INDIA: Continued chilli stockpiling as export orders sought

Overproduction has been blamed for the extensive stockpiling of chillies in India, which has meant a sweeping downtrend in the market. According to the president of the Guntur Chilli Merchants and Commission Agents' Association, Mr Rosaiah, production this year has reached 10-15% above normal and more than half the country's produce has been arriving at cold storage units from June.The commission merchants are also suffering from a slump in export orders, leaving them unable to pay back pledge loans from banks. Rosaiah explained: "There are no export orders from the Gulf, the US and other markets and both the farmers and commission merchants are stuck with the stocks. In the present situation, as the market rates have slumped, they will not be able to pay back the loans and therefore they are not keen on selling the chilli."At present, the rates for chillies per-quintal lie between Rs2,300 and Rs3,000, however there are no signs that the market might pick up. Rosaiah believes that the government should help farmers by cutting export taxes, currently at 4%, but so far "Our pleas to the State Government, the Spices Board and the Union Commerce Ministry have fallen on deaf ears."If the situation continues, it appears that about a fifth of the amount currently stockpiled, which has reached 50 lakh bags, could be carried over to the next chilli season, which begins during mid January.