BARRANCA, Peru — Agrokasa, a multi-faceted agricultural producer, has taken avocado growing to a new level of sophistication.
Its avocado orchard is ideally situated here, in a coastal region approximately 125 miles north of Lima.
“We have 3,000 acres of avocados, and the entire ranch is about 9,000 acres, so we really have no neighbors,” said Jose Chlimper, president of Agrokasa and a former minister of agriculture for Peru. “Also, it is a very hilly region, which minimizes wind that can be bad for avocados.”
Agrokasa’s Las Mercedes ranch is in an extremely arid region that receives just two to four millimeters of rain per year. Normally, this would be bad news for growing avocados, however the ranch’s location near a river emanating from the Andes Mountains gives it access to an abundant supply of water.
But Chlimper is still mindful of preserving that precious natural resource. To best do that, the company has a system in place to filter the water in open reservoirs before pumping it up to 10 covered reservoirs that each hold 130,000 cubic feet of water and sit several hundred feet above the avocado orchards. And being at elevation means gravity can be put to use to irrigate the trees without the need for further pumping.
Additionally, trees and fruit are outfitted with a sensor to measure contraction around their trunks. When the trunk contracts, it is an indication that the tree is thirsty and the irrigation system is triggered. When the trunk expands, the tree has had its fill and the irrigation system shuts down.
“It is not unlike people,” said Chlimper. “When you are thirsty, you drink and when you are not, you don’t. We let the trees tell us when they are thirsty so we only water them when they need it.”
In the orchards, Agrokasa workers meticulously care for the trees and fruit. Avocados exposed to direct sun are covered with avocado leaves to protect against sunburn. The leaves eventually fall to the ground and become part of the natural compost that nourishes the soil. It is a natural, inexpensive and efficient way to increase yields.
As another way to protect its water supply, Agrokasa breeds owls as a way of controlling the rodent population.
“Mice have a tendency to chew through the irrigation lines in search of water,” said Chlimper. “The owls help control the mice population so we can save water and the time and labor to fix the lines.”
Also, in keeping with the theme of self-sufficiency at Agrokasa, the company maintains 400 beehives and brings in more during the season to properly pollinate the trees.
The flowering season is late September to late November, and since Agrokasa has its own bees, it can better control the pollination period.
“We have enough bees in late September so we have fruit more evenly throughout the season,” said Chlimper. “We don’t get the big peaks throughout the season, which are not good for the market, the plants or the consumers. Intelligent management makes longer, smoother harvest and a predictable supply of fruit.”
When harvesting the fruit, workers carefully load it into field bins, using a special padding to minimize bruising.
For 2015, Chlimper predicts that total Hass avocado harvest from his Las Mercedes ranch would be about 21,000 metric tons, half of which is destined to the U.S. market. In three years, that volume could rise to 35,000 metric tons with all plants reaching maturity.
Agrokasa was also undergoing an expansion of its packinghouse early this season, which would double the number of avocado packinglines to four and increase the number of forced-air cooling tunnels to eight from four. The increased capacity will enable Agrokasa to handle 400 tons of fruit per day at peak season, according to Chlimper.
If the avocado market remains strong — as it has been all year — Peruvian’s share may rise beyond current expectations, according to experts from West Pak Avocados Inc. in Murrieta, CA.
Kellen Newhouse, vice president of sourcing for the company, said that total volume is forecasted to be between 150 million and 175 million pounds this year, compared to 145 million pounds last year.
“But we may see an increase if the U.S. market stays strong and the euro stays weak,” he noted.
As of early June, the euro was trading at a rate of about $1.09, which is about 20 percent less than it was a year ago. Consequently, it takes more euros to buy avocados from Peru and creates a higher-priced item for the consumer. That tends to depress demand, which is why Peruvian exporters might send more fruit to the U.S. market if the demand is there.
Newhouse said the Peruvian fruit is mostly large fruit, with 48s and larger making up the bulk of the volume. But again, he said the weaker euro should mean an increase in smaller-sized fruit sent to the U.S. market. Europe has always preferred a smaller avocado and the expectation is that there will be more of the smaller fruit available this year for U.S. export if Europe’s demand decreases.
The West Pak executive said his firm will be marketing Peruvian avocados into September. He expects tiered pricing with a gap between what the Peruvian fruit commands compared to California fruit, but he believes that gap will be narrower than in prior years.
