Avocado marketing situation to stabilize after unusual summer

The U.S. avocado marketing situation has been a bit unsettled through spring and summer as buyers and sellers had to deal with several unanticipated curveballs.

Mexico’s ongoing drought, which finally seemed to end in June, led to a smaller size curve than what is typically expected. Climatic conditions in Peru led to a much smaller crop than expected and smaller fruit than expected. And on the other end of the spectrum, California growers and handlers ultimately marketed a crop that was 50 percent larger than the preseason estimate. In addition, the U.S. Department of Agriculture suspended avocado shipments from Mexico for about a week, which in reality kept Mexican fruit out of the U.S. market for about 12 days

These factors combined to keep the FOB price at a very strong level through most of the first six months of the year, though there were fluctuations and sometime a two- and three-tiered market, based on point of origin. Several industry observers expect the second half of the year to be more predictable and less volatile.

Giovanni Cavaletto, president of GLC Cerritos, which is the U.S. sales arm of a large Mexico growing operation, was particularly annoyed by the California avocado industry’s wildly inaccurate crop estimate. Cavaletto has been in the industry for more than three decades, spending most of that time working for a California based grower-packer-shipper. The estimate used to always be within 2-3 percent of the final number is what Cavaletto recalls.

He believes the loss of institutional knowledge within the California industry, as well as a changing global environment, are the culprits for the inaccurate prediction. Cavaletto said because of retirement the industry has lost a lot of knowledge and indicated that those in the groves ground-trothing the estimates coming from packers and growers are just not as knowledgeable as previous estimators. In addition, he theorized when California was the major producer and provided packers with the bulk of their annual output, the handlers paid very close attention to what the state’s growers had on their trees.  Now since California is only producing about 10 percent of total volume, an estimate miss, in the grand scheme of things, is not that consequential.

But Cavaletto said California shipping 100 million more pounds than estimated and Mexico being shut out of the U.S. market for close to two weeks cost Mexico growers a lot of money.

The market price did fall about 30 percent in late June/early July with Mexico having full coolers and less orders than usual. But speaking to The Produce News in late July, Cavaletto expected that would all change by the middle of August with most countries of origin dropping out of the market and Mexico controlling about 90 percent of the volume.

He also expects that this upcoming season and the future bodes very well for the avocado industry as a whole and specifically Mexico, as it is the largest supplier.