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Market Survey

By: DR M. THAMARAIKANNAN
dr g. palaniappan

C. SENGOTTUVEL

TIME TO STEP UP CHILLI EXPORTS


Though Indian chilli exports show satisfactory trends, India is facing tough competition in
the international market, as price of Indian chilli powder is considered too high and other
countries provide chilli at competitive rates to the major importing countries.
though it is produced throughout
the world. A large demand for chilli
comes from several chilli-consuming countries such as India, China,
Mexico, Thailand, US, UK, Germany
and Sweden. Indian share in global
production is 50 to 60 per cent. However, India is the only source for hot
chillies.

Origin and history

hilli is considered as
one of the commercial
spice crops. Named as
wonder spice, it is the
most widely used universal spice. Different varieties of
chilli are cultivated for varied uses
like vegetables, pickles, spices and
condiments. In daily life chillies are
integral and the most important ingredient in many different cuisines
around the world as these add pungency, taste, flavour and colour to

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FACTS FOR YOU

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the dishes.
India is the world leader in chilli
production followed by China and
Pakistan. Indian chilli is considered
to be world-famous for two important commercial qualitiescolour
and pungency levels. Some varieties
are famous for the red colour because of the pigment. Other quality
parameters of chilli include length,
width and skin-thickness.
The bulk share of chilli production is held by Asian countries,

Chilli is believed to be originated


in Mexico in 7000 BC. Chillies were
grown and cultivated from 3500 BC.
It is said to be the first-ever domesticated crop in America. At that time,
chillies were cultivated by the farmers together with a primary crop to
protect the latter from any damage
caused by birds.
Chillies gained popularity in the
American continent for flavouring
and have been largely cultivated
since then. Christopher Columbus,
the founder of America, was one of
the first Europeans who encountered and consumed chilli and called
it pepper due to its taste resemblance. Crushing the dried pods gave
chilli powder, which was later identified as a substitute of peppercorn.
Chilli crop came to the Asian
continent during the sixteenth century with the identification of new
sea routes by the Portuguese and
the Spanish explorers. In 1498, chilli

Market Survey
was brought to India by the Portuguese explorer Vasco-da-Gama. Soon
chilli became an important ingredient in Indian cuisine. It became popular in entire Asia rapidly, and native Asians started cultivating this
crop as well.

Chilli cultivation in India


A large percentage of chilli production has shifted to Asia, as the
South-Asian climate suits this vegetable crop. Today, the most sharp
and valued varieties of chilli are
grown in Asia only.
Chilli is cultivated in tropical
and sub-tropical climates, mostly as
a rain-fed crop in India. The most
ideal climatic conditions are rainfall
requirement of about 850-1200 millimetre per annum and temperature
range of about 20-25C. Moreover,
light, loamy and fertile soil with organic matter is preferred for satisfactory growth of the crop. Also, the
crop needs well-drained soil with adequate moisture for growth.
Chilli is a seasonal and annuallygrown cash crop. Its sowing starts after commencement of the southwest
monsoon, i.e., from the first week of
August and extending until October.
Total crop duration is around four to
five months, depending upon varieties cultivated, climate and the soiltype. Harvesting is done through
picking. Ten to twelve pickings are
harvested within the season from
December onwards. Arrivals start in
February and continue till April after a proper drying under sunlight.

Potential health benefits


of chilli consumption
Chilli is an important cash crop
of India and is grown for its fruits,
which are used both green and ripe
(the latter in the dried form) to impart pungency to the food. Green
chillies are rich in vitamins A and
C, minerals and proteins. Dry chil-

Table I

Major Chilli Producing Countries


During 2008-09
Countries

Production Production
(MT)
(Int $1000)

India
China
Peru
Thailand
Pakistan
Bangladesh
Ethiopia
Ghana
Vietnam
Myanmar
Mexico
Nigeria
Egypt
Democratic Republic of
the Congo
Romania
Bosnia and Herzegovina
Cte dIvoire
Turkey
Nepal
Benin

1,269,850 3,771,670
252,000 748,482
165,000 490,078
161,505 479,697
130,000 386,122
117,765 349,782
115,000 341,569
81,000 240,583
78,500 233,158
71,000 210,882
60,000 178,210
50,000 148,508
45,600 135,439

pigment derived from


chilliis used for natural
colouration in jam and
jelly preparations. Extracts of chilli are used in
the preparation of ginger
beer and other beverages
as well.

