Virus outbreak in China dries up demand for Indian chillies

The hopes of chilli farmers, who had just begun to celebrate high prices of ₹15,000 a quintal three weeks ago, have been dashed as prices began to slide in the range of ₹9,000-14,000 in the key markets of Guntur, Khammam and Warangal.

While unseasonal rains in the last two days in some parts of Telangana and areas bordering Karnataka have impacted the quality of the product, a reduced export demand has impacted the trading activity, resulting in the drop in prices. The rains have slowed down the drying process of chillies.

Chinese demand dries up

Demand from China, one of the major buyers, has dried up following the outbreak of novel Coronavirus there.

“The Chinese purchases normally begins in February first week. This year, they were hit by the virus crisis around the same time,” a trader at the Khammam Market Yard said.

Teja variety of chillies has great demand in the export market, particularly Chinese, who use the produce for extracting oil.

Telangana grows chillies on about 2.10 lakh acres. The State expects a production of 3.28 lakh tonnes, showing a growth of about 8 per cent over the last year’s production. Telangana produced a record 4.83 lakh tonnes of chillies in 2016-17.

“Unlike in the case of perishables, chilli exports will happen later as demand for chillies extract is very high in China and they will have to depend on us for the produce,” said Rama Rao, who facilitates purchases between farmers and exporters.

Farmers allege that though traders are announcing a rate of ₹9,000, they are reducing the price during the sale process to ₹7,000. “We’ve heard that there are issues related to supply chain due to the quarantine norms on both sides. This must have impacted the purchases,” S Malla Reddy, a Telangana Rythu Sangham leader, said.

Prices in Karnataka

In Karnataka, prices have dropped in markets such as Bellary, where the Guntur variety is grown. However, in the Byadgi market, prices are largely stable for the average quality but the premium quality produce is fetching good price, traders said.

The market arrivals of the Byadgi variety chilli, which has low pungency and high colour content, have been slow this year as excess monsoon rains impacted the crop, forcing growers to take up re-planting in affected areas of North Karntaka. As a result, the production is delayed.

“We expect the arrivals to go on till May this year as against the normal of mid-March. There is good demand for top quality produce, which has been fetching good prices this year,” sources at Byadgi APMC said.

Byadgi chillies are widely used for extraction of oleoresin, which is used in production of cosmetics such as lipsticks and nail polish. The highest price fetched in recent auctions was around ₹33,000 per quintal for top quality produce, trade sources said.

The prevailing rates are at least 50 per cent higher than last year’s for all varieties traded in Byadgi, they added. The maximum prices are hovering around ₹19,000-20,000 per quintal, while the modal prices are around ₹11,000-12,000 per quintal.

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