Chinese farmers hoarding chilli peppers to hike prices

A 27-year-old from Shandong province, Gao Ge had chosen not to sell his freshly picked chilli pepper…

A 27-year-old from Shandong province, Gao Ge had chosen not to sell his freshly picked chilli pepper crop after prices soared by almost a third in just two weeks in November, hoping for even higher prices.

Speculators were scooping up tonnes of the spicy fruit, betting on tight supplies as hot temperatures and heavy rain damaged the nation's crop, cutting it by 10 percent.

Last year, the same investors played a similar game in garlic, sending prices to stratospheric levels.

But now, prices have slipped as fears about low supplies have ebbed, Gao hasn't sold a single pepper, and the two-tonne crop sitting at his small farm is losing its color - and its value.

"I'm a bit panicked," he said by phone just days before festivities started on Jan. 28.

"We have been toiling for the whole year and now we want to sell our stock and celebrate the new year."

The jump in prices has also captured attention in India, the world's top producer, where traders say orders from China are up.

"If China's production drops, it will help us in raising exports," said Alapati Srinivasa Rao, a trader based at Guntur, India's biggest market for chillis. "India is the only country that can supply large amount of chillis to China."