Avocado volume in U.S. market could top previous record by 40 percent or more
by Rand Green | August 05, 2009
Avocado marketers in the United States currently find themselves in a position that marketers in almost any other commodity would surely envy. An expected surge in volume of 40 percent or more in the marketplace above previous record levels would be a frightening thing for most.
But for the avocado trade, demand for the product is believed to have grown to such an extent that it will take every bit of that expected 1.4 billion pounds of fruit, and more, to satisfy consumer cravings for Hass avocados.
After jumping from 700 million pounds in 2005 to 1 billion pounds in 2006, annual avocado movement in the United States has held steady at around a billion pounds simply because there has not been more fruit available. But demand has continued to rise, and consequently, prices have been strong.
The situation could hardly have been described better than by Avi Crane, president of Prime Produce International LLC in Orange, CA, who put it in an interview with The Produce News July 27. "In all my years in avocados," he said, "I would never have expected that 20 million pounds [per week] would be [considered] a shortage," and especially not during a recession. Yet that is exactly the situation the industry has experienced in recent months. "It's mind boggling," he said.
"In the mid-'80s, anything over 5 million pounds would have caused market dislocation," he continued. "Today, we are shipping 21 million pounds a week, and prices are the highest they have ever been in a July. It is pretty amazing. I would say that right now, it looks as if the demand for avocados is in excess of 28 million pounds a week."
Some people in the industry are talking about as much as 1.6 million pounds of avocados in the market over the next 12 months from all sources, according to Jose Luis Obregon, executive director of the Hass Avocado Board. But "I would say between 1.3 and 1.5" million pounds is "what is expected to be here and to move properly."
The industry is ready to handle that volume, he stated. Since 2006, "the industry has been preparing with infrastructure [and] ripening rooms in various parts of the country." There are also marketing programs in place, backed up by what will be a "record volume of marketing dollars being spent." With all of the promotional support that will be "behind this fruit," he said, "the industry should feel confident of being able to move this product. The demand is there," and there will be "enough supplies" available to do "continuous promotions."
There are also ample opportunities to continue building demand for increased volumes that are anticipated in future years, he said.
Mexico, which exported a record volume of Hass avocados to the United States during its 2008-09 season, expects an increase this year, projecting exports to the United States of 700 million pounds of fruit. Chile, which has been light the past two years, is coming on with a record crop and expects to export 310 million pounds of fruit to the United States. And California, which is just coming off its lightest crop in decades, expects a large crop for 2009 in the range of 350 million to 400 million pounds.
Prices have been high, but retailers and consumers need to "just be patient" a little longer," because "there are going to be a lot of avocados this fall and winter," said Bob Lucy, president of Del Rey Avocado Co. in Fallbrook, CA. "Once we get into September with very good volume, I think you'll see very, very promotable prices for the retailer" and attractive retail prices for the consumer, he said.
"We've seen a billion pounds" in the market "for each of the last three years," said Giovanni Cavaletto, vice president of operations for Index Fresh Inc. in Bloomington, CA. "In order to move a billion pounds a year, you have to move 20 million pounds a week. ... In 2006, the first time we ever did that, demand was much lower than it is now."
The demand, the infrastructure and the promotional support are all in place to handle the much larger volume that will be in the marketplace during the coming year, he said.
(For more on the subject, see the Global Avocado Section in the Aug. 10 issue of The Produce News.)