Red chillies have become really `hot’ this year, with prices zooming to historic highs.
Supply squeeze has pushed prices up 50 percent from last year, despite sluggish demand from China, the largest importer of Indian chilli.
The prices of the biggest exported spice from India currently range from Rs 200- 300 per kg for different varieties such as teja, sannam and bydagi.
Excess rainfall last year led to widespread pest attacks, causing a shortage in chilli output in the last harvest in early 2022. Production, which was on the rise in the previous few years, went down by 9 percent in FY22 to 1,866,108 tonnes.
Traders have expressed concern at the insufficient supply of good quality chillies, which has affected exports. Olam Spices market update said the 2022 supply is tight, especially for good quality grades.
Stocks in cold storage are down by 50 percent, compared to last year in the same period. Prices have moved up by more than 50 percent since the beginning of this year, it added.
``Overall, the stock in cold storages may range from 80 lakh to 1 crore bags (each bag of 40 kg). In Guntur, the largest market for chilli, it is down by half to 30 lakh bags,’’ said Laxmikant G, product head, chilli, of Agro Crops. If demand picks up, the existing stock may not last till the next harvest.
Exports slow down, prices soar
Prices have soared despite exports slowing down. In April-June 2022, chilli export volumes slumped by 16 percent, at 1,04,283.57 tonnes, from the same period the previous year. Export earnings plunged by 19 percent to Rs 1,914.98 crore as per Spices Board data.
This is on top of the decline in exports in FY22 because of the logistics problems due to the pandemic. Red chilli exports fell by 14 percent in quantity and 7 percent in value. It stood at 55,7168 tonnes, fetching a revenue of Rs 8,581.88 crore.
China accounted for 34 percent of the exports. Sri Lanka and Bangladesh came next with 9 and 8 percent share, respectively.
“The purchases by China have dropped mainly because of the spread of COVID-19 in the country. Restaurants have remained closed, thus keeping demand down. Buying by other countries, like Bangladesh, too, has dropped,’’ said A P Murugan, director of Paprika Oleos, a leading exporter.
Spiralling prices may lead to increased sowing
Spiralling prices may lead to increased sowing next year. “In fact, the rise in acreage in Andhra Pradesh and Telangana, two largest chilli producers, and weak demand, particularly from China, has spurred a downward trend in prices. It remains to be seen how far the trend will be sustained,’’ pointed out Siva Krishna, director, N K Agro Exports.
Sowing, which usually starts by the end of August, has been delayed by a month by heavy rains. “This may delay the harvest, which usually starts by December. Besides, how the North-East monsoon pans out will also have an impact on the next crop. If it is intensive, the quality of the crop will be affected,’’ Laxmikant said.
The first chilli crop is expected from Madhya Pradesh, where sowing is over. It is the third-largest producer of the spice, followed by Karnataka. In the last harvest, the decline in output was not that much but the quality of chilli was affected by pest attacks. This time, sowing is higher in Madhya Pradesh. ``We are expecting a good crop in MP,’’ said Siva Krishna.Meanwhile, the domestic demand is expected to pick up with the onset of festival season. “So far, local demand has been average. Curry powder manufacturers were buying more,’’ Laxmikant said. Around 75 percent of the red chilli produced in the country goes for domestic consumption. The country saw the highest chilli production of 2,411,150 tonnes in 2016-17.