US Prices for Bell Pepper Remain Volatile as Demand Increases

High demand for bell peppers in the US due to the reopening of the restaurant and hospitality industries and demand from retailers led to an increase in imports from Mexico. In 2021, the import value and volume reached record-high numbers of USD 1.5B and 1.2M mt, respectively. 2021 imports saw a 4% YoY increase in value and a remarkable 52% YoY increase in volume. The accelerated growth has made US bell pepper producers repeatedly claim to be at an unfair market disadvantage, with most of the market dominated by Mexican imports.

Increasing Demand made Mexican Imports Dominate the Market

The US also has its own bell pepper production, with an average annual yield of 1.6B lbs of bell peppers. However, US supply also comprised 35% of imports, with 78% of the US bell pepper exports coming from Mexico. Of the total exports of Mexican bell peppers, 99.73% go to the US. Furthermore, exports of bell peppers to the US also represent one-third of Mexico's total bell pepper production. This only shows how US bell pepper demand assists in the strong Mexican bell pepper industry.

US imports of Mexican bell peppers have increased by 125% from 2011 to 2020. From USD 660M worth of bell pepper imports in 2011, it rose to USD 1.47B in 2020. In terms of production, Mexico satisfies 100% of the domestic demand with an annual production of about 3.3M mt and more than 9.2K hectares of harvested area. Of the total production, 34.2% of bell pepper production goes to exports, with 99.73% going to the US. As a result of all this, the US has become more dependent each year on Mexican supply, to the point that production seasonality transitions in Mexico now have a direct effect on US prices.

Production Transition in Mexico Affects US Prices

Sinaloa is the top Mexican bell pepper producing state in the country, with the largest open-pit area of 3.2K hectares, accounting for 35% of the country's total bell pepper production acreage. In addition, 50.3% of bell pepper production in Mexico is in open fields, while 49.6% of production is diversified among different protected agriculture processes, with 14.3% of those accounting for greenhouse bell pepper production. The peak season of Mexican bell pepper open-pit production occurs between December and March in Sinaloa and Sonora, making for a steady supply to the US during that time. For this year, open-pit supplies volume remained consistent until May, when the production transitioned to central Mexico and Baja.

The production transition in Mexico has become notable in the US market, with some of the areas experiencing shortages in volume and size. According to Arturo Muñoz, Tridge’s Engagement Manager in Mexico, bell pepper from Mexico is scarce. “At the McAllen border, it's hard to find the highest qualities, and bigger sizes of red bell pepper for 11lbs are getting difficult to find. Jumbo presentation is quoted from USD 19 to 20/carton. In addition, Sinaloa state and Sonora state keep decreasing the volume sent to both borders, making prices even more volatile”, he explained.

The shortage has created broader volatility in prices, with spikes in particular US areas and slight decreases in others. According to Tridge’s Price Chart, the price for Mexican bell pepper in the New York wholesale market registered a 120% MoM increase in W3 of May-22, while Philadelphia registered an 84% MoM increase and a 38% YoY when on the 16th of May-22, the price stood at 3.35/kg while the month earlier stood at USD 1.82.

Different from New York and Philadelphia, other US markets registered slight decreases in prices. In the Miami wholesale market, the price decreased by 32% MoM, as on the 16th of May-22, the price stood at 2.50/kg while the month earlier stood at USD 3.67/kg.

The price, however, had a yearly increase of 27.5%YoY, when on the same day last year at USD 1.96/kg. Furthermore, in the Los Angeles wholesale market, the price had a very moderate 5.3% MoM decline, while it registered a 10% YoY on the 16th of May, when the price stood at USD 23.3/carton.