Spend Matters welcomes another guest post from Corrina Savage of Mintec.
We all love a bit of spice in our food, whether it is a mild Cajun coating or something a lot spicier. One of the most common ways of adding flavour and heat to recipes is to use chillies. Beware though, prices for chillies are heating up – rising over 60 percent in two years.
Chillies are the fruit of the Capsicum plant. There are over 400 varieties that make up a dizzying array of colour, size, and pungency. Originally chillies came from South America, but now they are cultivated all over the world. The US imports practically all of their 675,000 tonnes worth of fresh chillies from Mexico and of the 100,000 tonnes of imported dried chillies, most come from India. Demand for chillies in the US is increasing and imports are up over 10 percent since 2007. This increase in US demand mirrors an increase in demand from the rest of the world, which is straining global supply.
Global production of fresh chillies and peppers amounts to nearly 30m tonnes annually and Mexico is responsible for 7 percent of that. Global production of dry chillies is approximately a tenth the size, at roughly 3m tonnes annually. India is the largest producer of dried chillies with 40 percent of global production.
Satisfying demand from the current supply is the issue causing the increase in prices. Mexico has suffered droughts this year, causing concern that there will be a reduction in production levels. If realised, that would be the second year running Mexico has had a reduced supply. In 2013 production was down 16 percent when compared to 2012.
India has also had supply issues with unseasonal rainfall during the important growing periods in 2013, which damaged stock and decreased supply by 11 percent year over year. This caused prices of Indian chillies to rise sharply towards the end of 2013. As a double whammy, this year India is expected to consume more chillies, therefore reducing the amount of supply available to export to the global market. As a result, prices from other chilli producing regions such as Mexico have felt the heat and prices have risen in response.