Chinese authorities recently announced the import tariffs for fresh and dried avocados would be reduced from 10% to 7% effective as of Dec. 1 this year. The follows an earlier drop from 25% in January 2016.
Fresh Fruit Portal understands that while the 25% rate was classified as permanent by the Chinese government, the subsequent reductions are temporary and so the tariff could be raised up to the initial level at any time.
This latest decrease to 7% is expected to provide the greatest benefit to Mexico, given that Peru and Chile already enjoy tariff-free access due to their free trade agreements.
Speaking to Fresh Fruit Portal, Avocado Producers and Exporting Packers Association of Mexico (APEAM) advisor Ramon Paz said the development was good news for Mexico.
“We are very satisfied with the tariff reduction,” he said.
“Effectively the tariffs have reduced over a period of two years from 25% to 7%, and that will have a compound effect as it will also reduce the value-added-tax (VAT) and other charges.
“So the cost of importing Mexican avocados to China is going down, and that should stimulate our exports.”
He also said this would improve Mexico’s competitiveness against Peru and Chile in the Chinese market.
“It brings us closer to them, but there is still some way to go. We need to get the tariffs completely removed in the future, but we are satisfied with what is happening now,” Paz said.
The representative noted while this could result in stronger export growth to China than previously anticipated, the price level in larger markets like the U.S. would be a more important factor.
For this Mexican avocado season – which runs from July through June – Paz said the industry was forecast to ship 12,000-14,000 metric tons (MT) to China.
The U.S. market
Approximately 835,000MT are projected to be exported to the U.S. this season, which would mark an 8% year-on-year increase from last season’s 772,000MT and be on par with 2015-16 volumes.
As of last week around 300,000MT of fruit had been shipped, which Paz said was 7% below what had been forecast. However, he noted this was because of rainfall in growing regions in July which delayed the harvests, and he still expects the original forecast to be achieved.
Paz also explained the first five months of this current campaign in the U.S. had been characterized by fluctuations in both prices and volumes.
“The season started when there was little fruit and high prices, and the season has been marked by instability,” he said
“The prices and the volumes have been changing rapidly. Overall we are within the forecasts, but the weekly analyses show that there have been bigger fluctuations in both prices and volumes than other seasons.”
He said average per-kilo prices have been slightly below last season, which he attributed to the increased supply.
Mexico is expected to export around 1.1 million metric tons (MT) to all markets this season.