5/14/2013

Capsicum Market
Report China & US

Vinay Sreekumar
May 16, 2013

Creating value is our business

Important Species

Family : Solanaceae
Genus : Capsicum

Species Characteristics Distribution

Capsicum frutescens High Pungency. Low flavor Tabasco, Most Indian Varieties
Low to Medium Pungency, Some Paprika as well as Indian
Capsicum annum good color Color chillies. Popular in U.S
Habenero,Jamaican Hot, etc. Not
Capsicum chinense Extremely Hot, Fiery common in India.
Not very common. Little is
Capsicum pubescens known Small regions in S.America
Not grown in Asia, Mostly grown
Capsicum baccatum Medium-High pungency in S.America.
usually, higher the pungency, lower the color.
Creating value is our business

1
 5/14/2013

Major Products:
Products: Color, Heat and Flavor
Paprika - Color
Primary Origins: China,
Peru, US
Secondary: Spain, Israel,
Zimbabwe

Specialties Flavor Mild Medium Hot

Jalapeno, Chipotle, Red Pepper
Capsicums
Ancho, Guajillo, Green
20-27 species
Chile & others Primary Origins
100(0)s varieties
India, China
Origins: Mexico, Peru

Hot Red Pepper

Primary Origins
India, Pakistan,
Bangladesh
Secondary: Mexico,
Africa

Creating value is our business

Standard Pod Size

- generally, smaller the pod size, higher the pungency.

Creating value is our business

2
 5/14/2013

2012/ 13 Market Overview Capsicums

Overall Global Production of Paprika is UP

Chinese Paprika Production is UP

Good US crop

Peru trending low to previous years
Continued Strong Demand

Higher than normal growth rate in destination markets

Whole Pods, Oleoresin Strong demand

Specialties on the rise.
Market Pricing trend is Lower

Creating value is our business

2012 Global Production - Paprika

432MM lbs ( 196,000 MT)
MM lbs
2%
7%
3%

12%

China

Peru
15% 61% US

Europe

Africa

Others

Creating value is our business

3
 5/14/2013

2012 Paprika End Usage by Type

1%

17%

49%
Ground
Oleo
Whole
33%
Others

Creating value is our business

2012 Global Demand by Region ( 190,000 MT)

MM lbs

5%
9%

40%
17%
US + Canada
Europe
China
Mexico
Others

29%

Creating value is our business

4
 5/14/2013

China Key Market Characteristics

Second largest Capsicum producer in the world.
Largest Paprika producer
High 2012 crop of ~120,000 MT
Large crop of Medium quality ( 160 200 ASTA)
High level of transformation Whole to
Crushed/Ground: VAT impact
High favorability among Spanish buyers
Meets EU requirements
Low pricing
High Oleoresin production
Creating value is our business

Chili Planting Areas in China

Linear Chili

Yidu Chili Jinta Chili

Jinta Chili

Yidu Chili
Sweet Paprika Jinta Chili

American Red Chili Yidu Chili

Linear Chili

These areas primarily plant Sweet Chili, American Red Chili,

Yidu Chili, Jinta Chili, and Linear Chili.
These areas primarily plants Chaotian Chili in the Hebei, Henan,
Guizhou, Yunnan, and Hunan Province.

Creating value is our business

5
 5/14/2013

Chillies in China: Varieties & Overview

Main crop varieties include:

Thread Yunnan American

Chaotian Jinta Paprika Yidu
chilies chilies red

The difference is ASTA & SHU

Creating value
Creating valueisisour business
our business

Paprika growing China

Basic Crop Kuerle Akesu Kashi Yili/

Yili/ Changji
2012
In Mou 180,000 Mu 40,000 Mu 16,000 Mu 30,000 Mu
% Area 68% 15% 6% 11%
County Bohu Yanji Hejing Wensu Baicheng Alaer Shufu Yupehu Zepu Various Area

Quality BEST BEST NORMAL NORMAL NORMAL BEST LOW LOW LOW MEDIUN

Creating value is our business

6
 5/14/2013

Products made from Chili Raw Material

Chili whole pod Chili crushed Powder

Oleoresin

Chili string Chili minced Chili ring

Creating value
Creating value is our business
is our business

Paprika -Crop Market Segments - China

Quantity 120,000 MT

4%

25%

54%

17%

Oleoresin Whole Pods Ground/Crushed Others

Creating value is our business

7
 5/14/2013

Crop Market Segments - China

Whole Pods 20000 MT Crushed / Ground 30000 MT

15% 24%
18% 23%
9%
14%

15%

27%
18% 37%

Creating value is our business

China Paprika Challenges 2013

Crop
Lower prices in CY 12 is a major de-motivator for
farmers.
Replacement by alternate crops.
Growing region far away from export ports local
transportation, cold storages and processing
infrastructure.
High ASTA captive oleoresin industry high capacity.

