Chilli Prices hot on short supply and rising demand

KOCHI/PUNE: Chilli prices are getting hotter due to supply squeeze and rising demand. The prices of the largest exported spice from India are hovering around Rs 95-Rs 100 a kg, 20 per cent more than the prices a year ago, and may race to a new high depending on the demand, trade insiders say.

Chilli crop was down by 15 per cent-20 per cent due to erratic rains last year. This along with high export demand in the end of 2014-15 seems to have dried up the stock, particularly in Andhra Pradesh — the largest chilli producing region.

"At present the cold storages in Guntur are showing 30 per cent-40 per cent deficiency," said Ravipati Peraiah, MD at Vijayakrishna Spice Farm, a dry chilli manufacturer and supplier based in Bellary.

The annual chilli production in the country is about 13-14 lakh tonne. Rising prices have led to hoarding, which in turn affects supply and boost prices further.

"About 75 per cent of the available stock is with the traders and only the rest is with the farmers," said Venkat Rosaiah, president of Guntur Chilli Commission Agents Association. "Heavy purchase by China and Bangladesh last year has created pressure on the stock and has lifted the price. But if Andhra gets good rainfall in the coming weeks, the prices will cool." The prices are expected to go above Rs 100 in the coming weeks. Chilli exports in 2014-15 touched a record 3,47,000 tonne valued at Rs 3,517.10 crore. This time it remains to be seen how export will pan out. "The sowing for the next Chinese crop in October is high, indicating a better crop unlike last year. But China’s domestic chilli consumption has gone up so much that its production is insufficient to meet the demand and hence they are forced to buy from other sources like India," said A P Murugan, director at Paprika Oleos, a major chilli exporter based in Tamil Nadu.

Meanwhile, keeping with the national trend of opting for crops with high paying potential, farmers are expected to increase area under chillies. Seed companies confirm such a trend.

M G Shembekar of Ankur Seeds said that this season, apart from soyabean and pulses, there is high interest in chillies. There has been good demand for chilli seeds right from the onset of the monsoon across prominent chilli growing states like AP, Maharashtra, MP and Gujarat, he said.