural earnings of Rs 3,800 per month (based on the recent NSSO survey findings for the year 2017-18). This made it worth the risk of sinking multiple borewells at increasing depths into the ground.

As Raju, a farmer near Doddaballapur put it, ā€œIf the borewell fails we lose 1.5 lakhs, but if it succeeds, we earn 4.5 lakhs in the very same year.ā€ However, the farmersā€™ knowledge remained limited to selling their harvest to processors and they were unsure of the market dynamics beyond this.

To dig deeper, we next visited some areca processors in Chikkahejjaji village. More than 800 of the 900 households of this village are engaged in arecanut processing. Gopal, the head of one such household, showed us a CCTV-monitored and iron-doored godown where the processing operation takes place, starting with harvesting and dehusking of arecanut, through boiling seeds in ā€˜areca milkā€™ and ending with sun-drying the seeds (images below).

Moving further along the trail, we visited Ramesh, a small procurer of arecanut in Mavinahalli village in Tumkur district and the regional office of the CAMPCO Ltd. (an arecanut cooperative), in Tumkurā€™s APMC yard. Ramesh, along with some other farmers of the village explained to us that over 95% of the areca produced in India goes to the gutka industry, which is able to ensure a stable demand due to its addictive nature.

Supported by cooperatives, innovations

In addition to arecanutā€™s financial viability, another big advantage it provides is that once processed, unlike perishable crops like tomatoes, arecanut can be stored for several years in cool dry conditions. It does not need expensive investments in cold storage. This means that traders can sell arecanut when the prices are high and store it when they are low. As a result, arecanut returns do not fluctuate as much as those of other horticultural crops.

Further, while the market is largely controlled by private middlemen who carry out a multi-crore annual trade, the presence of cooperatives ensures decent prices for farmers even in instances of market slump. Innovations in the sector continue -- mechanical dryers, automated grading, and ā€˜CAMPCO-on-wheelsā€™, an initiative to procure areca at farmersā€™ doorsteps and reduce their transportation expenses.

We were unfortunately unable to meet with large-scale traders and gutka industrialists ā€” the weeks of our research were experiencing a market surge and the larger players were reluctant to divulge too much information given the high stakes involved.

However, by the time we reached the end of the our trail, it had become clear that the arecanut market is not a bubble -- rather it is a thriving industry driven by the steady demand created by the gutka industry, is supported by a strong network of farmers, processors and traders, and is witnessing constant growth and innovation.

The way forward to a sustainable agricultural system?

It is important to ensure that farmers' incomes are improved, while simultaneously ensuring soil health and sustainable water use. 

In this context, the story of arecanut's growth is key, and questions on the way forward still linger ā€” what does the exacerbating water crisis portend for the future of this crop? Why has an environmental menace and a public health hazard been allowed, even encouraged, to proliferate to this extent? Stakeholders in this system are acting in self-interest, but the farmers we interviewed also wanted a healthier environment and a better future for the next generation. It is clearly the system that creates perverse incentives.

At a time of worsening water scarcity, it is critical to closely monitor the impact of crops like arecanut and look into what can be done to challenge the dominance that they enjoy in the market. Itā€™s important to note that this is not a ā€œfree marketā€, the groundwater boom is driven by the policy of free electricity to farmers. The question is how to direct the state subsidy to better help farmers make more sustainable crop choices.

*Respondentsā€™ names have been changed to protect their identities.

Tanvi Agrawal is a researcher with the Food Futures Initiative at the Centre for Social and Environmental Innovation at ATREE, Bengaluru.

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