Agony of the chilli farmer

Even after the Central government announced a price of Rs 5000 per quintal to alleviate the suffering of chilli growers, the agonised farmer is still agitated over the unprecedented crash in prices.

The concern is how long the procurement will take place and what would be the quality prescriptions that often turn into an impediment for farmers to access State procurement.

Chilli is one of the most important commercial crops of India. Though the official agencies claim the price in Khammam or Guntur markets to be in the range of Rs 4000 to Rs 5000, the fact is that most of the farmers are not even getting Rs 2000 per quintal while the production cost itself is around Rs 7000.

Thus is the demand from the farmers to procure atleast at the rate Rs 10,000 per quintal so that they can yield a minimum return on their hard work.

Surprisingly, markets in Mumbai and elsewhere are offering much higher prices for chillies as compared to Telangana and Andhra Pradesh. But, both these states account for over half of the total chilli production in India.

India is the world's largest producer, consumer and exporter of chilies in the world. India also has the largest area under cultivation of chilies in the world. The major arrival season for chillies to the market extends from February to April.

But, the governments announcing their intention to intervene in the market now, though appreciable, will not help most of the farmers but may turn into a support price for traders.

The price support scheme may not be of much use to growers as estimated 70% of them have already sold their produce

Early intervention would have benefitted the farmers most. India exports chillies in the form of dried chillies, chilli powder, picked chillies and chilli oleoresin. Indian chilli is mainly exported to USA, Sri Lanka, Bangladesh, the Middle East and the Far East.

The prices of chillies display high volatility, with the prices heavily dependent on season, production in different producing tracts spread across the country, demand from exporters and the stock available at the cold storages.

Such diverse factors influencing the prices of chillies turn into a bonanza for big agri cartels to exploit their monopoly over the market to the detriment of farmers.

High output and low prices are likely to trigger higher exports and the trading companies are expected to make massive margins. Big spices traders and companies that consume chillies are reportedly making heavy purchases encashing on the steep fall in prices in the peak season.

The governments should have intervened in time to regulate the markets and exports so that farmers benefit from the export boom.

The higher prices for chillies last year prompted farmers to grow chillies more resulting in surplus. But, creation of more cold storage facility would have mopped up the surplus, preventing fall in prices.

A comprehensive policy approach is required to stem the volatility in agricultural prices especially in case of commercial crops as the amplitude of price fluctuation in such crops is relatively higher. Fire fighting exercises would not suffice though they may offer some relief.