Avocados have been in a demand exceeds supply situation for the past 15 months. While that scenario should change for conventional fruit by October, there is not a lot of relief in sight for organic avocados.
For the first time in more than a decade, avocados shipped to the United States from Mexico declined during the last 12 months due to of lack of supply. Additionally, the much-smaller 2017 California crop and high prices have been the order of the day. Over the past year, a carton of 48-sized conventional avocados has most often been in the $45-$50 range, while organic avocados in the same size have averaged between $65-$70/FOB.
Bob Lucy of Del Rey Avocado Co. said the overall volume of avocados will increase, which will tend to lower the pressure on the organic price, but it will still be in a demand-exceeds situation. He noted California growers have received an excellent return for their conventional fruit over the past year, which tends to be a disincentive for transitioning to organic production. Though the market is stronger for organic production, growers are doing very well already. He noted organic production in Mexico is on the rise, though it can’t keep up with demand.
Gary Caloroso of The Giumarra Companies agrees, explaining high input costs for California growers – most notably labor and water – make it very difficult for a grower to transition to organic and the anticipated drop in volume. He said lower costs in Mexico make it an easier transition to organics and more Mexican growers are moving in that direction as they eye the premium.
Rob Wedin of Calavo said a review of the avocado market from five years ago reveals a carton of organic avocados typically had an f.o.b. price of about $4 more than a conventional carton---- a 10-12 percent upcharge. “Right now, we are seeing a $25 per box difference between conventional and organic,” he said in late July, representing a nearly 50 percent premium.
While the supply of organic avocados from Mexico continues to increase, it’s not keeping up with the growing demand. And the industry should not expect a change in the near term.