Organic Avocado Supplies on the Rise
After months of very high prices, caused by ever-increasing demand and lower-than-usual supplies, organic avocado volume is on the rise, according to several of the industry’s most prominent growers.
Rob Wedin of Calavo Growers, Santa Paula, CA, said the market on organic avocados has dropped significantly and he expects it to continue to shadow the fresh market at the tune of about a $10 premium per carton. For this past week, while the most desirable conventional fruit was in the $40 to $50 range, a carton of organic avocados in the larger sizes (40s and larger) was pushing $60. Still high priced but much better than the $80-$100 range that was evident for much of the summer.
Bob Lucy of Del Rey Avocado Co., Fallbrook, CA, reported even lower pricing on organic avocados, which made them ripe for promotion. He said that for the most popular fruit (48 size), the f.o.b. price was around $1 per piece, which leaves room for promotion. Lucy added smaller organic sized avocados were priced at such a level that allowed for very attractive retail promotions, in the neighborhood of $1.29 to $1.39 per avocado. Mexico has a very good crop of organic avocados, and promotable supplies and pricing should be the rule for the next several months, according to Lucy.
Wedin said total volume of avocados marketed in the United States hit a 52-week low for the week ending Sept. 3, with 25 million pounds sold that week from all points of origin. Volume has climbed significantly since then averaging right around 37 million pounds per week. That has led to the lower f.o.b. prices and a further reduction is expected over the next month.
In fact, Wedin said the U.S. consumed about 37 million pounds of fruit per week during the third quarter of 2017. With increased volume from Mexico, and California looking at a much larger crop on its trees for 2018, over the next year an average of closer to 44-45 million pounds per week must be consumed.
Wedin said those higher volumes will be met with lower prices on both conventional and organic fruit. In fact, he expects organic supplies to increase by about 15-20 percent over the next month or two as production from Mexico ramps up. The Calavo executive said all indications are there are quite a few Mexican growers transitioning to organic production to take advantage of the stronger market that consistently exists for organic avocados.
It is no secret that Mexican growers have lower production costs than their counterparts in California, so the mathematics of transitioning to organics often pencils out. In California, sky-high water rates tend to dominate every calculation and give yield an outsized impact, making the transition more difficult to justify. Consequently, much of the increase in organic avocado production will probably come from Mexico. Neither Peru nor Chile have participated to a great extent in the organic avocado sector.
Gahl Crane of Eco Farms Avocados, Temecula, CA, had a very similar take on the organic avocado situation. “We are seeing much better opportunities at retail for both conventional and organic promotions,” he said. “It’s a lot better now than it was and we expect it (the supply situation) to continue to improve throughout October and November.”
Crane said the extra large fruit will continue to be in short supply and will command premium pricing. But he added there should be some bargains with the smaller fruit allowing for more promotions and increased retail sales. Speaking specifically of the organic f.o.b. market, he said “those days of prices in the $80s and $90s are behind us.”
With regard to California’s 2018 crop, which is on the trees but still several months away from harvest, Crane cautioned that there is still four months of winter to get through. California’s 2017 crop came in right around 210 million pounds with expectations that the 2018 crop will double that. The Eco Farms executive said there has not been a lot of growth in organic acreage over the last year but volume should be up simply because, on average, each acre could very well produce twice last year’s output. Some California fruit could be available as early as January as this year’s marketing season should stretch out a bit at both ends because of the increased volume.
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