Camarillo farmer: Sriracha maker's shortage started when company 'cut us off'

Editor's note: This story was originally published in August. We are republishing it as we look back at some of our most-read stories of the year.

The Ventura County farmer who once grew 2,000 acres of red jalapeños for the makers of a hugely popular Sriracha sauce that is now very difficult to find can’t help himself.

The production shortage that makes it hard for his onetime partner, David Tran’s Huy Fong Foods, to keep its green-tipped, rooster-stamped bottles of hot sauce on shelves makes Craig Underwood, 80, of Camarillo, smile.

“Anything that is adverse to David makes me happy,” he said.

For 28 years, Underwood Ranches grew jalapeños in Ventura and Kern counties for Tran, a Vietnamese immigrant who created Huy Fong Foods. The ranches became the nation’s leading red jalapeño producer as Tran's Sriracha spawned a fanatical following.

Everything changed seven years ago. The partnership shattered in a bitter dispute that morphed into a public soap opera via a lawsuit from Huy Fong, a countersuit from Underwood and a trial that brought national attention.

Underwood Ranches ended up winning a $23.3 million verdict in Ventura County Superior Court when a civil jury ruled Huy Fong broke its contract with the rancher and committed fraud by withholding information. The verdict was upheld two years later in an expensive appeal that forced Underwood to borrow money.

He won the fight but still sees pepper red when people blame Huy Fong’s shortage on a drought in Mexico and climate change. He’s convinced that if his ranches were still growing peppers for Huy Fong Foods, there would be plenty of sauce for everyone.

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“There’s a shortage because David broke the supply chain,” he said. “He cut us off and turned us loose.”

Officials of Huy Fong Foods, based in Irwindale, declined to answer questions regarding Underwood and the lawsuit. In an emailed statement, representatives said limited production of Sriracha has resumed. They said that because Huy Fong doesn't sell directly to retail stores and markets, they can't comment about availability on shelves.

They noted their chili garlic and sambal oelek sauces remain “temporarily shut down."

“Unfortunately we are still experiencing a shortage of raw material,” officials said. “...At this time, we have no estimations of when supply will increase.”

The shortage has driven some Sriracha connoisseurs to sites like Craigslist where the sauce is being offered for as much as $39 for a large bottle. Experts blame the shortage on climate and production supply issues.

“Last year, the production was nipped by some weather events,” said Stephanie Walker, co-director of the Chile Pepper Institute at New Mexico State University in Las Cruces. She said the crop has rebounded.

“The current shortage is more based on not having the production contact and not being able to source enough jalapeños on the fresh market,” she said.

Underwood sees his former partner's shortage as opportunity. After its partnership with Huy Fong Foods exploded, Underwood Ranches started making its own Sriracha and several other sauces. Underwood said sales have risen as people struggle to find Huy Fong’s product.

The sauces are meant to boost a company that Underwood acknowledged was badly wounded by the end of the Huy Fong partnership. He said the financial jeopardy actually grew worse after the $23.3 million verdict. The company couldn’t start collecting the money until a ruling on the appeal.

Underwood financed the appeal via a $4 million advance from a litigation funding company, Burford Capital. He later drove journalist Leslie Stahl around his farms as part of a “60 Minutes” segment on litigation financing.

“When we got the money from Burford, we were on life support,” he said. The appellate court ruled in favor of Underwood in July 2021. The farmer and his wife and business partner, Sara Jane Underwood, remember the day vividly.

"We were sitting on a dock on a lake in Maine, and we celebrated with a pitcher of margaritas," he said.

The original court award was huge but maybe not as large as it once appeared. Underwood had to pay back the $4 million and also pay another $4 million from the jury verdict to Burford. Some of the burden was offset by interest on the award paid to the ranches by Huy Fong Foods.

Underwood Ranches stopped farming peppers on a large-scale basis in part because the $7 million in harvesting equipment they initially kept was turned over to Tran. Other crops include tomatoes, onions, herbs and potatoes. The company's health has improved but Underwood said he at times had to lean on the family’s other business, Underwood Family Farms, which runs food stands, farms and "u-pick-em" fields at locations in Somis and Moorpark.

Underwood said he'll likely grow more peppers if the Sriracha sauce business continues to grow. He said he doesn’t dwell on the past and has moved beyond the lawsuit. But some resentment still simmers at the loss of a partnership that fueled both his business and Tran's.

“When David is having trouble, I enjoy it,” he said.

Tom Kisken covers health care and other news for the Ventura County Star. Reach him at tom.kisken@vcstar.com or 805-437-0255.

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This article originally appeared on Ventura County Star: Camarillo farmer: Hot sauce shortage began when Huy Fong 'cut us off'