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Calavo sees opportunity to meet growing avocado demand

“You cannot deny the fact that demand” for avocados in the United States “continues to grow at about 15 percent a year,” said Rob Wedin, vice president of fresh sales for Calavo Growers Inc. in Santa Paula, CA.

The demand is year-round, and it has required an increased aggregate volume of fruit in the marketplace every year from California and other sources, mainly Mexico and Chile, to keep pace with the demand.

The past year, from latter part of 2010 through summer 2011, “has been the first time that the volume available for consumption in the United States has gone down in 10 years,” Mr. Wedin said. A short 2011 California crop, about half the volume of the prior year, has been a major contributor to that decline in aggregate volume in the market, and it has been a “stressful” situation. “Prices have been quite high, even higher than expected in some cases.”

But “it could have been worse,” he said. And in fact, overall, “I think it has worked out pretty well.”

While “there has not been a lot of promotion” of avocados with the high market prices seen this year, still there have been Hass avocados “in pretty much every store in America,” and that in itself is “a success story,” Mr. Wedin said.

“Avocados are a popular product” and deserve to bring a good price, he said. “But this year was a little bit of a shock.” Even so, customers “hung in there pretty good. I think they realized they could make money selling avocados at higher prices than they [previously] thought they could. We feel grateful to them that they didn’t give up on us and that they hung in there and did a good mob on merchandising avocados.” The trade deserves credit for that, he said.

But the industry also gets its share of credit for managing “the combination of crops” from various sources in such a way as “to keep things from getting worse,” Mr. Wedin said. “California did that by compressing its crop into the summertime when demand is the greatest,” when Chilean fruit is not in the market, and when Mexico is in its lightest period.

Because of that, California will finish its shipping season much sooner this year than it did last year, but that marketing strategy enabled California to keep more fruit in the market each week through the summer than it could have done if its smaller crop were stretched out over a normal marketing period.

Calavo’s growers from the northern districts, who normally harvest their fruit later in the season, have accelerated their harvest this year as the amount of fruit coming out of the Riverside and Temecula areas in the south started to slow down. “We’ve gotten great cooperation this year out of the Santa Barbara growers who have really stepped up to help meet the challenge,” he said. They were able to come in and “take advantage of really good prices” and also “help meet the demand on small fruit.” But as a result, those northern growers “are going to be finishing earlier than normal, that is for sure.”

As July was coming to a close, Mr. Wedin said, “we are now getting ready to decline on California volume,” a decline that will be “well along” in August, Mr. Wedin said. “By the second week of August,” which ordinarily would still be peak season for California avocados, weekly volume from California “will be about 50 percent of what it was at the peak period” in late June and early July.

The challenge ahead, as California winds up early, he said, is “to make the transition” to the three sources of Hass avocados that will carry the market through fall and winter and into the spring of 2012 when California will come back with a larger crop. Calavo will be handling fruit from all three sources.

“For the next seven months or so, we are going to be pretty much into the Mexican and Chilean season,” he said. In addition, Peru, which is close to the end of its season, has received approval from the U.S. Department of Agriculture to ship into the United States, and some of that fruit will be available in August and September.

Peru will get “the benefit of this [high] market on the tail end of their season, but it is going to contribute fruit” at a time that is needed to “bridge the gap” until “we really get into the heart of the Mexican and Chilean season.” Normally, California would carry through that transition, but with one of its smallest crops in 20 years, California “has chosen to go to market to try to satisfy the summer demand” leaving “nothing there for the fall,” he said.

“We are coming off a year when [global] supplies just really struggled to keep up with demand,” he said.

Calavo expects to bring most of its Peruvian fruit into the eastern markets through New Jersey, but could also bring some into Los Angeles or Houston where it would be distributed through “our Santa Paula facility and our Dallas facility,” Mr. Wedin said.

For the past two years, Calavo has been shipping Peruvian fruit to Canada in the “Calavo” label, he said.

Mexico, which was just beginning to ship new-crop fruit in light volume and would be accelerating production over the next couple of months, is expecting a somewhat larger crop. And “we expect to have the biggest Chilean crop, for us, in some time,” Mr. Wedin said. “So those two sources look good” in terms of their ability to meet growing market demand, once they get rolling, until California comes back into production next spring.