Andhra farmers face chilli heat

Competition from other states, declining prices box in growers

Growing acreage of chilli and tobacco in neighbouring states, declining exports and fluctuating international prices has made the going difficult for Andhra Pradesh's chilli farmers.

"The coverage and crop yield in chilli growing states such as Maharashtra, Karnataka, Uttar Pradesh have increased considerable. This has affected market prices despite production declining in the state this year," said D Prakasham, additional director of marketing, government of Andhra Pradesh.

Prices have drooped to as low as Rs 1,300 per quintal from Rs 3,000 to Rs 3,400 per quintal seen in 2003-04.

Andhra is expected to produce 5.3 lakh quintals in 2004-05 compared with 6.18 lakh quintals in the previous year. The tobacco story runs along similar lines.

Andhra farmers are being pushed into a corner as tobacco acreage keeps increasing in Karnataka.

"Early monsoons help early harvesting of tobacco in Karnataka. And that drives the tobacco traders to Karnataka for procurement leaving the Andhra farmers on a weak wicket," said Tulasi Das, president of Andhra Pradesh Raytu Sangham, a trade body.

According to an estimate, Andhra Pradesh accounts for almost 70 per cent of India's total chilli exports.

Andhra mirchi, especially the Guntur varieties, are renowned for their colour and quality. A fall in their exports impact the ryot in the state more than his counterparts in other states, officials of the marketing department said.

Chilli exports are down this time due to various reasons, one of them being the devastating tsunami that hit India's south-east coast around Christmas last year.

Sri Lanka, which was badly battered, is one of the major importers of Indian chilli, beside the US, UAE, Singapore, Malaysia and Bangladesh.

There is trouble from another flank for the state's farmers. Despite being the largest producer of chilli in the world, India exports only up to 8 per cent of total production, which is said to form 50 per cent of the global imports, leaving the rest for local consumption.

This means any increase in chilli production in other states will impact the movement of Andhra chilli to other parts of the country thereby impacting the local prices.

A couple of months back, the Andhra Pradesh government had to face the ire of chilli farmers when the market intervention initiated by the government could not live up to their expectations, leave alone stabilising the prices.

While the Andhra Pradesh Markfed offered Rs 2,300 per quintal when the arrivals were at a very advanced stage, farmers demanded Rs 2,700 per quintal as was offered in the last two years. Markfed incurred a Rs 40 crore loss as it had to sell the produce at much cheaper rates besides spending huge money on cold storage facilities.

The Telugu Desam Party (TDP), the main opposition in the state, besides backing the farmers' demand for increasing the procurement price, also demanded that the Centre set up a separate board for chilli.

It charged the Kochi-based Spices Board of showing bias for minor spices produced in Kerala and neglecting ground spices such as chilli. Apart from taking up the issue of chilli farmers in the Rajya Sabha, TDP Member of Parliament Laljan Basha also wrote to Prime Minister Manmohan Singh urging him to consider setting up of an additional board exclusively for chilli.

But how far the proposed measure will help farmers is another question. According to Prakasham, the constitution of a separate board will not solve the problem.

"We can infer effectiveness of a board from the experience of the Tobacco Board, which has been neither effective in regulating the acreage of crop nor has it ensured a stable pricing regime," he said.

Echoing his views, Tulasi Das said, "A separate board would, at the most, provide employment to a few, but will not address any of the problems faced by the farmers. What we require is a strengthening of the market intervention mechanism. When the NDA government introduced new terms and conditions for availing the market intervention scheme (MIS), which made it almost ineffective for all practical purposes, TDP did nothing during that time. The same policy is being continued by Finance Minister P Chidambaram now," he said.

According to new norms, MIS can be availed of only when the production increases by 10 per cent and market prices come down by 10 per cent. Also, target procurement should not exceed 10 per cent of the anticipated production for that particular year. Moreover, MIS price should not exceed the cost of production.

With the fall in chilli prices, which triggered angry and violent demonstrations at major market yards in the state, reaching to the level of political embarrassment, the self-proclaimed pro-farmer state government led by Y S Rajasekhara Reddy began to look out for other ways to address the issue.

The state has already advised the farmers to go for crop diversification and grow only crops which carry a minimum support price (MSP). That, however, does not solve the immediate problem.