By avocado industry veteran Avi Crane
Since 2007, when the United States Department of Agriculture (USDA) finally and fully annulled an 80-plus year prohibition on the importation of Mexican avocados, the consumption trend for avocados in the USA has risen at a 15% average annual increase. This extraordinary surge in supply did not result in any long-term price collapse.
While most of the produce industry failed to comprehend the future for avocado consumption (and predicted a very sloppy market), the long-established California avocado companies embraced the supply surge and supported their retail and food service customers with solid industry-funded promotions under the umbrella of the Hass Avocado Board.
Most knowledgeable players in the avocado industry attribute today’s decrease in supply to a “short crop”. This may be true, and certainly the firt quarter of 2017 was short on supply and high on FOB (freight on board) pricing. Michoacán is the “Ancestral Home” of the avocado. Since my first visit to the avocado producing areas of Mexican in the mid-80s , I have understood the production potential of the avocado tree; a potential unachievable in microclimates such as in southern California, with Carpintaria being the exception.
With the surge of plantings that are now coming into production and the ideal soil and climate, the conditions that would result in a “short-crop” in Michoacán and Jalisco seem remote.
I would conjecture, however, (with no hard-empirical facts) that the success of the industry-wide operation shutdown in October 2016 by a small minority of players, has fundamentally altered the avocado business model in Mexico. The law of supply and demand has been revised. I hope that my conclusion is erroneous and/or the situation will return to normal very soon.
Meantime, what is very clear is that the avocado supply will fall short of demand for Cinco de Mayo 2017. How short? Based on an analysis of year-to-date shipments, 46 million pounds of avocados will be missing from April shipments. The supply will not reach the 460 million pounds required for last year’s Cinco campaign. The avocado vendors of the chain and club stores will do everything possible to supply 100% of their contracted commitments. Foodservice contracts, for the most part, will be honored. The shortage will be extreme in the spot market deals.
SOURCE: California Avocado Commission, Hass Avocado Board and other industry and Propriety statistical models
Avi Crane is a former executive of Calavo Growers, Inc. (CVGW). Crane served as vice president at the California Avocado Commission, and established and managed the Chiquita avocado program. Avi Crane began his career in the avocado industry as a producer and currently, along with his partner in Mexico, he is working directly with producers to secure lines of credit to cashflow their production costs and to facilitate their shipments to the USA through ProducePay.
Avi Crane can be reached at email@example.com or via his Twitter feed @TheHasSHorn.
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