What's Behind the Red-Hot Market for Sriracha Sauce - Barron's

What's Behind the Red-Hot Market for Sriracha Sauce - Barrons

For 15 years, Fabian Grajeda and his family have grown chile peppers on their roughly 600-acre farm in Hatch, New Mexico, an agricultural town along the Rio Grande about an hour north of the Mexican border. For Grajeda, each season is a gamble.

U.S. chile production has steadily declined over the past two decades, as more extreme weather, an unstable water supply, and labor shortages continue to hamper the industry. Production has shrunk more than 50% over the past decade in dollar terms, to $77.1 million in 2022 from $156 million in 2012, according to the U.S. Department of Agriculture.

Those struggles extend to Hatch, which is famous for cultivating green and red chiles thanks to the area’s warm temperatures, nutrient-rich soil, and long growing season. The valley’s home county of Doña Ana produced 32% of the state’s chile peppers in 2021, and thousands of people flock to the Hatch Valley Chile Festival each summer.

In the past two growing seasons, drought and other adverse weather conditions caused chile pepper crop struggles at some farms in high-production states like New Mexico. Production in the state increased slightly in 2022 from a 10-year low in 2021, but was still about 15,000 tons lower than the consistent highs last seen in 2018.