Two years ago, Gale Carr, business manager for his family's Borderland Farms in Fort Hancock, was losing money with every chile crop he made, and he knew it.

Each fall, growers in the El Paso Valley harvest green jalapeño peppers. With more than 2,500 acres in peppers and annual sales of more than $5 million, Texas is the leading producer of fresh jalapeños in the United States.

Here's the dilemma: The cayenne industry uses red jalapeño peppers as filler, so that's a good market option. But, because of the high labor costs of hand harvesting, more growers have turned to machines and, unfortunately, mechanical harvesters are color blind, and leave the red jalapenos on the ground as a waste product.

“We harvest mechanically, so we get reds and greens mixed together,” Carr says. “You're up on the harvester, throwing the reds off. All of a sudden, you're slapped in the face with ‘That's how many dollars I'm losing.’”

Carr went to Jaime Iglesias, an Extension agent in El Paso County, for advice. “Jaime suggested making chipotle, like Mexico does,” Carr says. “At that time, I had no idea what chipotle was; I had never even heard the word chipotle.”

He learned that chipotle is smoked, dried, red jalapeño used in “fiery foods.” Carr traveled to Mexico with Iglesias — who has more than 25 years' experience growing and marketing chiles throughout the Americas — to study the process. He also searched the Internet and read every available book, magazine and anything else he could find on chipotle.

“It took lots of homework, lots of sleepless nights,” he says.

After the trip to Mexico several years ago, he decided to construct a small building to smoke 16,000 pounds of chiles in seven days.

Ruined batches

“We ruined the first 10 batches,” Carr recalls. “We couldn't get an even heat distribution, and the chiles on the inside portion of the smoker would burn, while we couldn't get any heat at all on the outside.”

They finally got the system right, and during the first year Carr says they sold 40,000 pounds and had trouble keeping up with demand, largely because of one big customer in Denver that supplies Chipotle Grills, a nationwide subsidiary of McDonald's.

The second year, he expanded to a plant that can smoke 40,000 pounds per day, making him the only major commercial supplier of chipotle in the United States. This year, he's added more customers and processed 2 million pounds of jalapeños.

Iglesias says Carr has a market niche because chipotle can't be imported in bulk from Mexico without passing rigorous inspection standards. Chipotle comes into the country in small quantities and is generally lower in quality.

In addition to jalapeños, the Carr operation grows red chiles, upland and pima cotton, alfalfa and grass hays such as Sudan. The chipotle business has allowed them to diversify their farm, which, with 48 employees is the largest business in their small West Texas community of about 5,000, a boon to an area that has wilted under a 5-year drought.

Drought influence

“One reason we wanted to diversify is because we're in a drought situation; we don't know if it's going to last one year or another five years,” Carr explains. “This year, we laid out 30 percent of this farm because we didn't have (enough) water to plant it. Next year, it may be 60 percent. To keep people on the farm working, we needed to do something that didn't rely on water.

“We're using a lot of water, but not on the scale we would on a farm. On a farm, we're talking acre-feet of water; here, we're talking gallons.”

An acre-foot is the amount of water it takes to cover an acre of land to 1 foot deep, or about 325,000 gallons. Carr uses about 5,000 to 6,000 gallons of water a day for cleaning and processing chipotle.

When a load comes in from his or other farms, the chiles go through a mechanical cleaning process to eliminate sticks and other unwanted material. On a grading table, workers sort out stems, leaves and other material. They spray the peppers with peroxide acid to kill mold and fungus. Another wash removes rocks and other debris. Next, a slice in the chile makes it dry faster.

Carr uses another by-product, pecan wood from orchard prunings, in the smoker along with mesquite. The smoked chiles are moved to a dehydrator, and then packaged for sale.

More valuable

When Carr harvested only green jalapeños, he received 15 cents a pound. By combining them with two previously cast-off by-products, Carr says they now sell a product worth $2 to $3 a pound, depending on the kind of chipotle.

Also the seed is extracted, which results in more chili meat, another profitable by-product to sell. Carr sells the seed to other producers at $14 to $30 per pound.

He credits El Paso Cooperative Extension for much of his success.

“The whole idea was Jaime's brainstorm,” Carr says. “Jaime's knowledge of the product and the people in the industry helped us get where we are.”

María Barua, Extension agent for marketing and public information, helped Carr design his logo.

“Even if our product wasn't as good-looking as it is, I think the logo would draw as much interest as the product,” he says.

For now, Carr sells chipotle only in bulk, but he hopes one day to market it over the Internet as well.

“I've been afraid to get ahead of myself and have 100,000 people say at once, ‘I want this in 1-pound packages.’”

But adding value is where the future of farming lies, he says.

“We're going to have to move up the chain a little bit and not be just a producer,” Carr explains. “You're going to have to add a little value to stay in business.”