“Peruvian fruit quality is good and it is gaining market acceptance with larger retailers and foodservice, which will help keep the market velocity,” he predicted.
Newhouse said Peru is a key part of West Pak’s program. “With California ending early and the Mexican ‘Flora Loca’ crop starting in July, we will be depending on Peru as another quality supplier of avocados through the summer,” he said.
West Pak distributes fruit from Peru all over the United States but Newhouse said “we will see a higher percentage on the East Coast.”
The Peruvian fruit is packed in all types of containers, including lug boxes, flats, RPCs and bags.
“Every year Peru continues to improve its infrastructure and is able to handle more and more pack configurations,” he said.
Like other marketers, West Pak is encouraged by the strength of avocado movement this year. “Sales have been strong and the market continues to absorb a lot of volume,” said Newhouse. “If we do not hit 2 billion pounds [sold in the United States] this year, it will be next year. California looks to have a good set for next year. Mexico continues to grow and with the addition of Jalisco it will have more volume. Also with the devaluation of the euro, we should see increased volumes from Chile and Peru.”
West Pak is on the same growth trajectory, according to Newhouse.
“West Pak continues to grow,” he said. “We are expanding our [distribution center] network. This is something we are excited about and the news should come out very soon.”
While some marketers need to rethink their Peruvian avocado strategy after last season, Index Fresh Inc. in Bloomington, CA, does not include itself in that group.
“We didn’t have any issues last year,” said Dana Thomas, president of this Southern California-based avocado operation. “We had a plan and we stuck to it, and we are going to do the same thing this year.”
He explained that the Peruvian avocados that the company imports will fit into the company’s programmed sales just as the fruit from other points of origin does. He said the size of the fruit, the geographic location of the customer and the merchandising needs of that customer will dictate the ultimate point of origin of the fruit. But in any event, the fruit will be pre-sold and not imported for speculation.
Thomas said avocados from Peru fit in very well and are imported through ports on the East Coast and West Coast as well as the Gulf Coast. Those three entry points allow the firm to service customers in all parts of the country with relatively short shipping times from all points of entry.
Peruvian avocados will fill all of the company’s normal packs and labels during the summer, including the principal “AvoTerra” brand, the organic label “AvoLoma,” and its newest entry, “AvoBuddies,” which is used for smaller fruit.
Thomas said the organic program from Peru is new this season, and he characterized it as a “pilot program. We are very excited about it.”
He expects the size distribution from Peru to be perfect. “So far we are pleased with the size and the quality that we have seen,” he noted June 1, two weeks into the deal.
Like virtually the entire industry, Index will have Peruvian avocados in its arsenal through September. Thomas believes the avocados from this South American country will do well in the U.S. market, as he noted that avocados continue to be a growth item.
“I am as excited about the prospects for increased sales in avocados as I was 20 to 25 years ago,” he said. “There is still lots of potential for more sales.”
Thomas admitted that in his wildest dreams two decades ago he could not foresee the volume of sales that the avocado industry currently enjoys in the United States, but that doesn’t mean there isn’t a lot of room for growth.
“I remember when 5 million pounds was considered a big week,” he said. “And then we thought 20 million pounds per week was a huge number. Now we consistently sell 40 million pounds a week.”
But the longtime industry expert said there are still many non-users or casual users of avocados that can move into the heavy user category.
“There is still lots of potential left,” he reiterated. “As you can tell, I remain a big avocado booster.”
On the last business day in May, not many Peruvian avocados had made their way to the marketplace, but this season the market is ready for them — and can no doubt use them.
Matthew Clark, general manager for Eco Farms Avocados Inc. in Temecula, CA, predicted that California will not reach the estimate for the size of its crop even though it has been downsized significantly in recent weeks. As the California season was getting under way several months ago, the California Avocado Commission estimated the marketable crop at 327 million pounds.
“That’s has been revised to 283 million (pounds) and we don’t think it is going to reach that,” he said, adding that 250 million to 265 million seems more likely.
Clark said Peru could be in a very good position to fill the void as California is going to certainly end its season sooner than anticipated.
The Eco Farms executive is advocating for the orderly marketing of Peruvian fruit spread out over an extended length of time. He said Peruvian fruit should be available from June until near the end of September. Last year, shippers from there sent about 135 million pounds of avocados to the United States. This year, initial estimates were well over 200 million pounds to the United States.
