On 5 December, Cyclone Michaung made landfall near Bapatla, Andhra Pradesh, causing intense rainfall.

This may affect red chilli crop production across key districts of the state, resulting in high prices, according to analysts and economists.

“Cyclone Michaung’s aftermath poses challenges to India’s red chilli industry, impacting both crop yield and planting timelines. As Andhra Pradesh, a major chilli-producing region, faces damage, concerns about a delayed harvest and reduced output loom,” said Ajay Kedia, director of Kedia Commodity Comtrade Pvt. Ltd.

The cyclone is expected to shrink red chilli crop availability for the 2023-24 season by about 15-20%, analysts said.

Heavy rains brought by the cyclone have already damaged parts of key chilli-producing districts Guntur, Ongole, Krishna and Khammam.

The wider spice market may see fluctuations in supply, influencing prices and trade dynamics, Kedia added.

According to the government’s second advance estimate for 2022-23, red chilli output is projected to be over 2 million tonnes (mt) with top producer Andhra Pradesh bringing 767,000 tonnes to the table, followed by Telangana and Madhya Pradesh at 506,000 and 322,000 tonnes.

The development comes even as packaged food companies continue to grapple with rising red chilli prices since the beginning of the year.

As per trade sources, chilli prices have shot up three times in three years, including a 23% rise between 1 January and 1 December this year alone. On Friday, the Teja S17 variety of dried red chilli sold in the Guntur mandi for ₹21,000-24,000 per quintal as against last year’s ₹21,400 a quintal..

Kerala-based Eastern Spices has already hiked Kashmiri chilli prices by 40% since January. Badshah Masala, another major spice manufacturer, is also struggling with the impact of high chilli prices.

The cyclone could further exacerbate the situation, potentially leading to even higher prices.

“The prices of Kashmiri chilli (a variety the firm also sources from Andhra Pradesh) have been going up for some time because its acreage is going down. So, volumes suffer while demand is the same. We are not forward buying Kashmiri chilli—but prices are just going up,” Sanjay Sharma, CEO of Orkla India, said.

The production of chilli, cumin, pepper, and coriander has remained volatile for some time now leading to a surge in prices. “Spice inflation has been high for over a year as supplies have come down. This feeds into other parts of inflation such as instant food, restaurant dishes, etc. However, this is less noticeable as consumption at the household level is small and does not show in budgets, said Madan Sabnavis, chief economist at Bank of Baroda.