India’s Whole Dried Chili Exports Are ‘Spiced up’ by Robust Chinese Demand

Dried Whole Chili Pepper

Published Nov 29, 2021

The Indian dried chili exports have been booming over the past five years. The bright result of successful trade activity can be seen in recent figures. In 2020, the exports of dried chili peppers from India stood at 424,475 tons, which is 68% more compared to 2016. A spike in export shipments is supported by surging demand from China, whose traders have boosted imports of the spice by 118 times from 2016 through to 2020 - to 162,400 tons. This is because domestic production is concentrated primarily on low-heat chili peppers, and deliveries from central Asian countries have been constrained. 2021 has not become an exception, with Chinese dried chili pepper imports being 15% higher in January-September compared to last year’s levels.

India’s whole dried chili exports have continued to grow in 2021. According to the latest data from the Indian trade statistics, the country exported more than 338,500 tons of spice in the first nine months of 2021, showing a 2.75% year-on-year increase. In value terms, the exports grew by 8.6% compared to the same period last year and were $737 million worth. An increase in the export revenue was possible to achieve not only because of higher volumes but also because of a higher average price, which stood at $2,175 from January-September 2021, showing a 6% gain year on year.

Source: Indian Ministry of Commerce and Industry

The biggest gain in the physical volumes of exports was seen in February-April 2021 when the Indian chili production season was at its peak and importers were rushing to buy the freshly dried spice from the new crop to replenish their stocks. In March-April 2021, India’s shipments of the whole dried chili paprika to foreign markets totaled 127,500 tons, showing a 64% spike compared to the same period last year. The exports slowed down in June-September, reflecting the winding down of the production season.

Source: Tridge

The same as last year, the main driver of India’s dried chili exports was China, whose national demand for high-heat chili has been going up since 2016. This East Asian state produces and exports mostly low and medium-heat pepper, which is more color-intense. However, many households also use hotter varieties of chili, the offer of which is limited in China, but obtainable in ample amounts in India. One of the most popular varieties on the market is Teja and Guntur Sannam.

The most recent trade statistics confirm the Chinese passion for hot pepper from India. Between January-September 2021, China imported 143,639 tons of whole dried chili of Indian origin. This is 15% more than in the first nine months of 2020. This is also the third year in a row when China has been the leading buyer of this commodity from India.

Source: Indian Ministry of Commerce and Industry

China imported the biggest volumes of whole dried chilies from India in March-April 2021, because of strongly depleted stocks after the holiday season. The uncertainties connected with the global logistics disruptions; prolonged cargo shipment time caused by COVID-19 gave additional incentive for importers to buy greater volumes in advance to secure sufficient supplies in the domestic market.

The situation on India’s export and domestic markets in November 2021

Exports of whole dried chili pepper from India usually slows down in October-November due to low production in that period.

Most of the volumes currently being sold for exports are from the 2020/21 crop. At the end of November/December, Madhya Pradesh and Maharashtra harvest their crops. However, most of these volumes gathered in the mentioned states are sold domestically, because of the high moisture content of the chilies.

Source: Tridge

In the first three weeks of November 2021, domestic and export prices for Indian whole dried chili peppers were under pressure from high stocks on the national market as well as expectations of the bumper crop in the 2021/22 season, which is estimated to increase by 15-20% compared to 2020/21 amid the expansion of the planted acreage under the crop. According to the Spice Board of India, the chili harvest in the country in 2021/22 is estimated at 1.98 million tons.

However, considering the recent heavy rains in the main production areas as well as reports of detecting a virus on the crop may cause producers to somewhat trim the initial production estimates.