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Chile pepper acreage in steep decline

The U.S. chile industry offers a paradoxical situation: a decline in the sector that grows crops for processing, but a comparatively bright future for at least parts of the fresh market category.

The decline in U.S. chile production has taken place over the long term, but even in recent years, the drop has been startling: in 2017, 16,000 acres were harvested, as opposed to a mere 10,200 in 2019.

In New Mexico, production fell from 11,930,000 tons in 2009 to 6,310,000 tons in 2019. Viewing the situation from a wider time frame, the website for the New Mexico Chile Association (NMCA) reports, “34,500 acres of NM chile were harvested in 1992—only 8,700 acres were harvested in 2016.”

In North America, Mexico is the region’s top producer; in South America, it’s Peru; and in the United States, New Mexico is the leading producer, with 77 percent of the domestic crop. California accounts for 23 percent; chiles are also grown in other states, such as Texas and Florida, according to Longino Bustillos, New Mexico state statistician for the National Agricultural Statistics Service.

“A few years ago, California was the number one producer, but they have reduced their acreage,” says Stephanie Walker, vegetable specialist for New Mexico Cooperative Extension.

“Imports account for about 82 percent of chile consumed in the U.S.,” says the NMCA site. From 2017 to 2019, dollar value of chile imports increased from $1,048,754,000 to $1,361,456,000 (see table).

The year-to-year decline is “sad but true,” Walker comments. The reasons? “Foreign companies are taking advantage of their reduced regulation and cheap, plentiful labor,” the NMCA contends.

Most chile peppers are not grown for the fresh market: they are frozen or processed for any number of products such as sauces and salsas. The fresh market accounts for a mere 25 percent of domestic chiles grown, according to Bustillos.

What accounts for the shift toward chile imports? “Mexico has huge advantages,” Walker remarks, “primarily in labor.”

Randy Bailey, owner and president of Bailey Farms, which principally grows for the fresh market, agrees: “Labor availability, labor cost, and labor regulations” are the industry’s greatest problem. “Legally speaking, farm labor is a minefield in which all growers have to tap-dance around to operate profitably. Much of it does not make common business sense.”

The situation with chile peppers resembles those for many fruits and vegetables in the United States: domestic growers are at a disadvantage with labor costs.

In the fresh market sector, the picture is brighter. Although “nationally fresh market production has gone down,” Bustillos says, “in New Mexico fresh chile production was increasing until last year, when the crop was affected by the weather.”

“I believe that the category will continue to grow as long as flavor and health benefits that these peppers offer are important to the consumers,” says Bailey. Furthermore, “spicy food has become more popular across most demographics. We expect continued growth.”

For her part, Walker is optimistic about the future of growers in the Rio Grande Valley who sell their crops on the direct market, noting that they have well established customer bases.

Chris Franzoy, president of Young Guns, Inc., and Hatch Chile Factory, LLC, grows in New Mexico’s Hatch Valley, whose chiles are in high demand.

“Business has been great for the past 10 years, and demand for our peppers is expected to continue,” Franzoy says. “Consumers all across the country look forward to when new crop Hatch Valley pepper harvest commences. It’s a special time of year, where families buy a box of peppers to take home and roast in the backyard. It’s a tradition that started over 50 years ago.”

For some fresh market growers, then, a constant increase in demand—fueled both by increased consumer awareness and the burgeoning Hispanic population in the United States—points to bright prospects.

Richard Smoley, editor for Blue Book Services, Inc., has more than 40 years of experience in magazine writing and editing, and is the former managing editor of California Farmer magazine. A graduate of Harvard and Oxford universities, he has published 11 books.