Andhra market price intervention scheme rescues red chilli prices, helps farmers

The state had earlier this year faced a significant decline in red chilli prices, with rates plummeting from over Rs 28,000 per quintal in the previous season to less than Rs 7,000 per quintal.

The Andhra Pradesh government's market intervention scheme, which was announced in response to significant decline in red chilli prices, has helped rates rebound and stabilise at levels remunerative to farmers, market data showed.

The state had earlier this year faced a significant decline in red chilli prices, with rates plummeting from over Rs 28,000 per quintal in the previous season to less than Rs 7,000 per quintal. This sharp drop led to financial distress among chilli farmers, particularly in the Rayalaseema, Guntur, and Palnadu regions.

To deal with the situation, the Andhra Pradesh government approached the Centre to provide a market intervention scheme for price. On February 25, the Union government, in collaboration with the Andhra Pradesh state government, initiated the Market Intervention Scheme (MIS).

It aimed to stabilise chilli prices by setting a procurement price of Rs 11,781 per quintal. Under this scheme, the government agreed to procure up to 25 percent of the produce at the specified price, with losses shared equally between the Centre and the state.

This scheme led to a 15-20 percent rise in open market prices within a week, with rates going up by Rs 3,000 per quintal, market data showed.

Traders offered as high as Rs 14,000 per quintal for some varieties, surpassing the MIS procurement price, as they anticipated further price escalations.

Varieties 334 and No.5 were trading at Rs 11,500 per quintal each on February 11 but the MIS rates went up to Rs 12,500 a qunital and Rs 13,000 respectively, the data showed.

Similarly, 341 variety saw prices go up from Rs 13,000 a quintal to Rs 13,900.

After issuance of this sanction order, the Andhra Pradesh government had a call with all stakeholders (farmers, agriculturists, traders) regarding implementation of the market intervention scheme, sources said.

Farmers told the government that prices have started stabilising since the MIS had already been announced, sources said.

Since the prices were going up, the market participants requested that the market intervention be kept in abeyance till the price goes up and stabilises. Implementing the price stabilization could limit the price at Rs 11,781 per quintal (and prevent it from going up further), they felt.

Presently, data showed that the price of all variants had gone up between Rs 500 and Rs 1,000 per quintal, thereby providing break even and much needed relief to chilli farmers.

Data from publicly sourced and independent Agriwatch agency shows that price of the teja variant has gone up to Rs 14,000.

The timely intervention through the MIS provided immediate relief to farmers, mitigating potential losses and stabilizing the market, sources said adding the success of the MIS highlighted the effectiveness of government intervention in stabilizing agricultural markets during price fluctuations, ensuring fair compensation for farmers, and maintaining market equilibrium.