New Mexico's Premier Commodity Crop Benefits from Regional Branding

Sep 6, 2019  | 7 min  | Ep4503

In the Land of Enchantment, New Mexico’s signature farm commodity casts a spell on the taste buds – sparking a fiery debate.

Reporter: “So the big question: green or red?”

Robert Gonzalez/Algodones, New Mexico: “Green.”

Karleen Gonzales/Algodones, New Mexico: “Red.”

Chile peppers - green or red - have enriched the southwestern palate for longer than apple pie has been American.

Sergio Pendragon/Pedregon Family Farms – Hatch, New Mexico: “We let it tumble in there and the skin just comes right off.”

Every year, tourists flock to the small town of Hatch, New Mexico, the self-proclaimed Green Chile Capitol of the World, to celebrate and devour a fresh harvest.

Marti Heath/Mesa, AZ: “Green chiles make everything better!”

John Heath/Mesa, AZ: “Oh yeah. We eat them on everything.”

The crop, which turns from green to red the longer it stays on the vine, is entwined with local identity. Hanging ristras are symbols of health and good luck.  And New Mexico has enjoyed good fortune as the national leader in chile pepper production.

Dr. Jay Lillywhite/NMSU: “I think the impact there is two-fold.  One in economic and one is cultural.”

Dr. Jay Lillywhite, an agricultural economist with New Mexico State University, says the state contributed 53 percent of domestic production in 2018 – valued just south of $100 million.

Dr. Jay Lillywhite/NMSU: “That includes the processors, the dryers, the canning companies as well as the producers themselves and any backwards linkages.  That also accounts for fertilizer dealers and manufacturers...that kind of thing.”

Lillywhite adds that New Mexican chile production has dropped from 35,000 acres in the early 1990’s down to just under 8,000 today, and with pressure from other states and Mexico, some are digging deeper as a buffer against competition.

Dr. Jay Lillywhite/NMSU: “There’s only so much chile that can be grown in the Hatch region and only so much chile that can be grown in New Mexico. And as that demand continues to increase, if you can actually build a marketing campaign around that, there will obviously be premiums.”

Hatch Valley farmers have adopted a distinct branding strategy to distinguish their product from a host of others.  Adjacent to the Rio Grande, the region has long been hailed for its unique blend of favorable soil and climate conditions.

Preston Mitchell/Owner - M&H Produce/Hatch Chile Store: “The Hatch Valley here in southern New Mexico has become synonymous with high quality green chile.”

Preston Mitchell contracts with local growers and estimates 2019 yields will average 15 to 20 tons per acre.  In previous years, prices have ranged from $500 to over $600 per ton for green varieties. 

Preston Mitchell/Owner - M&H Produce/Hatch Chile Store: “You can hear that nice crisp pop as it pops open.  Tear that pod open and you’ll see just a thin little yellow strip running up that vein and that’s the capsaicin in the pod that you taste as heat.”

Labor costs can bite into profits because harvest is done by hand.  Mitchell says finding workers is a challenge in itself.  While mechanization – long rumored – remains elusive - and drought – on average, abundant.

Gary Esslinger/Treasurer-Manager/Elephant Butte Irrigation District/Las Cruces, New Mexico: “Ninety-five percent of the water that fills up Elephant Butte comes from snow pack runoff and we just haven’t had it in since 2003 on a regular basis.  We may have one good year, maybe two and then nothing….”

Elephant Butte Irrigation District covers over 90 thousand acres of irrigable land in southern New Mexico.  Manager Gary Esslinger says the past couple of years have been a rollercoaster ride.  Drought-driven low water levels in reservoirs on the Rio Grande north of Hatch forced ratepayer allotments down from an average 3 acre-feet to just 10 inches in 2018.  But this past winter’s snowpack rebound, slow thaw and late irrigation season start saw grower allotments swell to 14 acre-feet.  While still not to full capacity, Esslinger says history indicates an average of 40 years between reservoir overspills.

And a complicated set of decades-old agreements also legally require the utility to satisfy surface water deliveries downstream first - to Texas and Mexico.

Gary Esslinger/Treasurer-Manager/Elephant Butte Irrigation District/Las Cruces, New Mexico: “Certainly we have to abide by the law and yet try our best to supply the water that’s necessary to these farms.  It’s a constant battle…and the litigation is always flowing here. It never stops.”

E-B-I-D has been at the center of legal wrangling between the federal government, Colorado, New Mexico and Texas for over a decade in regards to water rights under the Rio Grande Compact agreement.  After going before the U.S. Supreme Court this year, the outcome of the case remains in legal limbo as all the players continue to push for their side to prevail. 

Esslinger adds new stakeholders, ushered in by recent population booms, are unfamiliar and unwilling to compromise with water laws drawn up over 80 years ago.

Gary Esslinger/Treasurer-Manager/Elephant Butte Irrigation District/Las Cruces, New Mexico: “It’s the public at large that really doesn’t understand the complexity of how we have to operate down here.  It’s really easy for me to explain to a farmer what’s going on because of the drought.  Most of these farmers have been here three and four generations.  Some of them even five.”

Preston Mitchell/Owner - M&H Produce/Hatch Chile Store: “My great, great grandfather is actually credited with being the first chile farmer in the Hatch Valley.  His name was Joseppi Franzoy and he was an immigrant from Austria.”

Preston Mitchell says even though winter’s weather reprieve resulted in increased surface water allocation this year, farmers still pumped a majority of ground water to irrigate crops.  And over time, only salty brackish water is left in uncharged aquifers – which makes an infusion of fresh Rio Grande River water essential.

Preston Mitchell/Owner - M&H Produce/Hatch Chile Store:  “Drought is a major concern to growers in this area.”

Just like producers of higher volume commodities, Mitchell has diversified to remain profitable.  Expanded acres, processing and roasting chiles are all part of the mix. 

As word spreads, and orders for Hatch Valley green chiles come in from across the globe, Mitchell reiterates regional branding as a vital ingredient for future growth.

Preston Mitchell/Owner - M&H Produce/Hatch Chile Store: “Hatch chile is sought for by buyers at grocery stores such that they will not take chile from elsewhere.  So it kind of allows us to have this little niche within the overall green chile market and continue to be able to farm profitably.”

For Market to Market, I’m Josh Buettner.







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