Lower Prices and High Stock Levels Shape Chilli Planting Decisions

India's red chilli acreage has declined sharply this season as farmers in key states like Andhra Pradesh, Telangana, and Karnataka turned to alternative crops like tobacco, maize, and pulses, primarily green gram. This shift follows persistently low chilli prices and significant carry-forward stocks in cold storage, signaling a change in the cropping pattern.

Trade and industry insiders estimate that red chilli cultivation has dropped by 25-30% compared to last year. According to the Agriculture Ministry’s third advance estimates, India had 9,9 million hectares under red chilli cultivation in 2023-24, up from 8,52 million hectares the previous year. The production of dried red chillies increased to 3,208 million tonnes this year, compared to 2,782 million tonnes in 2022-23.

Regional Insights: Guntur and Beyond

In Guntur, Andhra Pradesh, a hub for red chilli production, carry-forward stocks surged to 42 million bags (40 kg each) compared to 27 million bags last year. Similar stockpiles were reported in Telangana (30 million bags) and Karnataka (42–50 million bags), noted Velagapudi Sambasiva Rao, Chairman of the All India Chilli Exporters Association.

Despite reduced acreage, crop conditions in southern regions remain positive. However, adverse weather in northern states like Madhya Pradesh, Gujarat, and Maharashtra has negatively impacted yields.

Prices Reflect a Changing Market

Prices for popular chilli varieties have significantly dropped from last year. Karnataka's Byadgi chilli, known for its vibrant red color and high oil content, currently sells at USD 2,65 per kg, a steep decline from USD 7,24 per kg last year. Hybrids like 5531 are priced at USD 1,45 per kg, compared to last year’s USD 1,69 per kg. Andhra Pradesh’s Teja variety fetches between USD 1,45–1,81 per kg, down from USD 2,05–2,29 per kg in 2022.

Farmers Pivot to Crops with Higher Returns

The dip in chilli acreage aligns with last year’s record-high planting levels, which industry experts call an “abnormal year.” Farmers, particularly in Karnataka, are turning to maize, incentivized by the government’s minimum support price (MSP) and favorable demand. “Farmers are also leaning towards low-value crop protection products due to tight cash flows,” explained NK Rajavelu, CEO of Godrej Agrovet’s Crop Protection Business.

He added that delayed rains have pushed fresh transplanting in areas with sufficient water availability.

What’s Next for the Chilli Market?

The reduced acreage and robust carry-forward stocks indicate that chilli prices may stabilize or see slight upward movement if demand improves. Farmers should consider holding onto their stocks until market conditions become favorable, while buyers may benefit from lower prices in the near term.





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