A review of the Israeli peppers industry, conducted by the research, economy, and strategy division of the Israeli ministry of agriculture, has painted a rather dramatic picture of the current state of the industry. In the past decade, peppers have become a major product for Israeli growers, with production quantities increasing substantially in recent years and even becoming the primary crop for certain regions of the country.
As the supply of peppers has increased, the demand in the local market has remained at a constant level, leading growers to turn the majority of peppers to be marketed for export. 2006 was the first year in which the quantity of exports was higher than the quantity going to the local market, and the gap has only widened since, reaching levels of more than twice as much pepper going to exports than to the local market in a number of different years.
The primary and traditional destination market for Israeli peppers has been Western Europe; in recent years 40% to 60% of all peppers from Israel were exported to Western Europe, far ahead of the second largest market, Russia, which received no more than 25% of exports. After several lucrative years in the European market, the conditions for Israeli peppers were beginning to shift as the supply of peppers from other sources increased, mostly from Spain and other countries from within Europe. The increased competition led to lower prices for Israeli exporters, and many resorted to directing their produce to the Russian market. This transition was accompanied in many cases by a shift to larger pepper varieties which have higher demand in Russia.
The economic crisis of 2008 served as an inflection point for Israeli peppers, as from that point on the exchange rate of the Euro to the Israeli Shekel weakened consistently and decreased the yields of Israeli exporters. As their profits decreased, growers were unable to invest in modern growing methods and forced to focus on producing large quantities and lesser varieties, and the result on the whole was lower quality Israeli peppers.
Currently, decreased quality and low prices have made Europe a difficult market for Israeli peppers to garner profits from. Exporters hoping to shift more supply to Russia have been deterred by Russia’s own economic situation, and any hope of the produce being absorbed in the local market has proven to be baseless. This leaves the Israeli peppers industry in a precarious position in 2015 and going forward.
The Israeli ministry of agriculture has recommended that growers shift some of their production away to other crops, while working on regaining the quality of their peppers. Additionally, the ministry reckons the large number of exporters could be hurting the competitiveness of Israeli peppers in markets abroad and suggests that exporters working together will be a necessary condition to the industry regaining its footing.
