ADEX - convencion capsicum 2013: olam

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Creating value is our business

Capsicum Market Capsicum Market Report Report –– China & USChina & US

Vinay Vinay SreekumarSreekumar

May 16, 2013May 16, 2013


Important Species

usually, higher the pungency, lower the color.

Characteristics Distribution

Capsicum frutescens High Pungency. Low flavor Tabasco, Most Indian Varieties

Capsicum annum

Capsicum chinense Extremely Hot, Fiery

Capsicum pubescens Small regions in S.America

Capsicum baccatum Medium-High pungency

Species

Low to Medium Pungency, good color

Some Paprika as well as Indian Color chillies. Popular in U.S

Habenero,Jamaican Hot, etc. Not common in India.

Not very common. Little is known

Not grown in Asia, Mostly grown in S.America.

Family : Solanaceae Genus : Capsicum

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Major ProductsMajor Products: Color, Heat and Flavor : Color, Heat and Flavor

Capsicums20-27 species

100(0)s varieties

Paprika - Color

Primary Origins: China, Peru, US

Secondary: Spain, Israel, Zimbabwe

Hot Red Pepper

Primary Origins –India, Pakistan,

Bangladesh

Secondary: Mexico, Africa

Mild – Medium Hot Red Pepper

Primary Origins –

India, China

Specialties – Flavor Jalapeno, Chipotle,

Ancho, Guajillo, Green

Chile & others

Origins: Mexico, Peru


Standard Pod Size

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

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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


2012 Global Production - Paprika432MM lbs ( 196,000 MT)

61%15%

12%

3%

2%7%

MM lbs

China

Peru

US

Europe

Africa

Others

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2012 Paprika End Usage by Type

49%

33%

17%

1%

Ground

Oleo

Whole

Others


2012 Global Demand by Region ( 190,000 MT)

40%

29%

17%

9%

5%

MM lbs

US + Canada

Europe

China

Mexico

Others

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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


Sweet Paprika

Linear Chili

Linear Chili

Jinta ChiliYidu ChiliJinta Chili

Yidu ChiliJinta Chili

Yidu ChiliAmerican Red 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.

Chili Planting Areas in China

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Creating value is our businessCreating value is our business

• Main crop varieties include:

Chillies in China: Varieties & Overview

Chaotian Jinta PaprikaThread chilies

Yunnan chilies

YiduAmerican

red

The difference is ASTA & SHU


Paprika growing – China

Basic Crop Basic Crop

20122012

KuerleKuerle AkesuAkesu KashiKashi YiliYili/ / ChangjiChangji

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

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Chili whole pod

Chili minced

Chili crushed Powder

Chili string Chili ring

Oleoresin

Products made from Chili Raw Material


Paprika -Crop Market Segments - China

54%

17%

25%

4%

Quantity – 120,000 MT

Oleoresin Whole Pods Ground/Crushed Others

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Crop Market Segments - China

23%

27%

18%

14%

18%

Whole Pods – 20000 MT

24%

15%

37%

9%

15%

Crushed / Ground – 30000 MT


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.

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China – Paprika - Benefits

• High carry forward of lower ASTA paprika in cold

storage.

• VAT benefits – more transformation

• Availability of seeds


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.

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US – Paprika growing

areas


0

5000

10000

15000

20000

25000

2010 2011 2012

Arizona

California

New Mexico

Texas

Unted States

0

50

100

150

200

250

300

350

400

450

500

2010 2011 2012

Arizona

California

New Mexico

texas

United States

Area Harvested (Acres)

Yields Per Acre

0

1000

2000

3000

4000

5000

6000

2010 2011 2012

Arizona

California

New Mexico

texas

United States

Production (1,000 cwt)

US – Capsicums Production Data

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US – Paprika Production ( MM lbs)

0

10

20

30

40

50

60

70

1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013

Mil

lon

es

US SW Paprika Production

REDS


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.

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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


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

.

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Mechanical

Harvest� All US crop is now

mechanically

harvested


Mechanized Dehydration

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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


Consumption of Capsicums

58%

39%

3%

Total Capsicums 160,000 MT

Paprika

Red Pepper

Capsicums - Others

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

Form.

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� 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

Key Quality Attributes for Capsicum Products


US crop - challenges

• Weather

• Planting size

• Yields

• Disease pressure

• Competing Crops

• Carry forward stocks from other origins

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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


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

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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.


Thank you

Questions ?

ADEX - convencion capsicum 2013: olam

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