Chilli prices are on the rally and likely to touch record high by the year-end on lower supply, traders said. Farming area has declined by more than 30-40 % in the major growing areas with farmer moving to cotton and other crops.
Chilli prices are on the rally and likely to touch record high by the year-end on lower supply, traders said. Farming area has declined by more than 30-40 % in the major growing areas with farmer moving to cotton and other crops. India is the world leader in chilli production followed by China and Pakistan. Veteran chilli trader Peraiah Ravipati from Bellary told FE that the total production of chilli would be lower by 40-50 % compared to last season. “Area under chilli is estimated to be lower by 25-30% and the yield from the current crop is also seen lower by another 25-30%. The supply is very low when compared to last year’s 18 lakh tonne. The current market prices are in the range of `85-115 per kg. “Very good quality chilli is trading above `150 per kg and good chilli can only be procured above Rs 100 per kg,” he added.
The price of chilli normally slumps during January to March due to heavy arrivals and surges during April-May due to higher demand and lower arrivals. Good returns from chilli farming in the past few years have also prepared the farmers to hold stocks and sell when it suits them. “They are better equipped than past in money, infrastructure and information to deal with the market fluctuations,” sources added. The Agro Marketing Intelligence Centre of Acharya Ranga reports that spurred by the sharp rise in prices, the chilli growers of Andhra Pradesh major planted more area during 2016-17. In India, 40% of chilli crop is monsoon dependent and fluctuates according to the availability of ground water. Chilli crop has to be irrigated and protected till March.
Sunand Subramaniam of Kotak Commodities told FE that farmers in Andhra Pradesh and Karnataka switched to other crops as the market for chilli crashed during the last harvest season. Ravipati said that the current inventory held by the trade is minimal as the market prices are high. He estimates the market to move up to new heights after the first half of the year benefiting farmers. Consumption of chilli is increasing substantially with the branded powder sales growing at a compound annual growth rate of 11% while the spices mix category is growing at a CAGR of 7%, according to a spices board report on the commodity.
Chilli is the major spice crop occupying about 29% of area under cultivation accounting for nearly 7.69 lakh hectares with a production of 16.28 lakh tonnes of chilli during 2015-16. Higher exports also lead to better realisation in the domestic market. India’s chilli exports volume has increased 12-14% annually to hit a record 3,47,000 tonnes in 2014-15, from 2,04,000 tonnes five years ago. Chilli retained its position as the most wanted spice in the first half of the current fiscal with exports of 235,000 tonnes amounting to Rs 2,125.90 crore in value, as against 165,022 tonnes in the previous fiscal, registering an increase of 42% in volume.