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Hot proposition: Not every farmer can grow this

Chilli prices are good this time, but the crop is still a risky gamble.

P Sivarama Krishna Reddy, owner of a chilli cold store in Guntur. (Express photo by Harish Damodaran)

Vuyyuru Venkateswara Reddy produced about 84 quintals of ‘Tejaswini’, a small-sized highly-pungent hybrid chilli, on three acres last year. He harvested 35 quintals of this in mid-December and sold it for about Rs 8,000 per quintal at the Guntur Mirchi Yard market in early-January. As prices fell to Rs 7,000-7,500 towards February-March and to Rs 6,500 levels in April, this farmer from Ramachandrapuram village in A. Konduru mandal of Andhra Pradesh’s Krishna district decided to wait it out. After leaving nine quintals un-harvested in the field, he kept the balance 40 quintals — from his second and third pickings in early-February and end-March — at a cold store in Guntur. The gamble paid off: At the start of August, red dry chilli rates had recovered and he could realise Rs 11,800 per quintal.

Reddy, however, is a relatively better-off farmer who owns 14 acres, which includes four under mango. On the remaining 10, he has planted chilli this time on four (two each of Tejaswini and Yashaswini, another very high-pungency ‘Teja’ variety bred by the Maharashtra Hybrid Seeds Company), cotton on three and paddy on three acres. In contrast, M. Raja Rao Goud has no land of his own. Last year, he grew a medium-quality Teja chilli hybrid on one acre taken on lease for Rs 25,000 in the same village. He harvested 30 quintals, with his first picking of 10 quintals fetching Rs 7,000/quintal, the second of 15 quintals Rs 6,000 and the last of five quintals Rs 5,000.

“My total revenue did not even cover production costs. There was no way I could have cultivated this year (nursery sowing is mainly in early-July and transplanting in August),” says Goud, who cannot afford to play the waiting game either. But even Reddy has reasons to be unhappy: Currently, deluxe-quality Teja chilli in Guntur is quoting at Rs 15,500-16,000 per quintal, way above the Rs 9,000-10,000 at this time last year and almost Rs 12,000 less than two months ago.

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Chilli being auctioned. (Express photo by Harish Damodaran)

“Prices have shot up, as the crop is lower this time and there seems to be sudden demand from China, too. Teja rates had even touched Rs 16,600 per quintal 10 days ago,” notes Shekhar Pallela, a commission agent at the Guntur Mirchi Yard. In 2017, this market had recorded arrivals of 1.36 crore bags with average 45-kg weight. In 2018, it fell marginally to 1.27 crore bags. This year, cumulative arrivals till September have been only 91.76 lakh bags and are unlikely to cross 1.1 crore. Unlike the last two years, not many traders or farmers are holding much stock to sell, before the new crop’s arrival from January.

The 1.2 crore bags that the Guntur yard handles on an average annually is equal to some 5.4 lakh tonnes (lt). That is nearly a quarter of India’s chilli production of 23 lt, of which over 4 lt, valued at Rs 4,500 crore, is exported to countries such as China (including through Vietnam), Thailand, Malaysia, Indonesia, Sri Lanka, US and UAE.

Festive offer

“This yard has 550 commission agents and 250 registered exporter-buyers, ensuring enough liquidity. As a result, farmers from not only Guntur, but even districts such as Prakasam, Krishna and Kurnool in AP, Khammam, Warangal and Nalgonda in Telangana, and Hubli in Karnataka bring their crop here,” explains Pallela, who does a business of 2,000 bags daily in the peak marketing season from January to May and also owns a one lakh-bags capacity cold store. Guntur has a total of 65 cold stores with an estimated 80 lakh bags capacity.

But for the farmer, chilli is a high-cost, high price-risk crop. It takes about 15 labourers to harvest one quintal of the small Tejaswini fruits. At Rs 250 per labourer for 30 quintals, picking cost alone comes to Rs 1.1 lakh-plus per acre. The picked fruits have to further be sun-dried, graded (to separate the spotted red chillis from the fine ones) and bagging. These operations will cost another Rs 800 per quintal or Rs 24,000/acre. Besides, the farmer will spend up to Rs 25,000 for pesticides and fertilisers, Rs 4,000 on seed, and Rs 30,000 on land preparation and irrigation. Add to these, cold store charges (Rs 185 per 45-kg bag or Rs 12,300 for 30 quintals), transport cost and interest on loans extended by the commission agent (for purchase of inputs and meeting other expenses), the total investment will work out to Rs 2.25 lakh per acre. It would be even more if the crop is grown on leased land.

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“The farmer can make decent money only at a rate above Rs 10,000 per quintal. If he harvests 30 quintals and keep costs within Rs 2-2.1 lakh, the net profit can, then, be Rs one lakh or so per acre,” points out Potlapalli Sivaramakrishna Reddy, owner of a 1.5 lakh bags cold store at Kothareddy Palem in Guntur’s Chebrolu mandal. He expects Teja prices to rule at Rs 10,000-12,000/quintal in the coming marketing season, with other chili varieties like LCA-334 and Indam-5 (which have lower production cost) fetching Rs 9,000-12,000.

For the farmer, though, few crops are a gamble like chilli.

First uploaded on: 03-10-2019 at 04:20 IST
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