Important
cultivable chilli
varieties

There are more than


400 varieties of chilli
available
worldwide.
These differ in pungency,
size, shape and colour.
Some of the main types of
chilli are aji, anaheim, bell
pepper, bolita, cascabel,
cayenne, habanero, pa34,000
100,985
prika, jamican hot, pasilla
33,000 98,015
and serrano. Places like
30,000
89,105
Andhra Pradesh, Tamil
20,000
59,403
Nadu, Gujarat and Kash20,000 59,403
mir became famous for
16,362 48,597
different varieties of chilli, viz, naga jolokia, by15,000 44,552
adgi, ellachipur sanman
Source: FAO STAT, US
chilli, guntur sanman
chilli, kanthari mirch,
kashmiri mirch, mundu chilli or
lies are also rich in vitamins A and
gundu molzuka and tomato chilli.
D. Chillies are excellent source of vitamins A, B, C and E with minerals
like molybdenum, manganese, foliWorld scenario
ate, potassium, thiamine and copper.
Chilli contains seven times more viThe world area and production of
tamin C than orange.
chilli is around 1.5 million hectares
Ever since their introduction in
and 7 million tonnes, respectively.
India, chillies have been included in
Major chilli growing countries are
ayurvedic medicines and used as tonIndia, China, Pakistan, Indonesia,
ic to ward-off many diseases. Chilli is
Korea, Turkey and Sri Lanka in
good for slimming down as it burns
Asia; Nigeria, Ghana, Tunisia and
the calories easily. It stimulates the
Egypt in Africa; Mexico and the US
appetite, helps to clear the lungs and
in North and Central America; Yustimulates the digestive system. It is
goslavia, Spain, Romania, Bulgaria,
also used in beverages.
Italy and Hungary in Europe; and
Chilli belongs to the genus capArgentina, Peru and Brazil in South
sicum, under the solanaceae family.
America.
The extracted capsaicin is used in
The world trade in chilli acpain balms, cosmetics and pharmacounts for 16 per cent of the total
ceutical industry. Capsanthina
spice trade in the world, occupying
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Market Survey
creasing demand from
diversified sectors and
Area, Production and Yield of Chilli
changing consumption
in India During 1999-2000 to 2008-09 patterns.
Year
Area Production Productivity
The area, produc
(000 HA)
(000 MT)
(kg/HA)
tion and productivity
of chilli in India from
1990-91 816.20 719.00 880.91
1990-91 to 2008-09 are
1991-92 846.30 617.50 729.65
presented in Table II. It
1992-93 962.10 862.10 896.06
shows that the average
1993-94 930.00 800.10 860.32
chilli production during
1994-95 829.20 794.70 958.39
the above period was
1995-96 883.70 809.70 916.26
992.70 thousand met1996-97 944.20 1066.00 1129.00
ric tonnes from 841.54
1997-98 840.60 870.10 1035.09
thousand hectares of
area under chilli culti1998-99 891.20 1043.20 1170.56
vation with the produc1999-00 959.20 1052.80 1097.58
tivity of 1197.49 kilo2000-01 836.50 983.70 1175.97
gram per hectare. From
2001-02 880.00 1069.00 1214.77
2002-03 onwards, the
2002-03 828.60 896.90 1082.43
area of chilli cultivation
2003-04 774.30 1235.70 1595.89
decreased but produc2004-05 737.50 1185.50 1607.46
tivity increased because
2005-06 654.00 1014.60 1551.38
of enhancing farm ac2006-07 758.00 1234.10 1628.10
tivities of chilli cultiva2007-08 805.80 1297.90 1610.70
tion. In 2006-07 and
2007-08, chilli produc2008-09 (P)
811.90
1308.62
1611.80
tion and cultivable area
Average 841.54 992.70 1197.49
as well as the productivSource: Ministry of Agriculture, India
ity increased near the
average level. In 200809, chilli production was 1308.62
second position after black pepper.
thousand metric tonnes with 811.90
The major chilli importing countries
hectares under cultivation.
are UAE, European Union, Sri Lanka, Malaysia, Japan and Korea.
The major chilli producing counMajor chilli producing
tries during the year 2008-09 are
states in India
shown in Table I. India stood first
with a production of 1269.850 thouIndia is a major producer, exportsand metric tonnes, with China as
er and consumer of chilli. The major
the competitor followed by Peru,
states growing chilli in the country
Thailand and Pakistan.
are Andhra Pradesh, Gujarat, Karnataka, Madhya Pradesh, MahaChilli production in India rashtra, Orissa, Rajasthan, Tamil
Nadu, Uttar Pradesh and West Bengal. The productivity is high in the
Chilli is the universal spice of
states of Andhra Pradesh and Tamil
India. India accounts for 1.2 million
Nadu, where chilli is grown under
tonnes of production annually, and
irrigation than in Maharashtra and
is the largest producer in terms of
Karnataka, where the crop is raised
international trade, exporting 20 per
mainly under rain-fed situations.
cent of its total production. Since the
The major chilli growing dislast decade, chilli production in Intricts of the country are Dharwad in
dia is moving northwards due to inTable II

