Bell Pepper and Tomato Crop Report: Fall 2016

October 19th 2016 Comments

Bulk food suppliers are only as good as their raw ingredients. That’s why Silva works so hard in our growing regions around the world to get the best quality possible. Here’s the latest update about two of our popular ingredients—bell peppers and tomatoes.

The northwest region of China is the main growing area for bell peppers and tomatoes within our product category. Silva’s quality team in China and our raw material procurement team from our U.S. location have spent more time than ever in the producing areas this year. With our continued commitment to quality, our team has worked with our growers and dehydration sites to ensure we are producing the best possible raw materials for further processing at our U.S. facilities. 

Bell Peppers

In general, the shifting weather patterns in China this year contributed to challenging conditions. Many crops have been adversely affected by unusual weather affecting both quality and yields. The bell pepper market is no exception. While the planting area in northwest China was larger than last year (+20%), higher than normal temperatures during the blooming period and excessive rainfall late in the growing season had a significant impact on crop yields (-30%).

Increased effort by central and local governments in China to control environmental pollution has reduced the overall capacity for dehydration in many areas where fresh product is grown. While the cost for water treatment facilities and other environmental control mechanisms is reasonable, the cost effect (+10%) is seen more as a reduction of supply of dehydrated raw materials.

It is our assessment that the bell pepper market is seeing greater equilibrium between supply and demand. Following two years of excessive supply and declining prices, the recent trend is being reversed and costs for raw material is on the rise. Both carry-over stocks and actual new crop production is at a three-year low. We estimate, however, that carry-over stocks in other areas of the world are higher than normal due to several years of favorable pricing and output.

The speculative garlic market also has a negative effect on the bell pepper market. We see some limited activity by domestic buyers procuring bell peppers for the purpose of holding for speculation.

We believe the market will continue to be firm over the next few months. Added activity from speculators and/or atypical buyers may lead to further firming tendencies. It is also possible that prices may soften as a result of inactivity by well-stocked foreign buyers. Current price levels are ~15% higher than last year as a result of a narrowing supply-and-demand gap as well as increased domestic purchasing activity and slightly higher costs from cost of production and fresh raw-material prices.

Tomatoes

The tomato crop was also influenced by the unusually heavy rains at time of harvest. This is especially true for the growing regions of Ningxia and Inner Mongolia within China, while the province of Gansu fared better in terms of weather. Yields in Inner Mongolia and Ningxia were poor with difficulty for farmers to harvest material. In addition, process costs were high with the fruits having higher water content than in a normal dry year. Across all tomato processing areas in China, the cold spring weather resulted in a late start to the dehydration season. Total production is estimated to be 20-25% less than 2015 with rising costs as a result. Market prices for raw materials are still increasing, but we believe this upward trend to stabilize with pricing remaining at levels well above last year.

Silva has proactively worked with our key raw material partners to ensure sufficient high-quality supply of raw material at attractive cost levels. Our team in China will remain involved in the pre-sorting and inspection of raw materials for shipment to our production facilities in Momence, Illinois, where the raw material will be tested, graded, cleaned and sorted, then cut to the desired size and specification required by customers like you. 

Additional Growing Regions

While China remains the largest raw material producer of bell peppers and tomatoes for dehydration, Silva is working with other partners throughout the world. We have partnerships around the globe to be able to offer you the products you need from desired growing origins.

We source bell peppers and other crops in Uzbekistan in close cooperation with our fully GFSI certified raw material partner in that region. In general, the crop outlook there has been much more positive as the weather has been more favorable. We also have various partnerships in Europe and South America to be able to offer you maximum flexibility. Please reach out to your sales contact if you would like to further explore specific supply options.

Confidence in the Process

We’re working on your behalf all around the world so you can get what you really need—confidence in the process.