What is this?
Hi- many gardeners are observing relatively high levels of caterpillar feeding. In your case, it may be climbing cutworms or tomato fruit worm (corn earworm). European corn borer will enter peppers fruits where they attach to the stem.
Unfortunately, it is difficult to locate and squash eggs prior to hatching. Organic insecticides for controlling caterpillars, such as Bt and spinosad, or diatamaceous earth (DE) can control caterpillars but must be applied before caterpillars start feeding on fruits. Pick up and dispose of infested fruits to prevent these pests from reaching the soil to pupate. Next year, yu can consider buying and using insect screening material (different from floating row covers) that can cover and exclude most insect pests without heat build-up around the plants.
If the holes are small, can I cut off the good part of the vegetable and eat it? You don’t know if any diseases the caterpillar may convey to the fruit, do you? Also, please describe in greater detail the cover I should use next year. It should NOT be a floating row cover? Thank you.
Yes, you can cut out the bad parts and safely eat the good parts. The diseases that infect tomato fruits do not infect people.
There are some new insect barriers, sometimes called micromesh, now available. We do not recommend specific companies or products. For description purposes here is an example: