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

Abstract
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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