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F I S C A L I M P A C T R E P O R T

SPONSOR Varela

ORIGINAL DATE

LAST UPDATED

1/31/06

HB 411

SHORT TITLE Promote New Mexico-grown Chile & Salsa

SB

ANALYST Hoffmann

APPROPRIATION (dollars in thousands)

Appropriation

Recurring

or Non-Rec

Fund

Affected

FY06

FY07

$250.0

Recurring

General Fund

(Parenthesis ( ) Indicate Expenditure Decreases)

Duplicates Senate Bill 363.

Relates to House Bill 720.

SOURCES OF INFORMATION

LFC Files

Responses Received From

New Mexico Department of Agriculture (NMDA)

Higher Education Department (HED)

SUMMARY

Synopsis of Bill

House Bill 411 appropriates $250,000 from the general fund to the Board of Regents of New

Mexico State University for expenditure by the Department of Agriculture to fund a marketing

campaign to promote out-of-state sales of New Mexico-grown chile and salsa products.

FISCAL IMPLICATIONS

The appropriation of $250,000 contained in this bill is a recurring expense to the general fund.

Any unexpended or unencumbered balance remaining at the end of fiscal year 2007 shall revert

to the general fund.

House Bill 411 – Page

2

SIGNIFICANT ISSUES

The New Mexico Department of Agriculture provided the following facts about chile production

in New Mexico:

1. New Mexico ranks no. 1 in the country in chile production – 214 million pounds.

2. In cooperation with New Mexico chile growers, shippers, and retailers NMDA

conducted a very successful New Mexico green chile sales/promotion campaign

in five different states (California, Texas, Colorado, Kansas, & Nebraska).

3. The New Mexico chile promotion included 45 growers/shippers, 15 retail super-

market chains, and 2,200 stores.

4. NMDA provided promo kits to retailers with recipes, cooking DVD’s, NEW

MEXICO–Taste the Tradition® signage, freezing instructions, and roasting

DVD’s.

5. The promotion cost $200,000 to implement but resulted in $19 million in sales!

Almost a 100-1 return in investment.

6. NMDA provided assistance to the industry to place New Mexico salsa’s in out-of-

state markets. New Mexico salsa’s are in 12 out-of-state supermarket chains rep-

resenting over 3,800 stores.

7. Funding is needed to maintain the chile and salsa sales/promotional momentum

and to address the increased demand for services.

8. All sales and promotion activities represent a minimum 50/50 match from chile

industry.

According to the Higher Education Department, Chile production ranks first in horticultural crop

cash receipts for New Mexico. The annual direct contributions to the state's economy are esti-

mated at $60-100 million. Currently Mexico is New Mexico's biggest competitor for fresh chile

sales in the U.S. marketplace. Efforts are underway to employ electronic telecommunications

tools to assist the chile industry in moving forward. A comprehensive website and distance learn-

ing workshops are being developed to provide up-to-date information and training to growers

and crop consultants. In fall 2003, the NM Chile Task Force launched a marketing initiative.

Task force members are looking for new ways to enhance their position in the global market

place. This bill’s funding would help support this important effort.

DUPLICATION AND RELATIONSHIP

Senate Bill 363 is a duplicate of this bill.

House Bill 720 is related to this bill. It would appropriate $140,000 to the Board of Regents of

New Mexico State University for expenditure to increase the profitability and yield of chile and

to increase the economic sustainability of the New Mexico chile industry.

CH/nt