The Hindu Business Line : Higher output, stockpiling pull chilli prices down

HIGHER production, piling stocks, poor export offtake and Government procurement policy have tended to push chilli prices downwards, allege trade sources. They foresee no upward movement in the price levels during the forthcoming season.

While confirming this scenario, the Domestic and Export Market Intelligence Cell at the Centre for Agricultural and Rural Development Studies (CARDS) has advised the farmers to size down the area under chillies to contain production during the next harvest to minimum.

The CARDS Director, Dr N. Raveendran, told Business Line that chilli production had shot up in the last three years, resulting in stock overflow in the cold storage godowns. Over 65 cold-storage godowns in Guntur belt and over 10 in Tamil Nadu are reported to be holding stock up to the maximum storage capacity.

Trade sources said the current stock level in the cold storage centres is around 60 lakh bags (of 20 kg/each).

The Andhra Pradesh Government is understood to have procured huge quantities in the last and current seasons.

The planting season commences in August and extends till October. Harvesting begins from December. Peak arrivals are reported in February-March and the market remains active till May.

The total acreage is marginally less than 9 lakh hectares, with Andhra Pradesh accounting for almost 50 per cent of this area. The other chilli growing States are Karnataka, Orissa, Maharashtra, West Bengal, Rajasthan and Tamil Nadu. Besides having the largest acreage under chilli in the world, India is also the largest producer (10.6 lakh tonnes), consumer and exporter of the red, dry chilli.

The popular varieties are Sannam (highly pungent), LC 334, Byadhi, Wonder Hot and Jwala.

Market sources estimate the annual exports to range between 0.8 and 1 lakh tonnes in different forms, such as whole, fresh and dried capsicum, powder, oils and oleoresins. It is being exported to the US, Sri Lanka, Bangladesh, West Asianand Far-East countries.

Market reports reveal that chilli, as a commodity displays high volatility in price movement, which is dependent on season, production, demand from exporters, stock available in cold storage and Government's price intervention policy. The rates have not looked up after 2000 and all the major markets have reported a 30-40 per cent fall in price levels in 2005 compared to 2004.

The price has dropped from around Rs 30/kg to the prevailing rate of Rs 15-20/kg. "This has created displeasure and unrest among chilli growers in Tamil Nadu," says Dr Raveendran. He attributes the steep decline in the price in the last one year to a phenomenal rise in market arrivals of up to 200 per cent compared to the previous season.

The spot prices of chilli in Chennai market during the first July fortnight ranged between Rs 12 and Rs 35 a kg. Byadgi chilli, which is a less pungent variety was quoting at Rs 35/kg (maximum), while the Ramnad (non A.C) quoted the least at Rs 12/kg.

Dr Raveendran said most of the exports from Tamil Nadu (Ramnad Gundu variety) was oriented towards Sri Lanka and Andaman and Nicobar Islands. But the export prospect turned bleak due to tsunami, on uncertainty over assured payment.

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Higher output, stockpiling pull chilli prices down