China demand may push chilli prices up

KOCHI: Chill prices have increased almost 50% over the past one year to Rs 125 per kg due to 20-30% decline in output in Andhra Pradesh, the principal producer of the commodity in the country, owing to inadequate rainfall.

Traders said that the prices might increase further to a new high in the coming weeks as the export demand picks up, especially from China. Chilli, the largest exported spice from India, fetched over Rs 3,500 crore last year. Scanty rainfall has affected the quality of chillies this season. High quality chilli, which is lesser in quantity, is selling at Rs 135-140 per kg.

“The regions fed by water from Nagarjuna Sagar Dam on Krishna river like Guntur, Prakasam, Khammam and Nalgonda, which contribute around 40% to the total chilli production in the country, have been affected. The output should be down by over 20%,” said Ravipati Peraiah, managing director of Vijayakrishna Spice Farm. Lesser crop may bring the harvest season to an early end by April. Usually it extends till the middle of May.

Part of the crop arriving in the market is going to the cold storages spread over Guntur and other rural regions. However, the quantity may not be enough to last till the next crop, according to the traders. Despite the high price exports are strong.

“But this time Chinese buying will be weak because of the high prices. Though China had a bumper harvest, it depends on India for hot chillies as this variety is not cultivated much there,” said AP Murugan, director of exporting firm Paprika Oleos (India) Ltd.