CHILLI EXPORT TO SRI LANKA

VINOD PRAJAPAT (63)

DATE:12/10/2009

Introduction

Chilli belongs to the genus capsicum which is native of tropical America. It was introduced into India by the Portuguese during the 16th century.chilli is also known as capsicum, Red Chilli and paprika depending upon the species, variety and the manner in which it is used.

Out of the 109 spices listed by the ISO, India produces as many as 75 in its various agro climatic regions.

India accounts for about 45% (2, 50,000 tons-2002-03) of the global spice exports, though exports constitute only some 8% of the estimated annual production of spices at 3.2 million tons (2002). Over all, spices are grown in some 2.9 million hectares in the country. Spice production in India, as much of the agriculture in the country, is undertaken in millions of tiny holdings and determine the livelihood of large number of the rural.

Crop Cycle

Cultivation Pattern: Chillies are herbaceous annuals grown in tropical and sub tropical climates.chillies are grown throughout the year in India.

The crop is sown from July onwards and the sowing season extends till September.

Chillies need well drained soils and are mostly cultivated as a transplanted crop.

Crop duration is 150 to 180 days depending on the variety season , climate, fertility and water management.

Crop can be grown in the regions with rainfall between600-1250mm.

Arrival start from January and extend till May. The peak arrival period is from February till April.

Indian Scenario

Chillies are cultivated mainly in the states of Andhra Pradesh,Orissa,Maharashtra,West Bengal,Karnataka,rajasthan and Tamilnadu.Andhra Pradesh is the foremost accounting for 50% of the production in the country.

India’s chilli production stood at arround 12lakh tonnes while the global out put was 27.7lakh tonnes.

Global Scenario

Chilli is the second largest traded spice in the world with a 22% contribution in the world spice trade.

India contributes 25%of the Global chilli exports.

Others major producers and exporters are China,Spain, Mexico,Pakistan,Morocco and Turkey.

Major importers of indian chillies are Srilanka, Bangladesh,U.K.,Germany,France and U.S.A.

Major Trading Centers in IndiaStates Trading Centers

Andhra Pradesh

Guntur,warangal,Hyderabad,Gudda-pah,Vijaywada,Rajamundri,Nellore.

Maharashtra Nasik,Ahemed Nagar,Sholapur, Aurangabad,Nanded,Amaravathi, Lasalgaon

Karnataka Gharwad,Mysore,Hassan,Banglore, Bellary,Ranibennur,Hubli,Byadgi.

Tamil Nadu Pollachi,Ramanad,Madurai,Trichi, Thani,Dindigul,Virudunagar,Sttur.

State Wise Contribution Of Chilli

State Wise contribution of Chilli

27%

19%5%12%

9%

2%

8%

18%AP

Karnataka

MP

Maharashtra

Orissa

UP

TN

Others

Acreage and Production

Acreage and Production

Year Area Production

2001-02 8.80 10.69

2002-03 8.28 8.96

2003-04 7.74 12.35

2004-05 7.37 11.85

2005-06 6.54 10.14

Acreage and Production of Chilli

0

2

4

6

8

10

12

2001-02 2002-03 2003-04 2004-05 E 2005-06 E

Area

Production

Stagnant or Declining Acreage and Production

Note : From 2001-02 to 2005-2006 Area in ‘Lakh Hectares; Production          in ‘Lakh Tonnes. Source : Spices Board, Ministry of Commerce & Industry & Ministry of Agriculture,             Govt. of India.

Chilli Major Producers World Wide

SRI LANKA

PESTLE ANALYSIS

Political : Prime Minister: Ratnasiri

Wickramanayake  GDP :- : $40.7 billion. GDP per capita :- $1400 Government :- : Republic. Population:- 20.2 million. Capital:-Colombo (pop. est. 1.3 million

urban area).

Economic 

Annual growth rate: 6%.  Natural resources: Limestone, graphite, mineral

sands, gems, and phosphate. Agriculture (12% of GDP): Major products--rice, tea,

rubber, coconut, and spices. Services (60% of GDP): Major types--tourism,

wholesale and retail trade, transport, telecom, financial services. 

Industry (28% of GDP): Major types--garments and leather goods, rubber products, food processing, chemicals, refined petroleum, gems and jewelry, non-metallic mineral-based products, and construction

Social

The Democratic Socialist Republic of Sri Lanka (formerly known as Ceylon) is an island in the Indian Ocean about 28 kilometers (18 mi.) off the southeastern coast of India with a population of about 20 million. Density is highest in the southwest where Colombo, the country's main port and industrial center, is located. The net population growth is about 1.1%. Sri Lanka is ethnically, linguistically, and religiously diverse.

Sinhalese make up 74% of the population and are concentrated in the densely populated southwest. Sri Lankan Tamils, citizens whose South Indian ancestors have lived on the island for centuries, total about 12%, live throughout the country, and predominate in the Northern Province.

