Peruvian Avocado Commission celebrates 10 years of growth, with more to come
In 2010, the U.S. Department of Agriculture approved the importation of Hass avocados from Peru and that first year seven containers were shipped to the United States with the fruit inside having been subjected to a cold treatment. Parallel to this, the USDA also certified the Peruvian Avocado Organization to operate under the U.S. Federal Promotion Program for Avocados.
Jose Antonio Castro of Agrokasa in Lima, who is the current chairman of PAC, remembers that shipment well. “Cold treatment disrupts the natural life of avocados,” he said, indicating that the arrival at the U.S. port was not stellar.
By 2011, Peru had developed a USDA-approved systems approach that allowed for groves and packing operations to be certified and the fruit from those operations to be sent to the United States without the cold treatment protocol. Peru’s U.S. avocado export volume has been on the rise ever since. This year, it is estimated that the South American country will send as many as 235 million pounds of avocados to the United States during its shipping season, which typically runs from late May through late September, peaking in June, July and August. If that number is reached, it will represent a 30 percent increase over 2020.
Xavier Equihua, president of the Peruvian Avocado Commission, said Peru’s position in the U.S. marketplace after just 10 years is very impressive, if you compare it to Mexico, for example.
Mexico, the world’s largest avocado producer and exporter, was facing regulatory challenges in its first decade in the U.S. marketplace and was still battling to have its fruit available throughout the year and in all geographic regions. Peru jumped that hurdle quickly, as it was the first country to receive APHIS certification to export from the entirety of the country and not just some states. Though most of its fruit is sold and consumed on the East Coast, importers handle the fruit on both coasts, and it is sold throughout the Continental United States.
Impressive as that growth is, there appears to be general agreement from Peru that the United States should be home to even more Peruvian fruit. Peru’s representatives believe that the country’s producers should have a greater market share and that the United States should be consuming more avocados during the summer months, which, as mentioned, is Peru’s sweet spot.
“We are a seasonal supplier and while it is very positive that we might reach 235 million pounds this year, we would have been at more than 200 million pounds two to three years ago if the overall market would have grown as fast as it should have,” said Equihua.
He noted that Peru will produce one billion pounds of Hass avocados this year and it could easily send more of that volume to the United States if the U.S. market grows.
Though the total U.S. market may reach three billion pounds this year, Equihua believes that threshold should have been surpassed several years ago. He estimated U.S. consumption of avocados is only growing at about a 5 percent annual clip in recent years. He points to the European Union as a growth model as its avocado consumption grew 23 percent last year, according to Equihua. The EU is Peru’s top avocado destination and Peruvian avocados dominate the EU market. Peru ships approximately three times as many avocados to Europe as it ships to the United States.
“If the EU can consume two billion pounds, the United States should easily be at three billion pounds, especially since there are more than 60 million Latinos that reside here who are natural consumers of avocados,” he said. “Additionally, there are thousands and thousands of restaurants – including over 70,000 Mexican restaurants -- serving avocados, and there is a collective budget of over $100 million spent each year on avocado promotions (in the U.S.). Europe, on the other hand, has a small population of people of Latin American descent, very few Mexican restaurants, and only about $5 million is being spent to promote avocados.”
Equihua points to U.S. cultural advantages as to why the consumption is greater than Europe and why per-capita consumption should be even higher.
He noted that of the 60 million Latinos in the United States, the vast majority have Latin American roots. That represents about 18.5 percent of the population, yet Equihua believes they consume more than one-third of the avocados in the U.S. And he said heavily avocado-centric Mexican food is a mainstay in the United States among all consumers, which is another advantage that should lead to greater than 5 percent year-over-year growth in avocado consumption.
By contrast, Equihua said Europe’s Hispanic population is not Latino based but rather from Spain, Portugal and Italy – cultures that do not have the same affinity for avocados but are gradually learning.
PAC Chairman Castro also believes that Peruvian avocados should be sold in larger numbers to the United States market, and that they should represent a larger market share. He pointed to supply chain issues at both source and destination as the number one limiting factor.
Castro admitted that both California and Mexico have a significant advantage in the U.S. marketplace over Peru largely because of the distance to marketplace. Peruvian fruit must spend 18-20 days on the water as it makes the long trip from South America to North America. Most of California’s fruit is consumed within a day’s travel time from the groves. Mexico’s fruit has a longer journey, but it still reaches many, if not most, destinations within a week to 10 days from the Central Mexico packing sheds.
The Peruvian avocado expert says that allows California and Mexico growers to pick the fruit with an average 29 percent dry matter. He said when Peru first shipped to the United States, a lot of the fruit was picked at below 23 percent dry matter, and that target is still not reached by some suppliers. He said all fruit has to be picked at 23 percent or higher, and added that Agrokasa averaged 26 percent in 2020 with a goal of 30 percent in the future.
Castro said many Peruvian packers have learned how to handle the fruit much better than they did the first few years from picking it to the grove to transporting it to the United States, which has allowed for greater dry matter, better quality and a far better U.S. eating experience than some remember from eight to 10 years ago.
However, handling at U.S. ports and in U.S. retailer distribution centers still needs work. He said a piece of fruit that has been on the sea for three weeks has to be handled differently than a similar avocado picked within the last week or two.
Castro understands that during the last decade most U.S. handlers of Peru avocados treated the item as a supplement to their Mexico and California fruit. They didn’t establish handling technique specific to the journey Peru avocados were on. He contrasted that to Europe, where Peru is the main game in town during the summer months.
“Even though the fruit is on the sea for an additional 10 days, EU importers had to learn how to handle it,” he said. “They didn’t have anything else.”
While it is counter-intuitive, Castro said the condition of most Peruvian avocados consumed in Europe is better than in the United States. He said Peru has increasingly improved the quality it ships and that U.S. importers need to adopt the protocols being used in Europe to provide consumers with a great eating experience.
A significant percentage of Peru’s fruit has been purchased in recent years by the nation’s largest retailers on what is called program buys. Castro said for the most part these larger chains have learned how to handle the crop and have been able to deliver good quality Peru avocados to their customers.
As U.S. consumption increases, he said Peru is ready to move past its initial role as a supplemental player to a source with larger market share. In 2021, Castro expects Peru to send about 4,000 container loads to the United States. He said it is conceivable that the number can double in the next few years -- if the fruit is handled properly at both ends.
He said one big advantage Peru has over both Mexico and the United States is that the larger shippers own most of their own fruit. They are not reliant on thousands of small growers, so they have more control over the process literally from field to fork. They control picking and shipping and, in some regard, they can also control the receiving end by making sure they don’t flood the market and work with handlers ready to pay proper attention to the needs of Peru’s avocados.
Castro said this should be a major advantage as the country moves toward increased avocado shipments to the world’s number one avocado market.