“That was an unrealistic number,” said Clark. “It was then reduced to another unrealistic number and now it has been reduced again to something a bit more reasonable.”
Clark said Peru could export 160 million to 180 million pounds if it is orderly and spread out. “Last year they competed against themselves by sending it all at one time,” he said. “As long as they don’t do that, it should work well.”
He noted that Peru tends to send only 36-, 40- and 48-size fruit to the United States. While the United States does like this large-size fruit, a restricted size portfolio also reduces opportunities, as some buyers do feature smaller sizes.
Eco Farms brings both conventional and organic avocados in from Peru, and Clark said Peruvian avocados, with their summer time frame, are a very good fit for this Southern California company.
Like from other foreign points of origin, the organic fruit is certified as such at the packingshed. He said most of the Peruvian fruit is used for the firm’s program business, which makes up a larger share of the company’s sales each year. This year, he noted that Eco Farms will almost exclusively devote the Peruvian avocados to those pre-sold programs and will not bring any fruit in on a speculative basis.
It’s no secret that last summer Peruvian avocados flooded the market during a relatively short time frame and caused some downward pressure on the market price. Clark said there will be a multi-tier pricing system differentiating between the points of origin: California, Mexico and Peru. He noted that any price differentiation is determined by buyer demand not by the shippers.
Clark added that with a year under its belt with regard to blending Peruvian avocados into the mix, Eco Farms, like the industry at large, is more prepared to do a better job this year.
“We expect to have a similar program to last year but we will do it better,” he said.
Avocado imports from Peru are predicted to be up as much as 25-30 percent this year, but Del Rey Avocado Co. Inc. in Fallbrook, CA, expects an even larger gain, as its volume from that South American country could double.
“We think our volume will double, which is all good,” said Bob Lucy, who is a partner in the operation and in charge of sales. “The size distribution is going to be much better than last year, which should really help sales.”
He explained that the “sweet spot” in terms of avocado sizing for U.S. consumption is in the 48-60 range size. That’s a nice piece of fruit and lends itself well to good promotions at retail and foodservice.
In 2014, Lucy said Peru had an oversupply of very large fruit in the 32-36 range. “It all came at once and it started to back up,” he said. “That won’t be the case this year.”
With the knowledge that there is going to be a good volume of 40s, 48s and smaller, “we’ve (the industry) been able to set up programs,” said Lucy. “I really like what the Peruvian Avocado Commission has done. They have been aggressive and met with many of the large retailers. They are offering a good deal of support, which is what they need to do.”
And he said the early-season pricing has been very attractive to create those promotions. “Right now, California fruit is going for about $45 delivered (per carton) on the East Coast, and Peru came in much lower than that.”
In addition, he told The Produce News on June 1 that three weeks into this season, the quality of the Peruvian fruit is also greatly improved over last year.
“It’s cutting and eating very well,” he said. “We’ve seen the fruit from five containers at this point and it is excellent.”
Del Rey has a decade of experience in the Peruvian avocado business. Soon after the turn of this century, Del Rey formed a partnership with Ulises Quevedo in Peru to form Avo-Peru. The partnership purchased 5,000 acres of land and has thus far put in 1,100 acres of Hass avocados.
Del Rey markets the fruit in the United States, while Quevedo’s firm, Talsa, runs the packing operation and is the marketing arm for the avocados that are sent to Europe and elsewhere.
Because the California crop is smaller than predicted and has moved very well this spring, Lucy said the Peruvian crop is very much needed to take the retail promotions through the summer. He expects most of the Peruvian avocados to be sold east of the Mississippi River but he added there are nationwide customers. The key, he said, is to use the Peruvian fruit for the retail and foodservice programs the company puts together. Lucy said that is a much better situation than bringing in fruit unsold on a speculative basis.
He said Peruvian shipments by the first week of May were in the 4 million to 5 million pound range, but they would more than double on a per-week basis by the second half of June. California, on the other hand, has already shipped about two-thirds of its crop. While it will have avocados through July and August, it will have far fewer pounds in the marketplace in the latter half of summer than it had last year.
Lucy said Del Rey continues to expand its volume and should have some news to report about the scope of its operations as the summer heats up.
“These are exciting times for our company,” he said. “Everything is going very well.”