Chinese demand for Indian chillies sluggish on higher prices

Vishwanath Kulkarni | | Updated on: Jan 12, 2022
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Excess rain, pest attack in growing regions affect rates

Lack of price parity is keeping the Chinese buyers away from the Indian red chillies at present, exporters said. However, a section of trade is hopeful that the Chinese demand will kick in later in the season as the crop in the neighbouring country is reportedly down by about a fifth.

“Chinese demand is slow as there is no parity. The Chinese buyers are waiting for India prices to come down,” said Pratul Bajaj of Torq Commodities. Moreover, there’s no local demand in China, which is heading into the Spring festival holiday season.

China has emerged as one of the large buyers of the Indian red chillies in recent years. The price difference between Chinese and Indian prices is about $100 a tonne. Indian chilli prices are quoted at $2,550 per tonne.

Red chilli prices had shot up in the recent months after the main growing regions in Andhra Pradesh, Telangana and Karnataka faced excess rains in October-November. Besides, the crop also faced pest attack in Andhra, the largest producer. Prices of Teja variety, which ruled at around ₹125 a kg in October when prices were low are now hovering around ₹160 a kg. The price of new chilli crop, which has a higher moisture content, are lower by ₹10 a kg, Bajaj said.

Crop damage

Trade sources in Guntur said though the overall area under chilli is considered to be more this year, there was a lot of damage to the crop due to rains and pests during October-November. A clearer picture on the actual crop loss and yields would emerge as the picking progresses. Chilli like cotton is harvested through multiple pickings. Though bulk of the early market arrivals are of of damaged quality, sources are hopeful of the quality improving going forward, especially in the peak season post-Pongal.

J Mohan of Spoorthi Chilli Producers Company in Edlapadu, Guntur said the thrips attack has damaged the crop resulting in lower yields. Farmers are not selling their chillies expecting prices to improve, he said.

Though the China demand is slow, sources in Guntur said the shipments are going to destinations like Colombo. However, exporters shipping to Sri Lanka are cautious due to prevailing economic situation in the neighbouring country, they added.

Traders hopeful

Basavaraj Hampali of Hampali Traders in Hubballi said the Chinese demand for Indian chillies will come back in the season ahead as the local production of paprikas is reportedly down by around 20 per cent.

According to Spices Board estimates, chilli exports stood at 6.015 lakh tonnes valued at ₹8,429 crore in 2020-21. The exports have risen by about 50 per cent over the past five years in quantity from 4 lakh tonnes in 2016-17. In value terms, the increase has been 66 per cent over the same period from ₹5,070 crore in 2016-17. Production of chillies, according to Spices Board, stood at over 19.88 lakh tonnes according to 2020-21 advance estimates as compared to 18.41 lakh tonnes in the previous year.

Published on January 12, 2022

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