Chilli output may miss target, prices to soar

The chilli production in the country is likely to miss not only the projected target of 1.2 million tonnes in 2007-08, but it could be below last year's level as well, as untimely rain has damaged 20-25 per cent of the crop, according to sources in the Spices Board.

Market analysts, who have pegged the loss at 15-20 per cent, said below-than-expected output could send the prices soaring in the near-term.

"Andhra Pradesh is the worst hit by rains, where the crop damage is estimated to be higher than those in Karnataka and Tamil Nadu. We expect the total loss to be about 20-25 per cent," a Spices Board senior official, who does not want to be identified said.

Last year, the production stood at 1.05 million tonnes while this year, the output might be only 700,000 tonnes, he said, adding that the rain has affected both standing as well as harvested crop.

"Our field person is gauging the actual loss and the picture would be clear in another two days," he added.

However, market analysts have pegged the crop loss at 15-20 per cent. Karvy Comtrade analyst Veeresh Hiremath said, "Even though production was expected to be higher this year, heavy rains in last three months have affected the crop. According to reports, there may be about 15-20 per cent of crop loss."

He said heavy rains were disturbing the chili supply in the market. Arrivals have declined to 40,000 bags from 130,000 bags on Monday. While the volumes on exchanges have slipped to 50 lots as compared with 300 lots on an average trading day.

Besides supply, the quality has also affected and added that all these have prompted prices to move northward on Monday. Prices had hit the four per cent upper circuit both at spot and futures market, he noted.

The chili prices would remain at higher level in the coming days due to fall in output as well as lack of quality chili arrival in the market, analysts said.

Andhra Pradesh, which accounts for 49 per cent share of the country's total production, is the leading chili-producing state in the country followed by Karnataka, Maharashtra, Orissa, Rajasthan and Tamil Nadu.