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New social-distancing measures to hurt chilli demand in India

July 10, 2020

1 mins read

Authorities in India are re-imposing or extending lockdown measures in some areas although the government has recently issued new guidelines for the next stage of unlocking. The number of people tested positive for coronavirus has more than doubled over the past month and some local authorities have started undertaking precautionary measures, tightening regulations and imposing full or partial lockdowns.

The Assam government has recently introduced a new lockdown in Kamrup Metropolitan district, with the West Bengal and Jharkhand governments extending their lockdown regulations until 31st July.  Several districts of Tamil Nadu have also locked down while other places across the country are introducing voluntary closures due to the pandemic.

The lockdown measures have had a big impact on the spice market, through market closures, limited export demand and subdued demand from the domestic hospitality sector.

In the chilli market, where majority of the spice is consumed domestically, prices have fallen substantially since the beginning of the year. The price of Byadgi chilli variety at the Guntur market has declined by almost 30% since mid-January, to USD 1.90 per kg. With farmers being unable to sell their crop at local markets, cold storage inventories have grown rapidly in size over the past three months. The demand from the domestic market is set to remain weak if social-distancing measures are re-imposed, hindering demand from restaurants and street-food vendors, weighing on prices further.

Prior to the coronavirus-induced lockdown, the chilli season in India was developing well with a view for a very good crop (quality and volume). However, since the country imposed lockdown restrictions, the supply-demand balance shifted. ‘If domestic consumption and export demand come down further, ending stocks will increase’ according to Biplab Sarma of Agriwatch. Agriwatch estimates this year’s Indian chilli production at 1.23 million tonnes, marginally higher than last year.

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Jara Zicha
Jara Zicha

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