By Scott Bury,
A distinct shortage of hurricanes in Florida in 2006 has led to a better crop of peppers, both sweet and hot. In addition, demand from the foodservice sector is growing. As consumers show increasing interest in colored and hot peppers, growers are finding more incentive for expanding their offerings.
After a couple of tumultuous years, this year’s Florida green bell pepper crop looks good, most growers say, with high percentages of No. 1’s and extra-large to jumbo sizes in the fields.
“The growing season has been the best we’ve seen in the last couple of years,” says Jim Monteith, sales manager for Pacific Collier Fresh Co., Immokalee, which grows and ships from 1,000 acres of bell peppers from south Florida and south Georgia.
The southern Florida growing region experienced some unseasonably cool weather during the week of Nov. 11, which slowed plant growth. But Monteith said quality remained good, and he expected volume to pick up by early December.
Monteith told The Packer in late November that Pacific Collier also had been pleased with the quality of its new organic bell pepper program. The company began shipping organic peppers Nov. 17.
“It’s moving along as scheduled,” he said, adding that retailer response has been favorable. “Everything we’re seeing out there indicates this is a field that will continue to grow.”
This year’s healthy crop can be attributed to more than just a lack of hurricanes. “There’s been very little rain so far this winter, and warm days and cool nights help the plants set foliage and set bloom, and there have been few windy days that blow bloom off,” says Jaime Weisinger, director of sales and purchasing for Custom Pak, the distributing arm of Immokalee-based Six L’s Packing Co. Inc.
While the weather is cooperating with pepper growers this year, the market isn’t as favorable as last year. As of December, growers were getting $8 to $10 per 1 1/9 bushel carton of green peppers. A year earlier, prices were over $20 a carton.
Even the holiday market fell short of growers’ expectations. In December 2005, extra-large and jumbo green peppers from Florida sold for $20 to $24 per 1 1/9 bushel carton, according to Pacific Collier. According to the U.S. Department of Agriculture, prices in early December 2006 were $8.35 to $10.85 for extra-large and jumbo green peppers.
“Thanksgiving this year was kind of dead for most growers,” Weisinger says. “In past years, Thanksgiving has spiked demand for green peppers, but that didn’t seem to happen this year. We’re hoping for a better Christmas boost.”
But there were some bright spots in the market.
Prices for color peppers—red, yellow and orange—remain high. J&J Produce Inc., Loxahatchee, this summer signed contracts with a greenhouse grower in the Dominican Republic for yellow, orange and red peppers. J&J began receiving shipments in December.
“We’re selling 4,000 to 5,000 boxes of colored peppers per week, and over 20,000 boxes of green peppers weekly,” say Brian Rayfield, J&J’s vice president of sales and marketing. “So colored peppers are a minimal proportion of our total output, but this deal is a huge shot in the arm for us.”
That’s because red, orange and yellow peppers sell at a premium price over green peppers. In late November, market prices for red peppers topped $20, even approaching $30 for a 1 1/9 bushel carton, and prices for yellow peppers were over $30, Rayfield says.
“Demand is growing for high-quality colored peppers,” he says. “Consumers want a better product, and they’re willing to pay more for it.”
The price premium allows producers such as J&J to invest in innovative packaging. J&J is just one grower who ships custom rainbow packs with red, yellow and orange peppers, and stoplight packs with red, a yellow and green peppers. “It’s a high-value package for us,” Rayfield says.
Despite the huge price premium, however, Rayfield of J&J says colored peppers so far are a small percentage of the company’s overall program, in part because of the many challenges and costs associated with production.
While it’s possible to grow colored peppers in the field in Florida—after all, they’re just ripe fruit—field peppers are subject to many stresses that make picking and shipping ripe product a challenge. Ripe red, yellow and orange Florida peppers don’t have a long enough shelf life to make the trek to markets in northern states or Canada.
Most colored peppers grown in Florida come from greenhouses, where conditions can be controlled. But greenhouse growing is a costly endeavor. The Packer reported in March 2005 that Pero Packing and Sales Inc., Delray Beach, spent $2 million to build its 8-acre greenhouse operation—producing a full line of green, red, yellow and orange peppers—plus annual growing costs of $200,000 per acre.
But even with high overhead costs and competition from Mexico, Canada and Holland, Rayfield says the high premiums for colored peppers are motivation for J&J to find ways to expand its volume in the future.
Promise in foodservice
Another market shift may be more significant and longer-lasting: the increasing demand for peppers from the foodservice sector.
“There’s been a big push from foodservice customers in the past couple of years,” Weisinger says. Now, the foodservice sector accounts for about 50 percent of Custom Pak’s green pepper production, and retail takes almost all the rest.
“The foodservice sector has spiked demand for green peppers—fast-food chain restaurants like Subway and Burger King are starting to seek contracts with green pepper growers,” Weisinger says. “They never used to do that, but they’re starting to add up the amount of green peppers they buy in a year and realize that they need to contract for that.”
Monteith confirms the trend among foodservice customers who are looking for contracts for green peppers—and other produce, too—directly from growers. “They want to guarantee a consistent supply at a set price,” he says.
A hot topic
Hot pepper production is just 5 percent to 10 percent of that of sweet green peppers, and most is in jalapenos. As a result, few growers in Florida grow their own hot peppers, opting instead to import them from Mexican or offshore producers.
But demand for hot peppers has increased during the past few years, growers say.
“We’re growing more specialty peppers, particularly in jalapenos, not so much in other varieties,” Monteith says.
Still, it’s a small portion of the company’s overall pepper production. “Where we might plant 50 acres in bell peppers, we’ll maybe plant 1 or 2 acres with jalapenos,” he says.
Cubanelles, long hots, yellow hots, habaneros and Hungarian wax peppers are among the specialty peppers shipped in larger numbers from Florida over recent years, shippers report. The Food Marketing Institute, Arlington, Va., has said the increasing size and affluence of Hispanic and other ethnic groups is driving an increased demand for specialty food products.
Weisinger noted the increasing retail presence of specialty peppers. “Wal-Mart’s done a lot to push hot peppers to the forefront of their produce section,” he says.
Because of coinciding shipping schedules, Mexico can present a challenge to the U.S. deal by depressing prices. Despite last season’s low prices, growers are hopeful this season will bring better prices.
New food-safety regulations and the Food Quality Protection Act of 1996 are important factors in protecting the nation’s food supply. Growers, retailers and consumers alike are particularly sensitive to this need in light of recent outbreaks of E. coli in crops.
However, the regulations do add to the cost and complexity of production for the producers, Rayfield of J&J notes. Growers now are coming under pressure to prove they follow the highest standards in labor and food-safety practices.
Weisinger says McDonald’s is just one foodservice operator that demands that all of its suppliers prove they pay workers fairly, employ no underage or otherwise ineligible workers, provide quality housing for workers and adhere to strict standards for pesticide use.
“The retail sector hasn’t gone that far—yet—but they’re keeping a real close eye on it now,” Weisinger says.
Even in the face of all these challenges, pepper producers remain optimistic. The weather’s been mostly favorable this year, and even though demand is soft and prices are lower as costs increase, Florida’s pepper producers still are hopeful for a profitable season.
“We’re looking for really good production through the season, and hopefully demand will keep up, as well,” Weisinger says. CVM