The prices of dry red chillies have taken a sharp downturn this year, dropping by about a third as fresh arrivals from the new crop flood the markets. Key chilli-producing states like Andhra Pradesh, Telangana, and Karnataka are seeing the impact of high carry-forward stocks and a reasonably good crop, despite a reduction in acreage and muted demand.
High Stocks and Good Crop Drive Prices Down
In Andhra Pradesh, chilli acreage has decreased by 25-30%, but this has not affected the crop quality, which is reportedly strong. Sambasiva Rao Velagapudi, Chairman of the All India Chilli Exporters Association in Guntur, explains, “The combination of a good crop and high carry-forward stocks has slowed down market movement, causing prices to drop significantly.”
Price Trends in Major Markets
New crop arrivals have started in prominent markets like Guntur, Warangal, Khammam, and Byadgi. However, the prices are lower compared to last year:
- Teja variety: ₹13,000-15,000 per quintal (₹18,000-21,000 last year)
- 341 variety: ₹12,000-15,000 (₹15,000-18,000 last year)
- DD variety: ₹12,000-14,000 (₹13,000-16,000 last year)
- S10-334, S4 Sannam varieties: ₹11,000-14,000 (₹15,000-20,000 last year)
In Andhra Pradesh alone, carry-forward stocks in cold storages are estimated at 35-38 lakh bags (40 kg each), with Guntur accounting for 31 lakh bags. Telangana’s carry-forward stocks are around 35 lakh bags.
Karnataka, known for non-pungent varieties like Byadgi chillies, holds record carry-forward stocks of 40 lakh bags (30 kg each), says Basavaraj Hampali of Hampali Traders in Hubballi.
A Buyer’s Market
“The arrivals are good, but demand is slow. It’s a buyer’s market this year,” Hampali remarks. Buyers, confident of ample availability, are in no rush to make purchases.
The Byadgi KDL chilli variety, which commanded ₹50,000-55,000 per quintal in January 2024, is now priced around ₹32,000—a 41% drop year-on-year. Future price movements will hinge on how demand and supply evolve, he adds.
Export Trends
Despite lower domestic prices, exports to China, India’s largest market for red chillies, are continuing, albeit at reduced rates. Velagapudi assures that the outbreak of the HMPV virus in China has not impacted exports. However, shipments to Bangladesh face disruptions due to the country’s internal challenges.
India’s chilli exports during April-October 2024 rose by 9% in volume to 3.30 lakh tonnes compared to 3.04 lakh tonnes during the same period last year, as per Spices Board data. However, export values dropped by 15%, earning $645 million compared to $757 million previously.
The Road Ahead
With a strong crop, substantial carry-forward stocks, and subdued demand, the red chilli market remains under pressure. While buyers take their time, the eventual price trajectory will depend on shifting dynamics in domestic demand and international trade.
This year’s bearish trend signals a challenging season for growers and traders alike, emphasizing the need for market adaptability and strategic decision-making.