India chilli acreage seen down on shift to cotton

MUMBAI, Sept 18 (Reuters) - India’s chilli cultivation has been gaining pace but acreage under the spice in 2008/09 may fall by up to 10 percent as some farmers have diverted area under the spice to more lucrative cotton, traders and analysts said.

Farmers in the southern state of Andhra Pradesh, the country’s biggest producer, are busy with cultivation as a recent spell of rain increased moisture level in the soil, said Alapati Srinivasa Rao, a trader based in Guntur, Andhra Pradesh.

Farmers in Andhra Pradesh usually begin cultivation from August while farmers in Madhya Pradesh, Maharashtra and Karnataka, other major producing states, start from mid-June.

“In Maharashtra, acreage has gone down sharply due to lower rains in June-July, but in Madhya Pradesh area is almost steady,” Rao said.

Arrivals from the Madhya Pradesh crop start from October while Andhra Pradesh crop hits the market in mid-January.

“Cotton prices are quite attractive. The government has also increased the minimum support price (MSP) which lured farmers. In Andhra Pradesh acreage may drop by up to 15 percent,” said A.P.J. Arun, an exporter based in Guntur.

The government raised the MSP of medium-staple cotton, which includes the popular Shankar variety, by 39-43 percent to 2,500 rupees per 100 kg. The MSP last year was 1,750-1,800 rupees.

“Chlli is much more labour-intensive than cotton and farmers are struggling to find labour during cultivation and harvesting period,” Arun said.

In 2007/08 India may have produced 1.2 million tonnes of the spice, according to traders’ estimates.

“In Karnataka acreage has increased slightly, but overall in the country, total acreage would be on lower side this year,” said an analyst at Religare Commodities Ltd.

Chilli exports in the first four months of fiscal 2008/09 rose 6.6 percent to 80,500 tonnes, Spices Board data showed.

“In Andhra Pradesh cultivation is complete on about 70 percent area and farmers may finish by this month-end,” Rao said.

India is the biggest producer, consumer and exporter of the red spice.

The country competes with China and Pakistan in the global market while Sri Lanka, Bangladesh, Malaysia and Thailand are the main buyers.

Editing by Sunil Nair