In Europe, the pepper season is marked by stability. Growers in the Netherlands and Belgium are happy with the pricing. In Poland there is also optimism about the situation. In the British Isles, the market is stabilising after a period of high prices and low supply. The acreage in the Netherlands and Spain is expected to grow in the coming years. In Israel, there is satisfaction about the reduced acreage, as this is bringing prices to a more sustainable level. On the other side of the ocean, the harvest is currently in full swing in many states. Canadian growers fear the impact of weevils, which can cause great problems to the production. In the Far East, China has opened its borders to Dutch peppers.
Room for Mexican peppers in the US
Through investments in growing techniques, producers have succeeded in bringing the start of the season forward. The first harvest is therefore expected in August, while the season would normally start in November/December. The largest part of the production is shipped to the United States and Canada. Once there, the early Mexican peppers clash with their Canadian competitors. The Canadian season runs from March to November and overlaps for several months with the Mexican campaign.
According to the exporters, there is enough room in the US market. The volume of shipments from Europe will be smaller. The borders are closed to Spanish peppers and Israel is looking more to Russia. "If we can quadruple our volume of exports in nine years and the price remains stable, then there is enough room in the US market," said a trader. Mexican growers are investing in better farming techniques and the acreage has expanded.
Weevils hold Canadian crops in their grip
Pepper growers in Leamington, Ontario, are worried about an outbreak of the pepper weevil. While the insect has been present in the region for several years, growers fear that the pest is more likely to strike during this season. Weevils are a nightmare for any pepper grower. The presence of a single adult weevil is sufficient to spoil the entire greenhouse. In a short time, they give rise to an entire population of weevils; these mainly affect the blossoms and young peppers, where the larvae grow. The peppers then stop developing
The weevil was able to settle in the region due to the milder winters and the area's year-round greenhouse cultivation. It has been reported that between 60 and 80 hectares have been lost. Growers are becoming more aware of the risks and are investing in techniques used in warmer areas to keep the bugs out.
US market at tipping point
With the approaching end of the summer, prices are expected to increase in the coming months as production decreases. The harvest peaks at this time in Michigan, Wisconsin, New York, Tennessee, and New Jersey. So, production is in full swing in many parts of the country. Although demand for green peppers has increased, there is still sufficient supply. On 1 September, the price for a box of green peppers in Michigan stood between 10 and 12.85 US$. Those prices are likely to change, given that production is expected to increase.
Dutch acreage grows
"If we can continue like this, we certainly won't complain," say Dutch growers. Prices are slightly lower, but still in line with last year's, and this, after a few bad years, is considered exceptionally good. The production is fine, with many growers in an even better situation than last year. Overall, the results are satisfactory enough.
The impact of the good results achieved this year (and the last) can already be observed in the acreage, which has been expanding considerably. There are currently 25 greenhouse hectares being built by Leo Hoogweg in the north east; another 9 hectares by Rainbow nursery in Andijk, North Holland; 18 hectares by 4Evergreen Westdorpe and 15 hectares by VGT's pepper growers. With the acquisition of a rose nursery by Overgaag, the nursery's acreage will grow by at least 80 hectares next season, an increase of 6.5%. Moreover, there are additional acquisitions and expansions planned for next year.
The Dutch pepper acreage reached its peak of 1,400 hectares in 2010. After that, a decline started, but the acreage has stabilised over the last two years at around 1,200 hectares.
Belgians happy with season
Although traders are still too cautious to speak of a good season, the prospect is that the campaign will come to a close in the same fashion as 2015. Despite fluctuations in the price, the average is comparable to that of last year. That will ensure a satisfactory result for everyone, according to a trader. Prices for red and yellow peppers are normal, while those for the green are higher than average. Due to a smaller supply, the prices for green peppers have exceeded 2 euros per kilo. The yellow yield around 1.50 euros per kilo and the red costs approximately 1.20 euros per kilo. The supply of yellow peppers is gradually falling, but for the time being, that of red peppers should be more than sufficient.
Polish season stable
The conditions in the Polish market are similar to last year's. Volumes are also similar to those achieved last season and the quality, despite sudden changes in the weather, is good. When it comes to exports, traders are looking to other countries in the region: Scandinavia, the Czech Republic, Slovakia, Belarus and Romania are key markets. There is also some export to Western Europe, namely to the UK and to the Netherlands. Polish exporters could somewhat benefit from the hailstorms which have left a trail of destruction in the Netherlands.
The market for organic vegetables is growing in Poland, and although the market is showing interest in organic peppers, there appears to be little interest from the growers in converting their crops. A trader fears that Poland will miss the boat, especially if the Netherlands gives a push to this segment.
Spanish acreage exceeds 10,000 hectares
The pepper acreage in Almeria, Spain, has expanded by another 600 hectares and has thus exceeded the 10,000 hectare mark. This represents a growth of more than 6 percent, as reported by the Spanish Ministry of Agriculture, Fisheries and Rural Development. Due to the good results achieved in the previous season and the disappointing results for other greenhouse vegetables, growers have been switching to peppers.
British prices back to normal
Vegetable prices are back to normal levels after the increases recorded a few weeks ago due to shortages. This deficit was caused by the poor summer weather in Britain and Europe. The supply is currently good again, but a gap is expected in the production of green peppers. Due to the currency exchange rates, Dutch peppers are still very expensive. The price of peppers is relatively high at the moment. A trader explains that during the period of the supply deficit, peppers had to be imported from Poland. Right now, the supply is currently good for peppers of all colours. The retailers have been understanding about the circumstances, according to a trader. When placing orders, they have taken into account the longer shipping times.
Israeli policy is bearing fruit
After a period of rapid decline due to economic difficulties in key export markets and an oversupply in the local market, the sector is currently sailing into calmer waters. The Israeli government offered growers funding to switch to other crops. This was intended to remove pressure from the market. Many growers took advantage of the scheme, which resulted in the acreage falling by 40 percent. In 2014, the total harvest still stood at 200,000 tonnes per year; this season, it is estimated at 120,000 tonnes.
In the past, 60 percent of Israeli peppers had to be exported. The main destination is Russia, accounting for half of the volume. The second most important customer is the Netherlands, from where the peppers spread further across Europe. The export figures have now dropped, with half of the production shipped overseas. Despite investments to export more to North America, profits from exports remain low.
On the domestic market, the policy seems to be bearing fruit. After years of low prices, prices have again increased as a result of a smaller supply. Prices currently stand between 1.50 and 2 euros per kilo. At one given time, the price went as high as 3 euros per kilo. This has allowed growers who continued growing peppers to stand on their own two feet.
China opens borders to Dutch peppers
The season will come to an end in October. The bulk of the production is found in the north and north east of the country, with Shanxi as the main cultivation area. The majority of the crops are in open ground. Due to the impact of rain this summer, prices increased on the wholesale market in Beijing. The cultivation in greenhouses is also expanding. In the provinces of Shangdong and southern Hainan, major projects have got off the ground, often with foreign investment.
This summer, the Netherlands has gained access to the Chinese pepper market. In July, a test was done with a few shipments to Shanghai and Guangzhou. Sales will capitalise on the trend towards safe and healthy food. The Netherlands is the first country that will be allowed to export peppers to China and a larger volume is expected to be shipped next year.
Every week, FreshPlaza and AGF.nl publish an overview of the market situation of a product in a global context. With these articles we aim to provide a view of a global market shrinking due to globalisation. Next week, pineapples will be in the spotlight.