International Journal of Business and Social Science

ISSN 2219-1933 (Print), 2219-6021 (Online) DOI: 10.30845/ijbss

Areca Nut Farming in Southern India: A Case Study
S. Aaron Hegde, John Deal

Areca nut, the seed of the Areca palm, is cultivated in East Africa, the Pacific Islands and South Asia and is chewed as a stimulant by at least 5% of the world’s population. The largest producer within India is the state of Karnataka (in Southern India), which contributes approximately 47% to India's annual output. This paper examines the production, processing, and marketing stages of the areca nut farming in Karnataka. A number of issues, including the impact of asset fixity, limited risk management options, and a shrinking labor supply, are discussed in the context of the challenges facing areca nut farmers. We also examine a unique auction mechanism design which allows sellers to choose the quantity supplied to the winning bidder in a first-price, sealed bid auction.

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