Creating value is our business

8
 5/14/2013

China Paprika - Benefits

High carry forward of lower ASTA paprika in cold
storage.
VAT benefits more transformation
Availability of seeds

Creating value is our business

China 2014 crop forecast

25% less planting lower crop

High carry forward of low ASTA product ( 8000 -10,000

MT)

Stable to low prices till Sept 2013

Prices trending higher from Oct 2013

More focus on transformation of available stocks.

Creating value is our business

9
 5/14/2013

US Paprika growing
areas

Creating value is our business

US Capsicums Production Data

Area Harvested (Acres)

25000 Yields Per Acre

500
20000
Arizona 450
California 400
15000
New Mexico 350 Arizona
10000 Texas 300 California
250
Unted States New Mexico
5000 200
texas
150
100 United States
0
2010 2011 2012 50
0
Production (1,000 cwt) 2010 2011 2012

6000

5000

4000 Arizona
California
3000
New Mexico
2000 texas
United States
1000

0
2010 2011 2012

Creating value is our business

10
 5/14/2013

US Paprika Production ( MM lbs)

US SW Paprika Production
70
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

60

50

40
Millones

30

20

10

REDS

Creating value is our business

US Key Market Characteristics

Large producer of Capsicums Bell Pepper,
Green Chile, Capsicum.
High 2012 crop of ~ 32,000 MT
ASTA medium quality ( 160 200 ASTA)
Contract based farming
Fully mechanized operations
Dehydration Mechanized Tunnel or
Continuous
Lower competitive pricing
Variety management higher ASTA, disease
resistance.
Creating value is our business

11
 5/14/2013

Capsicum Growing - US
Crop is planted in
March
Mature green pods
by Aug.
Pods begin achieving
red color Sept 1., due
to carotenoid
development
Fields are defoliated
prior to harvest

Creating value is our business

Capsicum US Harvest

One time single harvest .

Fields usually sprayed with sodium chlorate solution to defoliate plants and
makes the pods easier to pick

All of the New Mexico/Texas/Arizona crop is now mechanically harvested

Creating value is our business

12
 5/14/2013

Mechanical
Harvest

All US crop is now
mechanically
harvested

Creating value is our business

Mechanized Dehydration

Creating value is our business

13
 5/14/2013

Capsicum Products - US
Paprika Ground, Flakes and Whole
Table Capsicums ( Mesa)
Red Pepper Ground, Flakes & Whole
Chili Blends
Oleoresins Paprika & Capsicum
Specialty Peppers Jalapeno, Chipotle,
Ancho, Guajilo and others

Creating value is our business

Consumption of Capsicums
Total Capsicums 160,000 MT

3%

39%

Paprika
58%
Red Pepper
Capsicums - Others

Approximately 65,000 MT converted and consumed in Wet/Liquid

Form.

Creating value is our business

14
 5/14/2013

Key Quality Attributes for Capsicum Products

 Analytical
 Extractable Color (known as ASTA Color)
 Visible Color (Scan)
 Pungency
 Particle Size
 Moisture
 Water Activity (Aw)
 Bulk Index
 Adulteration Indicators (Added colors, Contaminants)
 Base purity of the spice (Rodent Hair & Insect Fragments)
 Pesticide Residues

 Microbiological
 Salmonella
 Aflatoxin & Ochratoxin as an indicator of poor post harvest management
 SPC
 Yeast / Mold
 Coliform
 E.Coli

Creating value is our business

US crop - challenges
Weather
Planting size
Yields
Disease pressure
Competing Crops
Carry forward stocks from other origins

Creating value is our business

15
 5/14/2013

US crop - outlook
Smaller 2013 crop compared to 2012 (
10% drop)
Pricing pressure from other origins
Focus on cost management /
mechanization
Pricing increase in new crop

Creating value is our business

Overall Global outlook

High carry forward stocks in 2013

Lower pricing through 2013
Lower planting in 2013

Less available stocks in 2014

Higher pricing for good quality supply
shortage
FSMA, Food safety and quality
management critical

Farm management Pesticides

Post Harvest management Toxins
Creating value is our business

16
 5/14/2013

Peru Capsicums to focus on..

Cost Management initiatives

Yield improvement

Mechanization of agriculture practices
Agricultural Practices

Pesticide control and management
Post Harvest Management

Mechanical Drying

Reduction of Toxins, Yeast & Mold, SPC

Extraneous matter & Insect Fragment control.
Creating value is our business

Thank you
Questions ?

Creating value is our business

17