The overall Chinese paprika crop has turned out to be very different from previous years, which has started to pose signiﬁcant challenges to the industry. Chinese paprika farmers have transitioned away from traditional sweet paprika to a hotter hybrid variety, which accounts for 70% of their production this year – only about 30% of the total production will be traditional paprika.
The overall harvest was also delayed by 3 - 4 weeks. At this point, there is less than minimal product available in the Xinjiang drying yards.
Traditional sweet paprika yield and ASTA color have been lower than expected. In addition, the product has high moisture due to the late harvest and cloudy days preventing the drying of product. Drier and higher color product is sold out. Late buyers have the option to buy only from speculators or exporters.
Oleoresin processors have started to buy heavily in 2019 compared to the previous year. Oleoresin companies and their suppliers (powder processors) are buying the hybrid variety due to higher color and because the variety is better suited for extraction. The procurement price has increased a few times already over the last month to ensure they are able to get the required raw material.
This price level is expected to increase further as the availability reduces further. Domestic paprika Oleoresin consumption in China is increasing at a fast pace, requiring these companies to extract more.
The biggest variable this year has been the procurement by local chili companies for domestic consumption. With the other chili varieties being more expensive and in short in availability, there has been an inﬂux of buyers who are substituting the paprika and the hybrid for domestic use. This has removed a large volume of product from the market.
Farming practices in China are under high scrutiny as more buyers are aware of the high levels of Chlormequat in Chinese paprika. The situation seems to have slightly improved in this crop. As stated at the China Spice Conference this year, the ESA now estimates 75% of the 60,000 mt of paprika powder consumed in Europe is from China, amplifying the impact of paprika meeting the Chlormequat levels. Shipping product to the U.S. has become more expensive with the import tariff of 15%, effective Sept 1.