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September 2011

Karnataka, Nagpur in Maharashtra


and Prakasam, Khammam, Guntur
and Warangal in Andhra Pradesh.
Andhra Pradesh stands first both in
area and production. Guntur is the
largest chilli market in the world.
The state-wise area, production and productivity of chilli in
India from 2006-07 to 2008-09 are
presented in Table III. The table
shows that Andhra Pradesh, Karnataka, Punjab, Uttar Pradesh,
Tamil Nadu, West Bengal, Madhya
Pradesh and Orissa are the major
chilli producing states in the country and contribute more than 40
per cent of chilli production in India. The average chilli production in
Andhra Pradesh was 772.67 thousand metric tonnes from 221.67
thousand hectares of area under
cultivation with the productivity of
3.49 metric tonnes per hectares.

The importance of chilli


trade in India
Chilli is the largest spice item
exported from India in terms of volume and occupies second position
in terms of value. During 2008-09,
chilli accounted for 40 per cent in
volume and 20 per cent in value
terms, of the total exports of spices
from India. The mandatory qualitytesting of chilli and chilli products
has made Indian chilli more acceptable in the international market
and helped to achieve this higher
level of exports.
The market for chillies is affected by seasonal price fluctuations,
overall production in the country,
world demand, stocks available in
cold storages and hedging among the
various varieties of chilli. Chillies
are exported as chilli powder, dried
chillies, pickled chillies and chilli
oleoresins.
The major importers of Indian
chillies are Malaysia, Sri Lanka,
Indonesia, the US, Bangladesh,
Singapore, UK, Nepal and Mexico.

Table III

699.23 1190.51

Source: Ministry of Agriculture, government of India

Total

11.35 726.51 1226.65

11.48 741.50 1254.10

11.42 722.41 1223.75

11.42

Andra pradesh 214 766 3.58 223 772 3.46 228.00


780.00 3.42
221.67
772.67 3.49

(30.61) (64.34) (31.53) (30.69) (62.94) (30.15) (30.75) (62.20) (29.95) (30.68) (63.14) (30.54)
Karnataka 132.2 148 1.12 136 155 1.14 141.00
164.00 1.16
136.40
155.67 1.14

(18.91) (12.43)
(9.86) (18.72) (12.64) (9.93) (19.02) (13.08) (10.18) (18.88) (12.72) (9.99)
Maharastra 98 47 0.48 100 44 0.44
103.00
47.00 0.46
100.33
46.00 0.46

(14.02) (3.95)
(4.23) (13.76) (3.59) (3.83) (13.89) (3.75) (3.99) (13.89) (3.76) (4.02)
Punjab
2.6 4.2 1.62 2.6 4.2 1.62 2.90
4.40 1.52
2.70
4.27 1.58

