Bumper crop, dull demand mean chilli is not so hot

The current year is proving a tad bland for chilli, with a bumper crop and not too many takers for the hot condiment.

According to sources, the demand from Bangladesh and Sri Lanka is not picking up and the European buyers are still discussing the quality issue with the Indian exporters and the Spices Board.

The domestic consumption is around 90 per cent of the production and rest of the 80,000 metric tonne to 1,00,000 metric tonne is exported in the form of whole dried chillies, chilli powder and pickles to the world market.

Further, the year's Chinese crop is also reported to be better than expected and the Bangladeshi market is flooded with cheap Chinese chillies.

The tsunami that hit a large portion of South East Asia has dried up the demand in Sri Lanka. In addition, the monsoons have hit the southern parts of India earlier than usual. This has forced the farmers, especially in Andhra Pradesh that grows the majority of chilli crop to sell their produce in hurry.

As a result of the bumper crop and the absence of demand, the outlook for chilli has further dampened and a fall in prices is expected to continue to even up to Rs 1,800 per quintal.

The spot prices of chilli have fallen from a high of Rs 2,500 per quintal, to Rs 2,050 as the arrivals the arrivals started in Andhra Pradesh, the largest producing state. With a carry over stock of 10 lakh bags and a daily arrival of 80,000 to 1,00,000 bags the supply pressure is building up and is transferred on to the prices.

The current stock and supply position is with a carryover stock of 1,000,000 bags, with a stock of 90,000,000 bags at warehouses. Stocks at Guntur stand at 50,000,000 bags.

The government procurement is currently at 200 to 500 bags daily, and it further plans to procure 5000 tonne of good quality variety at Rs 2700 per quintal and 10 quintals of fair average quality from farmers.

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Bland facts

• The domestic consumption of chilli is around 90 per cent of the total production
• Around 80,000-1,00,000 metric tonne is usually exported as whole dried chilli, chilli powder and pickles