Analysis of the Economic Importance of the Betel Leaf for the Indian Economy, Observation, Explanation and Discussion of the reasons for the price fluctuation of betel leaf in the spot markets, strategies to manage the price fluctuations and various government schemes for increasing production and improving productivity to control the price of betel leaf in the Spot Market has been discussed in this paper

1. Price Risk
Management
in Betel Leaf
Betel Leaf
Shekhar Jyoti Das
17-PGDM-ABPM-35
22nd
January 2019

2. The fresh leaves of betel vine are prominently known as “Paan” in India.
The tremendous monetary capability of the crop can be enough settled by
the fact that around 15-20 million individuals consume betel leaves in India
all the time, other than those in different nations of the world, which may
mean more than two billion consumers.
Since the betel vine cultivation is a labor intensive job. The betel cultivating
exercises can produce employment opportunities for agricultural workers thus
consistently, helping them to support their families. Further as far as national
employment generation is concerned, around 20 million individuals derive their
livelihoods directly or indirectly by producing, processing, handling, transporting
and marketing betel leaves in India. Thusly, the harvest gives a National Income
to the tune of Rs 6000-7000 million every year
The Indian betel leaves are in great demand in several other nations of the
world where demand far surpasses the local supply.
Subsequently, leaves worth about Rs 30-40 million are exported to Bahrain,
Canada, Great Britain, Hong Kong, Italy, Kuwait, Nepal, Pakistan, Saudi Arab
and many other European nations.
This obviously demonstrates the foreign exchange earnings and profitability
of the crop, which can be further exploited.
Economic Importance
of Betel Leaf

3. Betel Leaves Prices over the
Past 3 Years in Spot Market
State
Prices
(2018)
Prices
(2017)
Prices
(2016)
%
Change(Over
Previous
Month)
%
Change(Over
Previous Year)
Assam 12499.92 13000 7018.26 -3.85 78.11
Karnataka 3690.05 4050.41 3238.38 -8.9 13.95
Meghalaya 12786.49 14457.6 11464.2 -11.56 11.53
Odisha 8958.13 9268.26 8956.1 -3.35 0.02
Average 9483.65 10194.07 7669.24
State wise Spot Market Prices for Betel Leaves for over 3 years
Report Generation: As per the data reported by APMCs
Prices in Rs/Quintal
Since it is a tropical plant, growing betel in the subtropical climate of India
requires extra care and attention. So farmers grow it in a greenhouse where
they can maintain humidity of 40-80 per cent, and temperature between 15C
and 40C. Betel crop is vulnerable to intense cold and dew factor, which results
in dried up leaves and decreasing the economic value of the crop.
Farmers say the cost involved in watering has become a major hurdle in betel
farming lately. “Earlier, water was not a cost to bother as it was available year
round. With rainfall becoming increasingly erratic, ponds do not hold sufficient
water all year round. Officials said the area under betel cultivation is set to
shrink further because farmers are now left with very few cuttings to begin a
new crop. Once planted, the perennial crop can be harvested for four-five
years.

4. Betel is vulnerable to even the slightest weather change. “Paan cannot be
harvested if temperature goes beyond 40 C. Rainfall is no longer uniformly
distributed.
Recent increase in the cost of labor and farm inputs has added to betel
farmers’ woes. For instance, to put up a betel greenhouse, a farmer needs
stacks of bamboo sticks. Earlier, state governments used to provide bamboo
at subsidized rates. But the practice has stopped in most states.
Farmers say the government needs to recognize betel leaves as an important
trading commodity and offer them support. Although betel cultivation began
in India 1,500 years ago, the country has not improved the cultivation
technique since, nor identified its industrial uses.
Wholesale paan markets across Uttar Pradesh, West Bengal and Delhi retell
the story of India’s diminishing status as the largest betel leaf producer and
consumer. Gutkha invaded the Indian market in the 1990s. The success of
the Rs 10,000-crore gutkha industry is due to its easy availability, smart
packaging, high shelf-life and low prices. Besides, Paan is a varying
commodity, while gutkha has a uniform taste. People prefer gutkha because
it is cheaper, saves time compared to Paan which takes time to prepare and
more fashionable than red-stained lips. The trend of chewing gutkha has
influenced the fall in demand and cultivation of paan.
Changing weather conditions, less support by the Government Schemes
and use of traditional and conventional farming methods are some of the
prime reasons that has led to downfall of productivity and decrease in
importance of betel leaf as a tradable commodity in Indian Market Scenario.
Thus this contributing factors have led to fluctuation in prices of the betel
leaves in the Indian Market.

