Why Andhra Pradesh, Telangana farmers are suffering despite a good harvest

"For the first time in a decade, I will lose money despite a good harvest," rues K. Uppalaiah who grows red chillies with pretty names like Meenakshi and Vaishnavi on his 2.5 acre farm in Telangana's Warangal district. Current prices at the Enumamula market are Rs 3,000 a quintal. It was Rs 12,000 last year, Rs 15,000 in 2015.

Cultivating chilli is expensive. It takes Rs 1.5 lakh an acre including the Rs 50,000 to pick the chillies. For him, and many others like him in Telangana and Andhra Pradesh, it just isn't adding up despite a bumper harvest. Traders are refusing to buy the crop, there is no market intervention mechanism to rescue farmers and chilli prices are in free fall. There have been angry farmer protests, including instances where market yards have been torched.

Ironically, it was the state that had encouraged farmers to switch from cotton to chillies. In Andhra alone, the acreage under chilli went up from 350,000 to 470,000, raising production to 14 million bags (40 kg each).

Notably, India accounts for 38 per cent of the world's chilli production, and Telangana and AP grow half of that. The Chandrababu Naidu government has now set aside Rs 200 crore to offer farmers as compensation-Rs 1,500 per quintal for a maximum of 20 quintals per farmer. The incentive, however, is only if a farmer was forced to sell his crop for less than Rs 6,500 a quintal. Telangana is meanwhile looking towards Delhi for a bailout. It may be too late by then for farmers like Uppalaiah.