By avocado expert and Green Earth Produce business development manager Avi Crane

The growth of avocado consumption in the USA since 1985 has been record-setting for the produce industry. In the past 10 years, consumption has increased by more than 11% annually. The avocado industry leadership has been diligent in preserving and expanding industry promotions since Ralph Pinkerton became the founding president of the California Avocado Commission over 50 years ago.

Today, led by the Hass Avocado Board and Avocados from Mexico, effective and well-funded consumer advertising and trade promotional support - along with solid scientific research results on the health benefits of avocados - assures the continued growth in the demand of fresh avocados. At the beginning of this month, the largest television audience in history viewed an advertisement created by Avocados of Mexico during the Super Bowl half-time.

By the end of this decade, based on historical data, population/economic growth projections and supply forecasts, my analysis forecasts that annual consumption of avocados in the USA will increase an average 7% per year and surpass 2.5 million pounds. Imports will continue to facilitate the growth in consumption with increased volume from current suppliers and the prospective market access attainment from other avocado-producing nations such as Colombia and South Africa. Mexican avocados (including production from Jalisco) will dominate the first, second and last quarter of the year. Peru and California will contribute most of the volume in the third Quarter.

For the trade, this information translates into an almost certain year-round supply of avocados. Super Bowl, Cinco de Mayo, Memorial Day, Independence Day, Labor Day and New Year's will continue to be the major promotion periods. The industry funds available for these promotions will increase with the volume.

Today's Avocado Market

Despite a 20% increase in supply during the first seven weeks of 2015 as compared to 2013, the available inventory of avocados remains well below the demand level. The result has been an increase in freight on board (FOB) prices since Week 4. Concurrently, even with 50% of this year's crop still on the trees and a higher on-tree crop than this time last year, field prices in Mexico have gone up and the imported volume has decreased.  Suppliers are struggling to meet their commitments to retail and foodservice customers. Meanwhile, FOB pricing is rising with the field prices in Mexico.

Industry shipments in pounds

Mexico

The avocado harvest is expected to mirror 2014 during the second quarter of this year. However, field prices are expected to remain higher than last year. As normal, the availability of export quality fruit will decrease as the percentage of #2 fruit received at the packing houses increases. This year, according to some industry sources, the percent of #2 fruit on the remaining on-tree crop is larger than in the past. In addition, the volume sent to the domestic market will increase in the second and third quarters. As with the recent Super Bowl promotion, volume is expected to pick up for the Cinco de Mayo retail and foodservice promotions. Avocados from Mexico executes an effective year-round advertising and promotion campaign that eclipses in scope and financial resources any industry efforts in the past.

USA

This past week, the California Avocado Commission (CAC) issued its crop estimate for the current season. The CAC estimate of 327 million pounds is a 16% increase over the prior year. Due to various weather-related factors that have accrued since fruit set last spring, this author forecasts a USA crop that is just below 10% higher than 2014. Regardless, the majority of the crop will be harvested in the third quarter and pricing is expected to be at or above 2014 levels.

Peru

The initial arrivals of avocados from Peru this year will begin in late April. Favorable weather conditions and production from avocado acreage bearing its first yields, will allow Peruvian avocado exporters to ship possibly 50% more product than in 2014. Peruvian Hass has maintained a significant market in Europe for over 15 years. Therefore, this author forecasts that around 50% of the Peruvian Hass harvest will be packed in facilities certified for the USA market. The consumption projections shown earlier in this article include an assumption on increased imports of Peruvian Hass from May to September every year - eventually resulting in the dominate market share for the third quarter of every year.

Chile

The volume of the Chilean avocados harvest shipped to the USA continues to be limited. Virtually all of the product sent by Chilean avocado exporters to North America is on fixed volume/price programs. With a strong domestic market and profitable exports to Argentina, Europe and Asia, Chilean avocados do and will play a very limited role in the USA market.

 Avi Crane can be contacted at avi.crane@greenearthproduce.us

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