5. Strategies to Manage
the Fluctuations
Shifting from organic cultivation to chemical cultivation
Due to low demand and high-input costs betel farmers should look to switch
from organic manure to chemical fertilizers and growth hormones.
Usually a concoction of cow dung, vermin compost and oil cakes of
mustard, groundnut and neem seeds, costs the farmers around Rs 36,000
per acre (0.4ha). Chemical fertilizers bring down the cost by less than half.
It also helps them harvest the first batch of leaves within a month of setting
up the garden instead of two-three months. Weekly plucking goes up from
twice to three times.
Farmers who are opting for cheap chemical farming helps them to quickly
recover the high initial investment and minimize the loss in case of a slump
in the market.
Government support
Little support in terms of insurance or infrastructure will help the betel leaf
trade to flourish. The National Botanical Research Institute (NBRI) in
Lucknow, said in 1981 the institute worked with Mahoba farmers on a
government-sponsored project to improve betel leaf cultivation. They had
offered suggestions like using plastic sheets instead of thatched roofs. But
the government scrapped the project due to shortage of funds in 2000.

6. Hence, various measures should be taken by the Government to provide the
basic facilities required for betel cultivation. Some of the measures like
 Issue of crop loan for betel vine growers through Banks and Primary
Agricultural Cooperative Societies at concessional rate of interest.
 Regulation of labor wages in betel cultivation could be initiated by
the Government.
 Betel leaves should also be included in the list of priority crops and
be covered under Crop Insurance claim.
 During slack season and excessive production period, the
Government should construct the cold storage warehouses at least
two or more such cold storage in each block of the district.
 Initiatives should be taken to establish research centre in the study
area to improve the techniques and methods for betel cultivation
 Training and skill development programmes for betel growers should
be organized by the government frequently to upgrade and also to
encourage young growers for adopting the cultivation, thereby
making sufficient production.

7. Government Schemes
for the Commodity
Odisha Government launched special crop specific scheme to promote
betel leaf cultivation
Farmers interested in setting up betel vines in Odisha will get financial
assistance from the State government under the special crop specific
scheme launched to promote betel leaf cultivation. They will be provided
at least 50 per cent of the first year’s establishment cost.
Each farmer developing a betel vine in an area of 10 decimal will get an
assistance of Rs 40,000 under the scheme. The aid includes the cost of
training of around Rs 3,000.
With a budgetary provision of Rs one crore, the scheme laid out under the
State plan envisages doubling the income of betel farmers and encourage
farmers to adopt betel leaf as a cash crop in nine districts.
Betel vine cultivation is highly labor intensive and particularly suited to
small holdings. Once established, a betel vine becomes a perennial source
of employment and income for farmers to meet their daily requirements.

8. Madhya Pradesh and Bihar Government has also launched financial
assistance for betel farmers.
Madhya Pradesh offers Rs 30,000 or half of the cost of setting up a farm to
each betel farmer and is sponsoring a betel vine project. The impact is
evident. Area under betel has gone up from 694 ha to 766 ha in five years.
In Bihar’s Navada district, the horticulture department has been disbursing
Rs 15,000 per half-a-decimal farm since 2008-09. Area under cultivation has
since increased by 40 ha.
The inclusion of betel farming in RKVY to increase production of betel leaves.
The government is also supposed to provide every facility for its marketing.
The state government is also required to provide farmers some benefits
under this scheme