(0.37) (0.35) (14.23) (0.36) (0.34) (14.07) (0.39) (0.35) (13.28) (0.37) (0.35) (13.86)
Uttar Pradesh 15.1 14.3 0.95 16 15 0.94 18.00
15.50 0.86
16.37
14.93 0.92

(2.16) (1.20) (8.34) (2.20) (1.22) (8.16) (2.43) (1.24) (7.54) (2.27) (1.22) (8.01)
Tamil Nadu 61.4 42.7 0.70 67.4
34.1 0.51 66.30
45.20 0.68
65.03
40.67 0.63

(8.78) (3.59) (6.13) (9.28) (2.78) (4.41) (8.94) (3.60) (5.97) (9.00) (3.32) (5.50)
West Bengal 52.2 63.6 1.22 62.4 93.7 1.50 58.50
90.80 1.55 57.70
82.70 1.42

(7.47) (5.34) (10.73) (8.59) (7.64) (13.08) (7.89) (7.24) (13.59) (7.99) (6.76) (12.47)
Madhya Pradesh
47.63
40.81 0.86
43.01
44.75 1.04 48.10
46.70 0.97
46.25
44.09 0.96

(6.81) (3.43) (7.55) (5.92) (3.65) (9.06) (6.49) (3.72) (8.50) (6.40) (3.60) (8.37)
Orissa
76.1 63.9 0.84 76.1 63.9 0.84 75.70
60.50 0.80 75.97
62.77 0.83

(10.88) (5.37) (7.40) (10.47) (5.21) (7.31) (10.21) (4.82) (7.00) (10.52) (5.13) (7.24)

States 2006-07 2007-08 2008-09 Average



Area Production Productivity Area Production Productivity Area Production Productivity Area Production Productivity

(Area in 000 hectares, production in 000 metric tonnes, productivity in MT/HA)

State-Wise Area, Production and Productivity of Chilli in India During 2006-07 to 2008-09

Market Survey

Export of spices and spice products


from India crossed 500,000 metric tonnes for the first time in the
history of spice trade in 2009-10.
Despite the economic slowdown in
major consuming markets, the export of spices has recorded an alltime-high both in volume and value
in 2009-10.
Table IV shows the chilli exports
from India from 2006-07 to 2008-09.
Chilli export from India mainly depended on Malaysia and Sri Lanka.
The average quantity of chilli exported was 161,246 thousand tonnes
with value of Rs 11689.2 million.
The US and UK are other significant
importers of Indian chilli.

Problems

Aflatoxin and pesticide residues


are the two major constraints in increasing our exports. Buyers expect
a high degree of hygiene and sanitation in processing and preparation
of chillies for export. The potential
for increasing exports of whole chillies, chilli powder and crushed chillies in consumer packs is very high,
provided we meet the stringent
quality requirements of importing
countries.
The consumers in importing
countries insist on clean spices and
to meet this challenge we have to
make every effort to prevent contamination from external sources during
harvesting, post-harvest handling,
processing and storage. This can be
achieved only through an integrated
approach with the collective efforts
of farmers, processors and traders.

Market structure

Guntur is Asias largest market


for chillies. The marketing season
begins in the first week of March,
peaks during the month of April and
closes by the middle of May. Around
35-40 per cent of the crop that arrives is stored in the cold storages

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Market Survey
Table IV

Export of Chillies From India


(Quantity in 000 tonnes, value Rs million)
Country
2006-07 2007-08 2008-09 Average

