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LINDA WERTHEIMER, host: This is WEEKEND EDITION from NPR News. I'm Linda Wertheimer. Now, I'm from New Mexico and I can tell you that if there is one thing people from my state agree on, it is that chile is king. The deeply flavorful local pepper is ubiquitous, hanging dried in big red bunches from porches, simmering fresh and green in sauces. We even have a state question that's asked in restaurants from Santa Fe in the north to my home of Carlsbad in the south: you want that with red or green - sauce, that is. But chile grown in New Mexico is under assault from cheaper foreign products. This month, a new state law went into effect that makes it illegal to claim your chiles are New Mexican if they haven't been grown in the state. We sent WEEKEND EDITION's Audie Cornish to investigate.

AUDIE CORNISH: The heart of chile pepper country in southern New Mexico is the tiny village of Hatch, which bills itself as the chile capital of the world. The heart of Hatch is the Pepper Pot Restaurant.

MELVA AGUIRRE: Hi, this is Melva Aguirre. I'm the owner of the Pepper Pot Restaurant in Hatch. And I guess I got to show you how to make rellenos with our fresh peppers from Hatch.

CORNISH: And this kitchen is where Aguirre turns out hundreds of plates a day of chile rellenos.

AGUIRRE: And you just put cheese or - a lot of people use Spam. A lot of people don't eat any meat, so they just like it with cheese in it. When it's time for to make it, for me, for the chile festival, I have to make up to 3,000 to use on the weekend.

CORNISH: Tens of thousands of hot pepper fans converge on Hatch for the annual Chile Pepper Festival - all devotees of the smoky rich flavor distinct to the New Mexico variety. Aguirre grew up picking chiles and her brother still works the harvest each year. Chile farmers eat at her restaurant so often, they unlock the doors and let themselves in for breakfast. Can you list some of the things on your menu that have chile in it?

AGUIRRE: Everything.

CORNISH: So, to find out what makes the New Mexico chile so special, we headed to the Chile Pepper Institute at New Mexico State University, where we met up with extension vegetable specialist Stephanie Walker. She's like the Encyclopedia Brown of facts on hot peppers.

STEPHANIE WALKER: One, is if you just bite the tip of a very hot chile pepper, as long as you don't bite into the placenta or vein, you'll get no heat from that. So, it's a great trick you can play on your friends if you have a very hot chile pepper. Fact number two: chile peppers and bell peppers are the exact same genus and species. The only...the heat in chile peppers is not detected by birds. Chile pepper is actually used to feed flamingos in zoos to keep them pink. The heat at the capsaicin chemicals from chile pepper are extracted for a number of uses, including put in paints that they actually paint on boats to keep barnacles from attaching to the sides.

CORNISH: Not bad for someone who says her first taste of pepper was as a teenager at Taco Bell. These days, Stephanie Walker's job is to study and grow chiles. She says New Mexico's peppers get their special flavor from the environment here. High altitude, long seasons of heat and sunlight, hot days and, um, chilly nights. But chiles are also a tough crop for farmers because they're sensitive to drought and parasites and they have to be harvested by hand. That's one reason the number of acres devoted to New Mexico's heritage crop has dropped more than 70 percent over the last two decades. And it's why Walker is supporting a new state law aimed at stopping people from labeling foreign pepper as New Mexico grown.

WALKER: As with other crops in other parts of the country - we all know about the Vidalia onions, we know about other crops that really have their brand identity in place. New Mexico has that but it's never been protected the way other crops in other parts of the country have.

CORNISH: Walker sees part of her job as protecting farmers, like Shane Franzoy.

SHANE FRANZOY: And they were just starting to - see the little bitty chiles coming on? So, we're in the early part of the fruiting stage, you know, setting the fruit.

CORNISH: Franzoy's been walking pepper fields ever since he was old enough to walk. His family has farmed in Hatch Valley for four generations. But these days, it's onions and alfalfa that are the moneymakers for the farm. The price of red chiles has dropped to the point where he's only growing them for seed. The market for the green chile, which is just a fresh version of the dried red, is a little bit better. But Shane says buyers are looking to cheaper chiles from China, India and just south of the border. Why are your chiles more expensive than foreign chiles?

FRANZOY: Mainly the cost of labor and the regulations that we have to go through to grow the chile. We're paying $7.25 an hour, and we're competing with $7.25 per day in other countries or even less.

CORNISH: Even though his chiles are more expensive, Franzoy can still rely on food processors like Gene Bacca at Bueno Foods.

(SOUNDBITE OF MACHINERY)

CORNISH: Bacca is head of the New Mexico Chile Association. His family's company has been selling green chile salsa and roasts for decades. His morning oatmeal is the only part of the day that doesn't include a dose of chile sauce.

(SOUNDBITE OF MACHINERY)

CORNISH: This is the sound of the factory room where huge machines are helping to pound, bake and cut tortillas. This is the sound of the room where he processes green chile.

It's empty because local chiles are not yet in season. And Bacca is one of many producers who have pledged to sell only New Mexico-grown peppers for his company's sauces and roasts. Now, when you make a choice to only use chiles from the state, to me, it leads to an empty room in a factory. I mean, don't you want to be using this room and aren't you taking a hit by not using it?

JOE BACCA: You know, you're right. I mean, if you did it strictly based on economics, we would probably be sourcing from China or from India, but that is not what we feel. We feel like we want to provide a very high-quality product, and so we concentrate our efforts on New Mexico, so that is where we put all our effort into it.

CORNISH: So, it's worth it to you to have this room not producing any money for you right now.

BACCA: Yes. Definitely. I wish it was running all the time, and that's why we need a certification program so we can run this room all the time.

CORNISH: State lawmakers decided not to go for federal certification or trademark for the New Mexico chile pepper. It would have cost a lot more to enforce but it would have allowed the state to sue in federal court when outside growers label their peppers as New Mexico-grown and put U.S. Customs on the lookout for foreign impostors. Products from Idaho potatoes to Florida oranges benefit from this system. But, for now, at least anywhere else in the country, you can call a leather shoe a New Mexico chile if you want. Just so we're clear, what you're proposing is that your state agriculture officials could come into your factory right here and make sure that this room isn't operating with chiles other than the ones you promised out front?

BACCA: Correct. If we say it's a New Mexico chile, then they can come here and check. But I also think though that just getting on the books really helps, and getting on the books and really publicizing it helps.

(SOUNDBITE OF DINERS TALKING)

CORNISH: And that's why back at the Pepper Pot, Melva Aguirre has a little sticker on her door from the Keep New Mexico Green chile campaign. Aguirre packs and freezes bushels of green chile each season just so she can truthfully say that she serves up New Mexico-grown chiles year round. But you're running a business. And, I mean, wouldn't it be cheaper and easier for you to use other chiles or you wouldn't have to freeze them.

AGUIRRE: No, I don't have to freeze if I buy them. But what about your pride? What about being proud of what you do? See, if I buy chile from Mexico or another country, I'll just going to be like everybody else. It's just the pride of you owning something. This is mine.

CORNISH: After that, Aguirre turns back to the kitchen to finish serving the lunch crowd. At the end of the day, she will be hustling home to make her husband dinner, which undoubtedly will include chile.

AGUIRRE: You like it with red or with green or with both?

CORNISH: For WEEKEND EDITION, I'm Audie Cornish.

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