Chilies Market Report- December 2019

US Harvest

Harvest is 80% finished. It will continue for the rest of the year and may be extended into 2020. It has been a rough growing and harvest season – one of the most difficult in the last couple years.


Yields have been impacted due to early weather issues in the growing phase, rain in the initial part of harvest and the early set in of freeze. We now expect the total U.S. and Northern Mexico crop to be about 20% short with some regions being as high as 30%. The crop is now in the most critical harvest period and the weather for the rest of year is important to get the product to the factory gate.


In addition to the higher crop cost, inefficient processing due to weather is also affecting overall costs. The Northern Mexico region is reporting a very similar pattern on yield and the crop is estimated to be short by about 20 - 30%. Securing enough labor to harvest during the holiday season is another expected challenge.
Organic paprika and chili harvest in the U.S. is progressing well and getting close to completion. There has been an increase in acreage in 2019 to support the rising demand for U.S. grown organic paprika and chili peppers with complete traceability.


The U.S. remains the most reliable and traceable source of paprika and chilies around the world, due to minimum issues with pesticides and toxins, such as Aflatoxin and Ochratoxin. Growers in this region also do not use banned chemicals in the agriculture process.

Other Origins


The overall Chinese paprika crop has turned out to be very different from previous years, which has started to pose significant challenges to the industry. Chinese paprika farmers have transitioned away from traditional sweet paprika to a hotter hybrid variety, which accounts for 70% of their production this year – only about 30% of the total production will be traditional paprika.

The overall harvest was also delayed by 3 - 4 weeks. At this point, there is less than minimal product available in the Xinjiang drying yards.


Traditional sweet paprika yield and ASTA color have been lower than expected. In addition, the product has high moisture due to the late harvest and cloudy days preventing the drying of product. Drier and higher color product is sold out. Late buyers have the option to buy only from speculators or exporters.


Oleoresin processors have started to buy heavily in 2019 compared to the previous year. Oleoresin companies and their suppliers (powder processors) are buying the hybrid variety due to higher color and because the variety is better suited for extraction. The procurement price has increased a few times already over the last month to ensure they are able to get the required raw material.


This price level is expected to increase further as the availability reduces further. Domestic paprika Oleoresin consumption in China is increasing at a fast pace, requiring these companies to extract more.


The biggest variable this year has been the procurement by local chili companies for domestic consumption. With the other chili varieties being more expensive and in short in availability, there has been an influx of buyers who are substituting the paprika and the hybrid for domestic use. This has removed a large volume of product from the market.


Farming practices in China are under high scrutiny as more buyers are aware of the high levels of Chlormequat in Chinese paprika. The situation seems to have slightly improved in this crop. As stated at the China Spice Conference this year, the ESA now estimates 75% of the 60,000 mt of paprika powder consumed in Europe is from China, amplifying the impact of paprika meeting the Chlormequat levels. Shipping product to the U.S. has become more expensive with the import tariff of 15%, effective Sept 1.


Peruvian paprika farmers are continuing to have a good year due to the challenges faced by European processors in securing Chlormequat-free paprika and the shortage of good quality Mesa paprika out of China. Farmers were able to secure higher prices, thus maintaining an interest to grow more paprika.


There is expected to be a marginal increase in production due to planting that has just been completed in Southern Peru. However, Northern Peru continues to struggle with the Aflatoxin and Ochratoxin challenges. Peru will continue to see strong demand this year especially from Europe for grinding and for Mesa Paprika to the U.S.


Prices are expected to increase as this will be the predominant source of paprika until the Fall of 2020, due to the paprika situation in China and the import tariffs from China into the U.S.


The organic paprika grown in Spain had extensive damage (close to 40%) in September 2019 from the historic floods. Subsequent hot weather has led to high Aflatoxin levels in the organic paprika, leading to a very tight situation for availability from this origin.


  • Availability of U.S. origin paprika and chili peppers may be limited due to the short crop and it is advisable to cover your requirements for 2020
  • Strong demand is being observed for U.S. grown organic paprika and chili peppers and it is expected to increase as more shift continues to happen towards organic
  • Prices are expected to remain firm due to the shortage across all origins
  • Availability of traditional sweet paprika will be a challenge this year, with possible migration to blended paprika as customers adjust to the possibility of other varieties being blended in. It is expected that more farmers will move to the new hybrid varieties in 2020
  • Tariffs at 15% will dampen the flow of paprika and chilies from China directly into the U.S. However, Chinese stock will flow into the U.S. through European processors
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