By avocado industry veteran Avi Crane

The summer 2016 avocado market in the USA (and Canada) has seen industry-wide events that have resulted in record FOB prices and a decrease in consumption.

To name a few - inaccurate volume projections, a (preventable) missed opportunity for Peruvian avocados in North America (vs. Europe), a current missed opportunity for Chilean avocados in North America, an unexpected (but not uncommon) heatwave in California (causing extensive drop of the current crop being harvested and reducing the already low producing crop for 2017) and the increased demand in developing markets for Mexican avocados.

As the chart below demonstrates, producers and importers severely shorted the North American avocado
market for the past 90 days. World supply was below summer 2015 levels, but still sufficient enough to
supply customers in the USA and Canada. It would have most certainly been above the actual levels achieved below had product not been diverted to alternative markets.

For example, in anticipation of a close-to-record avocado harvest in California in 2016, USA-based companies with packing houses in both California and Mexico accelerated their export programs of Mexican avocados to China.

When it was clear that the USA avocado crop had been over-estimated (not by this analyst) and the June heatwave caused extensive fruit drop, commitments to programs in China prevented diverting more Mexican avocados to USA and Canadian customers in July and August.

Despite the undersupply situation, as the chart below analyzes, year-to-date sales through the end of August are 155% of prior period in 2012.

The continued steady growth of avocado consumption in North America began with the United States Department of Agriculture (USDA) allowing limited-market access for Mexican avocados in 1997 and full-market access ten years later on Feb. 1, 2007. In 2007, avocado consumption in the USA was less than one billion pounds. In just two years, consumption passed one billion pounds and has seen an increase over the years since.

This author has spent over 3 decades projecting avocado consumption trends in the USA. Based on a
comprehensive analysis of past consumption and production trends, I can confidentially forecast that within
two years’ time avocado consumption in the USA will surpass 3 billion pounds and within five years demand will be close to or above 4 billion pounds.

There are many elements that contributed to the projections in the chart below. However, the most significant factor is that the Hass Avocado Board (HAB), through its country associations, will spend an average of US$80 million annually on promoting consumption of avocados.

The Mexican avocado industry is expected to add at least US$10 million annually to this amount, so the Avocados of Mexico, will have +$60 million to spend annually during the next five years.

Sources: California Avocado Commission, Hass Avocado Board, APEAM and other industry and personal information

Avi Crane is a former executive of Calavo Growers, Inc. (CVGW). Crane served as vice-president at the California Avocado Commission, established and managed the Chiquita avocado program and began his career in the avocado industry as a producer. Currently, Avi Crane is working directly with producers to help maximize their returns from the market in North America. He can be reached at avicrane@scpacking.com.

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