Writer: Kevin Robinson-Avila
RADIUM SPRINGS - Deming-based Border Foods–the world's largest green chile processor–buys 95 percent of its peppers from New Mexico growers.
But this summer, producers from Peru offered to sell the company canned green chile cheaper than freshly picked local peppers. Canning preserves the chile for shipment to New Mexico, extending the 24-hour shelf life of fresh peppers, said Border Foods agricultural manager Dave Layton.
"The Peruvians approached our sales group at a food show in Europe, and it really took us by surprise," Layton said. "This is the first time a South American company has offered to sell us fresh chile for processing."
If Border Foods ignores the offer, Layton fears the Peruvians will become direct competitors, processing the chile themselves for sale to Border Foods customers at lower cost.
"This situation is so new, we don't know what we'll do," Layton said. "We don't yet have a strategy to deal with it."
Like Border Foods, most New Mexico producers are feeling the sting of cheap chile imports. As production and processing spreads across the globe, domestic businesses are finding it hard to compete with operations in developing countries, said Rhonda Skaggs, an agricultural economist with New Mexico State University.
"Chile producers are facing fierce international competition," Skaggs said. "Competitors are constantly nipping at our heels because chile production is a low-tech industry. You don't need to be a rocket scientist to stick chile in a can."
Imports of fresh and semiprocessed chile have skyrocketed since 1995, said Skaggs, who is compiling data for a forthcoming publication.
Foreign imports of fresh and chilled green chile nearly doubled in the past decade, from 231,000 metric tons in 1995 to 446,000 last year, Skaggs said. Imports of dried, ground and crushed red chile nearly tripled in the same period, from 29,000 to 89,000 metric tons.
Although most imports still come from Mexico, Asian countries are aggressively expanding, Skaggs said. Dried and ground chile imported from India tripled between 1995 and 2004, and Chinese imports grew fivefold.
"India and China have always been huge chile growing and processing hubs, but until recently most of their production was consumed locally," Skaggs said. "Now they're exporting a lot to the U.S. market."
Many Latin American and African countries are also jumping in. Peru is now the top supplier of imported paprika.
"Five years ago, Peru didn't even produce paprika," said Lou J. Biad, owner of Resolex, Ltd. Co. in Radium Springs.
Resolex extracts oleoresin from paprika for natural food coloring.
"Peru and a few other countries now supply about 30 percent of all the paprika consumed in the United States annually," Biad said. "But 10 years ago, local producers supplied nearly everything."
Processed chile imports are also growing. India and Spain, for example, exported 321 metric tons of oleoresin to the U. S. last year–almost seven times more than in 1995. That, in turn, has forced three U.S. oleoresin factories to close down, Biad said.
"Four years ago there were five oleoresin extractors in the United States, but now there's only me and another guy in Michigan," Biad said. "Food and cosmetics producers can buy oleoresin much cheaper from places like India where workers earn $2 per day. It's dragging us down."
A huge spike in mashed hot red pepper imports is also burning local producers. Spicy mash–made from cayenne peppers–goes into Cajun-style hot sauces, said Dino Cervantes of Vado-based Cervantes Enterprises Inc.
"The hot red mash coming in from other countries is likely being sold to our customers," Cervantes said. "They're taking business away from us, and it's not because their product is better, it's because of low labor costs. They can make it and sell it cheaper than we can."
Meanwhile, chile production in New Mexico has dropped substantially, Skaggs said. Since 1992, local chile acreage plummeted from about 34,000 acres to just 15,000 today.
Consequently, processors like Biad must buy raw chile from foreign growers to keep up production.
"This year, we'll buy about 20 percent of our paprika from Peru and some other countries to cover production shortfalls in New Mexico," Biad said. "If these trends continue, it will make more sense to just move processing overseas to where the low-cost production is."
Despite competition, New Mexico's chile industry employs about 5,300 part- and full-time workers and contributes more than $400 million annually to the local economy, said Rich Phillips, senior project manager for NMSU's College of Agriculture and Home Economics.
"Low wages are an important advantage for developing countries," Phillips said. "But we can stay competitive by employing our science and engineering skills to mechanize chile production, lower labor costs and improve efficiency."
To do that, the New Mexico Chile Task Force–a coalition of scientists and industry representatives coordinated by NMSU–is working to improve mechanical chile harvesters and develop new chile cleaning machines, Phillips said. The task force encourages growers to modernize production by using drip irrigation to save water and increase yields.
But with chile imports steadily growing, it's a race against time, Biad said.
"The task force has helped a lot to mechanize the harvest and improve production," Biad said. "But we need to move much faster. If not, in five years foreign producers will control the whole market."
© 2013 New Mexico State University Board of Regents
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