The organic avocado market is red hot with the popular fruit getting a $15 to $20 premium over conventional packs for the past month and is expected to continue through May and the upcoming Cinco de Mayo holiday.
Patrick Lucy, Del Rey Avocado Company
“Mexico’s volume is starting to go down and California can only produce so much organic volume each week,” said Patrick Lucy of Del Rey Avocado Company, Fallbrook, CA. “Demand has been good, especially now with many retailers running Cinco de Mayo ads. And we think the pandemic is having an impact as many people are trying to eat healthier and eating organic avocados is one way to do that.”
He said it is not unusual for there to be a $15 to $20 gap between conventional and organic avocados, but typically it is short lived with a $10 gap being the norm. “But we’ve had at least a $15 gap for the past month.”
Lucy did say that organic avocados from Peru have started to reach U.S. shores and that volume will continue to climb through May. California’s organic volume is also expected to increase through May. By June, the Del Rey executive predicted that the supply and demand of organic avocados will be better in sync.
Rob Wedin, Calavo Growers
A look at volume projections indicates California avocado growers are expected to ship at least 75 percent more total volume in 2020 than they did in 2019 and handlers of Peruvian avocados have predicted that total avocado shipments to the U.S. market will be about 20 percent greater than last year. Both of those sources of supply are forecast to hit their peak shipping weeks in the June/July time frame. Their organic volume should also be at its peak in that period.
Lucy said Mexico and California have combined to put a lot of fruit in the U.S. marketplace in the two weeks leading up to Cinco de Mayo (135 million pounds), so a drop in price after the holiday is being anticipated. This week, a carton of organic 48s was selling for about $60 while conventional fruit was bringing in about $45.
Rob Wedin of Calavo Growers, Santa Paula, CA, reported the same price structure and said it is difficult to keep up with the organic demand. “Organic fruit is hard to find right now,” he said, noting that the level of demand and sales could lead to an ongoing shortage as the season wears on. “The simple fact is we (the industry) can’t keep up with demand. There is a $15 per box premium on all sizes. We are buying as many as we can.”
Ross Wileman, Mission Produce
Wedin said growers have taken note with more growers transitioning some of their acreage or at least considering it. He expects more organic production to come out of Mexico in the coming years as the biggest deterrent is the increased cost of growing organically and that is less of an issue south of the border. “Because of labor costs, Mexico can grow organically for a lower cost,” he said.
Ross Wileman of Mission Produce in Oxnard, CA, also commented on the demand exceeds supply situation regarding organic avocados. “We can’t get as much fruit as we would like,” he said. “Supply is just not keeping up with the demand.”
An interesting facet of the discussion is that the organic fruit has reached its demand levels without promotion for the most part. It has been reported that most supermarkets have reduced their consumer advertising during the coronavirus, concentrating on keeping their stores stocked with no urgency to attract new customers. In fact, one prominent regional retailer in the West told OPN that its weekly flyer has shrunk from eight pages to four with room for only three to four produce promotions each week. Organic produce promotions are rarely making the cut.