ExportsShare of Chilli in Indian spices export is around 20-40% in volumes

India export its chilli mainly to Srilanka, Bangladesh, Korea, Malaysia,Singapore, Japan, UK, Germany, France and USA

Nepal3%

Others28%

Usa26%

Sri Lanka24%

Bangladesh13%

Malaysia6%

Share of major items in Indian spices export(Qty)

Chilli42%

Pepper4%

Cumin4%

oils & oleoresin3%

Mint product2%Turmeric

13%

Curry powder2%

Coriander10%

Other seeds11%

Other Spices6%

Ginger3%

Export Scenario

Chilli- Major Consumers Worldwide

Country wise Percentage share of exports

• India (26%)

• China (26%)

• Spain (18%)

• Mexico (9%)

• Pakistan (8%)

• Morocco (8%)

• Turkey (5%)

India26%

China26%Pakistan

8%

Morocco 8%

Turkey5%

Spain 18%

Mexico9%

Rising Difference Between Production & Consumption of Chillis

Producers Price Movement of Leading Exporting Nations of Dry Chilli Pepper

Chilli- World Exports Share

Chilli World Imports Share

Statewise Production – Share trend of CHillis in India

Gantur Monthly (average) price movemant of Chillis in six year period 2002 -03 to 2007-08 (Up to Jan 2008)

Gantur: Price trend of chillies form April 2002 to January 2008

Area and production of major spices in India, 2000-2006

Statewise area and production of chilli in Inida, 2000-2006

EXPORTS OF SPICES FROM INDIA

India can now boast as the monopoly supplier of spice oils and oleoresins the world over. In the case of curry powders, spice powders, spice mixtures and spices in consumer packs, India is in a formidable position. The consistent effort of the Board during the last one decade has improved the share of the value added products in the export basket to 60%

Distribution channels for spices and herbs:-

Brokers/Agents .

Traders/importers.

Grinders/processors.

End users.

CHALLENGES:-

Market access requirements. Legislative requirements.

Non-legislative requirements.

Packaging, marking and labelling.

EXPORT

Futures Contract Specifications Type of contract Futures Contract Specifications

Name of commodity Chilli

Ticker symbol CHLL334GTR

Trading system NCDEX Trading System

Basis Chilli (Paala) traded as LCA 334 ex warehouse Guntur inclusive of all taxes and Market Cess

Unit of trading 5 MT

Delivery unit 5 MT

Quotation/ Base value Rs. per Quintal

Tick size Re. 1

Quality specification

LCA 334

Colour - Bright Red

Length

  a)   Not less than 5 cms

  b)   Chillies less than 5 cms will be allowed to a maximum of 5% by weight

Moisture should not be more than 12.5*%

Foreign matter should not be more than 2%

Broken Chillies should not be more than 7%*

Loose seeds should not be more than 2%

Damaged and discolored pods - Basis 6%*

Acceptable up to 7% with 1:1 discount

Pods without stalks should not be more than 8%*

 

*Tolerance up to 0.5% of the above limits only in the outbound deliveries will be allowed

Also Deliverable Guntur Sannam with a premium of Rs. 150 per Quintal

Quantity variation +/- 2%

Delivery center Guntur (up to the radius of 50 Kms from the municipal limits)

Additional delivery centreWarangal (up to the radius of 50 Kms from the municipal limits) Location Premium/Discount as notified by the Exchange from time to

time.

Due date/Expiry date

20th day of the delivery month

 

If 20th happens to be a holiday, a Saturday or a Sunday then the due date shall be the immediately preceding trading day (other than a Saturday) of the Exchange

Delivery specification

Upon expiry of the contract all outstanding positions will result in delivery.

The penalty structure for failure to meet delivery obligations will be as per circular no. NCDEX/TRADING-091/2007/235 dated October 4, 2007.

Delivery Logic Compulsory Delivery

Opening of contractsTrading in any contract month will open on the 10th day of the month. If 10th happens to be a non-trading day, contracts would open

on the next trading day

Closing of contract On the expiry of the contract, all the outstanding position would have to be settled by physical delivery

No. of active contracts As per Annexure A

Daily price fluctuation limitDaily price limit will be 2%. If the price touches 2%, trading will continue with 2% limit for the 15 minutes period from the time 2% limit

was reached. Thereafter, price limit would be extended by another (+)/ (-) 2%. No trade would be permitted during the day beyond the price limit of (+)/(-)4% from the previous day's closing price

Position limits Member: Maximum of 4,500 MT for all contracts or 15% of market open position whichever is higher.

Client: Maximum of 1,500 MT for all contracts

 

The above limits will not apply to bona fide hedgers.

For bona fide hedgers, the Exchange will, on a case to case basis, decide the hedge limits. Please refer to Circular No. NCDEX/TRADING-100/2005/219 dated October 20,2005.

 

For near month contracts:

The following limits would be applicable from 28 days prior to expiry date of a contract

 

Member: Maximum of 1,500 MT

Client: Maximum of 500 MT

Special marginsSpecial margin of 5% of the value of the contract will be levied whenever the rise or fall in price exceeds 20% of the 90-day prior

settlement price. The margin will be payable by the buyer or the seller depending on whether price rises or falls respectively. The margins shall remain in force so long as the price stays beyond the 20% limit and will be withdrawn as soon as the price is within the 20% band.

Trading System

Minimum 2 & Maximum 12 Contracts. Presently running 3 alternet month

contracts. Total open intrest 6375 MT (All Months). Total demated sotck 900 MT Total margin 6.22% of contract value. Current price 5122 quintal. Tick size .10 paisa. In 1 rs movement 50rs +/- .

Thank you