China is the world's largest producer and consumer of chili peppers. In 2020, the planting area of chili pepper in China was about 814,000 hectares, and the yield reached 19.6 million tons. China's fresh pepper production accounts for nearly 50% of the world's total production, ranking first.
Another major chili pepper producer besides China is India, which produces the largest volume of dried chili peppers, accounting for about 40% of global production. The rapid expansion of the hot pot industry in recent years in China has led to the vigorous development of hot pot based production, and the demand for dried peppers is also increasing. China's dried pepper market mainly relies on imports to meet its high demand, according to incomplete statistics in 2020. The import of dried pepper was about 155,000 tons, of which more than 90% came from India, and it increased dozens of times compared with 2017.
India's new crops have been affected by heavy rains this year, with a 30% reduced output, and the supply available for foreign customers decreased. In addition, the domestic demand for chili peppers in India is larger. As most farmers believe that there is a gap in the market, they would rather keep the products and wait. This results in soaring prices of chili peppers in India, which further increases the price of chili peppers in China.
In addition to the impact of the production decline in India, China's domestic chili pepper harvest is not very optimistic. In 2021, the chili pepper-producing areas of northern China were affected by disasters. Taking Henan as an example, as of February 28, 2022, the shipment price of Sanying chili pepper in Zhecheng County, Henan Province, reached 22 yuan/kg, an increase of 2.4 yuan or nearly 28% compared with the price on August 1, 2021.
Recently, Hainan chili peppers are getting on the market. The field purchase price of Hainan chili peppers, especially pointed peppers, has been soaring since March, and the supply has exceeded demand. Although chili peppers are valuable, the harvest has not been very good due to the cold snap this year. The yield is low, and many pepper trees are unable to flower and bear fruit.
According to industry analysts, the seasonality of Indian chili pepper production is obvious due to the impact of rainfall. The purchase volume of chili peppers and the market price are closely related. It is the season to harvest pepper from May to September. The market volume is relatively large during this time, and the price is lower. However, there is the lowest volume on the market from October to November, and the market price is just the opposite. It is thought that there is a chance that the price of chili pepper will reach a tipping point, as soon as May.
Source: Chinese vegetables