Economic Analysis of Chilli Processing and Value Addition Across Domestic and Export Value Chains in Andhra Pradesh

Abstract

The experiment was conducted during the months of August to March, 2023–24 to examine the cost structure and value addition across different chilli processing units, small, medium, and large-and maps value chains in both domestic and export markets. Primary data were collected from 135 chilli farmers and 10 processing firms across NTR, Prakasam, and Kurnool districts between August, 2023 and March 2024. The study estimated processing recovery, cost per kilogram, and the distribution of value addition costs among key stakeholders such as farmers, traders, commission agents, wholesalers, retailers, and exporters.Results revealed that small units had the highest chilli powder recovery (92.5%) and the lowest processing cost (`Rs. 16.61 kg<sup>-1</sup>), while large units, despite higher processing volumes, incurred the highest costs (`Rs. 29.45 kg^-1), mainly due to labor and energy expenses. Value addition was most prominent at the farmer level in domestic dry chilli chains, while processing firms dominated in chilli powder chains for export markets, contributing up to 69.54% of total value addition.The findings highlight the critical role of processing efficiency and stakeholder coordination in enhancing profitability and competitiveness of the chilli sector. The study underscores the need for targeted interventions to improve value chain integration, promote Good Agricultural Practices (GAP), and upgrade processing technologies, especially for small and medium enterprises.