Competition is tight, but chilies hold potential for dedicated growers

By Tom Burfield

Chili peppers might be a hot commodity for you—if you know what you’re doing.

U.S. chili pepper acreage totaled 26,500 acres in 2007 with a value of $120 million, according to the U.S. Department of Agriculture’s National Agricultural Statistics Service.

New Mexico is by far the leading producer of chili peppers with 12,000 acres. California was second with 5,800, followed by Texas with 4,700 and Arizona with 4,000.

Although New Mexico had more than twice the acreage of California, California’s crop had a value of nearly $62 million compared with $32.8 million for New Mexico. That’s because a greater percentage of California’s chilies than New Mexico’s are grown for the often lucrative fresh market rather than processing.

The good news for potential pepper producers is that U.S. consumption of peppers increased from an average of 12 pounds per person in 2001 to 14 pounds in 2006, according to the Chili Pepper Institute at New Mexico State University in Las Cruces.

The not-so-good news is that U.S. growers must compete with their foreign counterparts, whose production costs often are lower, according to the Las Cruces-based New Mexico Chile Task Force. And domestic buyers, trying to contain costs, often buy foreign chilies.

Pepper potential

The perceived potential for peppers varies depending on whom you ask. Danise Coon, program coordinator at the Las Cruces-based Chili Pepper Institute, is enthusiastic.

“The demand for chili peppers is growing exponentially across ethnicities,” she says.

If you have an interest in growing chili peppers, she encourages you to give them a try. But she warns that you’ll have to pay close attention to growing practices and marketing.

“You’ve got to know what you are doing,” she says.

However, Tim Hartz, vegetable Extension specialist for the University of California, Davis, says the industry “is in the process of a severe shakeout” and that “prospects for growing chilies as a lucrative opportunity are questionable.”

Processing accounts for the biggest share of the chili market, he says, “and that industry is contracting strongly.”

Industry experts agree that a key to a successful pepper program is having an outlet for your product—whether it’s fresh market or a processor—before you plant your first seed or transplant.

If you don’t, Hartz warns, “you might as well set fire to your money now.”

Processing dries up

Rio Farms in King City, Calif., used to pick up to 15 truckloads a day of green chilies and jalapeños for processing. But that deal dried up when processors no longer could afford the costs, says Bob Martin, general manager. But the fresh market is different.

Unlike bell peppers, which are grown by a handful of large producers, chili peppers are grown by a lot of small farmers, he says.

But is it a venture you should embark on?

“You have to look at your local market,” Martin says. “You can’t afford to ship them too far.”

Talk to local buyers and find out what their needs are, he suggests, and ask if they’re involved in a buy-local campaign.

If they are, he says, “You might have a small tiger by the tail.”

Analyze your competition before launching a pepper deal.

“It’s a product that is very competitive in the marketplace,” Martin says.

And be prepared to work hard. Chili peppers, including jalapeños, serranos, yellow wax chilies and habañeros, are harvested by hand—not with mechanical harvesters.

And only one-half to one-third of what you raise will be fresh-market quality. The rest will be crooked or have scars or other defects that fresh buyers frown upon.

“Don’t think you’re going to raise green chilies and get 30 tons to the acre,” Martin says.

Rio Farms sells its chilies to buyers on the Los Angeles Wholesale Produce Market who are “pretty particular about the quality coming in.”

Niche commodity

A significant market exists for chili peppers, but they’re still a niche item, and it doesn’t take much to flood that market, especially in August and September, when everyone is in, says Richard Smith, vegetable crop and weed science farm adviser for the University of California in Salinas.

Consider direct sales at a farmers market, he suggests, or see if you can partner with a handler who will cover your production costs.

Smith suggests using chilies to diversify an existing product line rather than growing them as a solo item.

If you’re going to limit yourself to peppers, add bell peppers to your line and seek out as many outlets as possible, he says.

Smith points out that pepper production dropped from 34,400 acres in 2005 to 30,800 in 2006 and now stands at 26,500.

Grower Javiar Diaz of family-owned Diaz Farms in Deming, N.M., suggests that growers offer both fresh and  processing chilies.

“You have to have a mix,” he says. He grows paprika and several New Mexico chilies, including big jim, sandia and extra hot.

He sells his fresh chilies at the farm’s roadside stand.

Chili peppers won’t prosper just anywhere, he says. Nighttime temperatures should be 20 to 30 degrees lower than daytime temperatures.

Five varieties rule

New Mexico red, New Mexico green, jalapeño, cayenne and paprika are the main varieties grown in New Mexico, says Coon of the Chili Pepper Institute.

Most of the peppers in New Mexico now are grown by large producers, she says, though smaller growers still produce product for roadside stands and smaller venues.

“They definitely take some specialized care,” she adds.

For example, fields must be laser leveled to eliminate the possibility of standing water that can quickly wipe out acres of chili peppers by spreading a soilborne fungus, such as Phytophthora.

Like bell peppers, chili peppers typically start out green and gradually turn red.

“You have to decide if you want fresh green, fresh red or dried red, because the way you harvest them is different,” she says.

Chili peppers take more than 120 days to mature.

Chemicals found in chili peppers can be used as dyes or as ingredients in pepper spray and arthritis cream, she says.

One of the main research focuses at the university is mechanical harvesting, Coon says.

Although processed product can be harvested by machines like a modified tomato harvester, fresh product still is hand-harvested.

“It gets extremely expensive for the grower,” she says.

Summer crop

In the United States, chili peppers typically are harvested during the summer and into the fall, says Martin of Rio Farms.

They can’t tolerate frost, and they require a lot of work to harvest, compared with crops like lettuce or celery.

“You don’t get far in an hour,” he says.

Growers must decide whether they want to plant a determinate variety, which is harvested all at once, or an indeterminate one that is picked several times.

And they’re expensive. Although seed for open-pollinated varieties used for processing can be bought for $60 to $100 per acre, some fresh-market hybrids can cost $800 to $1,000 per acre for transplants or $5,000 to direct seed.

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