Quantity Value Quantity Value Quantity Value Quantity Value
Malaysia 43,625.40 2513.32 51,782.40 3052.07 40,615.40 2607.21 45,341.07 2724.20
Sri Lanka 21,822.40 1122.86 29,504.80 1350.11 37,791.70 1962.80 29,706.30 1478.59
USA 13,058.20 832.82 19,712.60 1295.69 15,793.10 1288.16 16,187.97 1138.89
Pakistan 254.60 5.50 11,349.80 453.20 22,375.80 1019.20 11,326.73 492.63
UAE 12,622.60 368.54 15,813.20 588.91 18,812.90 700.65 15,749.57 552.70
Thailand 626.90 38.71 2913.90 154.43 9189.90 543.46 4243.57 245.53
Indonesia
6488.50 315.11 9305.30 414.68 10,530.50 514.88 8774.77 414.89
UK
2279.40 152.22 2872.30 201.04 3045.10 264.66 2732.27 205.97
Others 24,340.80 4824.43 27,365.50 6574.59 29,845.60 1908.48 27,183.97 4435.83
Total 125,118.80 10,173.51 170,619.80 14,084.72 188,000.00 10809.50 161,246.20 11,689.24
Source: Spices Development Board, Cochin, India

counts for around 30-35 per cent of


present at Guntur and surrounding
the total production. This is also the
areas. Normally, about 8-10 milmain variety that is exported. If this
lion bags of chilli (each bags carries
single variety is offered for futures
about 35 to 50 kilogram) are traded
trading, it will be possible to offer a
during the season in Guntur market
relatively homogeneous product for
alone. The market players estimate
futures trading.
that trade worth nearly Rs 5000 million takes place in Guntur during
the season.
Ups and downs in
The commodity has well-esproduction and trade
tablished spot markets. Guntur,
Warangal, Khammam in Andhra
1. Prices in the Guntur spotPradesh; and Raichur and Bellary
market are taken as the benchmark
in Karnataka are the major spotto determine export and domestic
markets at the production centres. The
trade channel involves
several members, viz,
a village-level trader,
commission
agent,
wholesaler,
retailer,
agents for exporters
and exporters. The
commodity
changes
hands several times,
exposing
all
these
members to price risk.
There are several
grades and varieties of
chilli grown across India. However, SannamS4 grown primarily in
Andhra Pradesh ac- Dried red chillies
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September 2011

prices on a daily basis. These prices


are greatly influenced by arrivals
and on the extent of demand in the
market.
2. The commodity displays 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.
3. The prices of major chilly varieties sold in the country are correlated with each other. As a result,
the players in other varieties can hedge their
risks through a single
high-return variety.
4. The significant decline in production during 2007-08 was mainly
due to unfavourable
weather conditions in
major producing countries like India, China
and Pakistan.
5. The cardinal factors driving the increase
in production of chilli
are the use of high-yielding hybrids and increase
in average yield with
respect to favourable

Market Survey
weather conditions and changing
consumption pattern.
6. Due to unattractive prices,
most of the farmers shifted their
production to other cash crops like
cotton and sugarcane, thus resulting
in a decline in area and production
under chilli cultivation in subsequent years.
7. Crop damage due to floods in
major producing regions of south India, particularly in 2005-06, resulted
in a sharp decline in production to
around one million tonnes.
8. Sowing operation had been in
progress since fresh crop arrivals
and strong export demand due to
lower crop in other major producing
countries led to sharp gain in prices
during the last few years.
9. A significant increase in area
under chilli cultivation may not be

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seen as most farmers incurred huge


losses from the 2007-08 crop, and
have not yet recovered from these
losses.
10. For the near term, demand
from spice industries, retail segment
and emergence of export demand
may support prices to trade on the
higher side.

Measures needed
Though Indian exports are showing satisfactory trends, India is facing tough competition in the international export market, as the price
of Indian chilli powder is considered
too high and other competitive countries are providing chilli at competitive rates to the major importing
countries.
If the country is able to meet the

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strict quality demands of the international market, the exports can be


further improved. Necessary steps
have to be taken by the government
to encourage the exporters to maintain the Indian dominance in the
world market. The improved quality
and productivity of Indian chillies
will enable India to increase exports
of chillies and chilli products, effectively meeting the competition from
other producing and exporting countries.

Dr M. Thamaraikannan is associate professor in the department of commerce at


Sri Vasavi College, Dr G. Palaniappan
and C. Sengottuvel are assistant professors in the faculty of management studies at VMKV Engineering College, Salem
and in the department of commerce, CA at
Nandha Arts and Science College, Erode,
respectively

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