The avocado supply situation is continually challenged for one reason or another, yet U.S. sales of the fruit also continue to climb and are currently in record territory.
In fact, during the second week of January, Mexico shipped more than 70 million pounds of fruit to the U.S. market — an all-time record. And it appears that January alone will see U.S. sales climb close to 250 million pounds.
This tremendous volume follows a self-imposed two-week hiatus in shipments from Mexico in November, which experts predicted would have lasting effects that would linger into the new year. But retailers appear to have put aside fears of artificial manipulation of supplies and are promoting the crop at a very high level. Stable f.o.b. prices have led to numerous promotions, with a typical ad price of $1 per piece or even less.
More challenges to the U.S. supply are anticipated throughout 2019, as California will have its smallest crop in decades, Colombia supplies have been hampered by weather and Peru remains a wild card with the European options always looming large for packers and shippers of that fruit.
Mexico will continue to be the major supplier of avocados to the U.S. market, but it is always difficult to get accurate forecasts of supplies two or three months into the future.
Rob Wedin, vice president of fresh sales and marketing for Calavo Growers Inc. in Santa Paula, CA, is always a diligent chronicler of the supply situation but admits that forecasting the future is fraught with uncertainties.
Mexico operates on a July 1 to June 30 fiscal year, and Wedin said in quarters one and two, (July 2018 through September, and October through December) packers from that country sent just 900 million pounds of avocados to the United States with 382 million pounds in Q1 and 513 million pounds in Q2, despite the aforementioned two week picking “holiday” during early November.
In Q3 (January-March 2019), Wedin is estimating shipments of about 630 million pounds followed by Q4, which will be very close to Q2 figures at about 520 million pounds.
Add it all together, and Mexico’s shipments to the United States in fiscal 2018-19 should top 2 billion pounds.
Wedin said Mexico is currently in its heaviest shipping period as he expects the January-through-February time frame to include an average of 50 million pounds per week. He noted that retail ads were very strong around New Year’s Day and are continuing throughout the month, buoyed by the early February Super Bowl, which is one of the top three avocado-consumption events of the year.
Gahl Crane, sales director for Eco Farms in Temecula, CA, told The Produce News Jan. 14 that January is shaping up to be a great month for avocado sales, and he expects February to produce great sales as well. He noted that the U.S. promotion arm of the Mexican avocado industry – Avocados From Mexico – has a very strong February promotion program designed “to use the Super Bowl momentum and translate that into post Super Bowl ads and sales. There is a huge opportunity to use that momentum and AFM is capitalizing on it.”
For 2019, Mexico has Q1 mostly to itself, as California’s small crop of an estimated 162 million pounds is not expected to kick into gear until late March at the earliest.
In fact, the Hass Avocado Board, which projects sales from the various points of origin weeks in advance, does not have California topping the 2 million pound mark per week until March, and no 4 million-pound weeks until the last week of that month. Contrast that to 2018, when California had a 5 million-pound week in February, approached 7 million pounds in early March and eclipsed the 10 million-pound mark in early April.
Wedin expects most California growers to take a wait-and-see approach as they watch the market and supplies from other regions, most notably Mexico.
The Mexican avocado industry is scheduled to give a crop assessment during the second week of February in which it is expected to determine production levels through the spring months. The report could shed a lot of light on the supply-and-demand picture during the March-through-July time frame.
In January, the f.o.b. was predicated on Mexico’s strong volume and so it was relatively weak compared to a year ago. While there was very little California fruit in which to gauge the market, it was selling for at least $10 less per carton than a year ago. With a small crop, California growers are clearly hoping for very strong pieces to offset their lack of volume, but the price structure has many other factors to consider –most importantly, overall supply.
Peru is often a wild card for California producers as shipments to the U.S. market coincide with the typical peak of the California season.
In early January, Xavier Equihua, president and chief executive officer of the Peruvian Avocado Commission, told The Produce News that it was too early to estimate the size or drill down on the timing of Peru’s shipments to the United States. “But at the very least, we should have the same 180 million pounds we shipped to the U.S. last year — and we could have as many as 250 million pounds,” he said.
Again, Equihua said that while it is too early to tell, a total Peruvian crop of 750 million pounds seemed feasible. He said it is an off year for Peruvian avocados as it is for California avocados, but that does not mean shipments will decline. Peru still has many young trees with production increasing every year, even during off years.
For the last several years, Peru has concentrated a good part of its marketing efforts in Europe and that market has grown significantly with Peru being the major avocado importer. Its shipments to the U.S. market can fluctuate significantly as they have during the last four or five years. In 2018, Peru’s shipment started later and lasted longer as the weather in South America and the market dictated timing.
Equihua said it has yet to be determined how the market situation will play out in the summer of 2019. He expects a very strong market in Europe, as he noted that South Africa — another supplier of avocados to Europe — is also experiencing an off year. If that results in a hot European market, Peru’s shipments to the United States might not break any records.
On the other hand, California’s short crop could lead to record imports from Peru. Peru’s shipments could start as early as late March and last into September as they did last year. History reveals that the bulk of the shipments land at U.S. ports in June and July, but August was the heaviest shipping month in 2018.
The Peruvian Avocado Commission is developing its most ambitious U.S. promotion campaign focusing on sports and fitness, which Equihua said aligns well with Peru’s culture.
In the past, much of the promotional dollars have been spent on the East Coast, but with California’s much-smaller crop, Equihua said there could be an expanded focus in the western half of the country, where overall avocado sales have always been strongest.
BY TIM LINDEN
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