Earlier this week, California organic avocados had an FOB price approaching $70, giving them a very significant price premium over their conventional counterparts.
“Right now, we are seeing a 30-40 percent gap between conventional and organic,” said Patrick Lucy of Del Rey Avocado Company, Fallbrook, CA. “The conventional price on 48s is a very good $48 today, and we are getting $20 more on organic avocados.”
Patrick Lucy, Del Rey Avocado
Lucy did say that it appeared the organic price had topped out, but he anticipated that it will remain steady through May as he does not expect a market-changing rise in volume for at least the next six weeks.
“California’s organic crop was hit hard over the Labor Day weekend last year,” Lucy said, speaking of temperatures that spiked above 110 degrees throughout Southern California, which greatly impacted the amount of fruit that remained on the tree for this year’s harvest.
Lucy does not expect a market-changing rise in volume for at least the next six weeks.
The total California avocado crop this year is expected to be in the 290-million-pound range, nearly 25 percent less than 2020, and Lucy said the organic crop is most likely down by a larger percentage. Organics typically account for about 10 percent of the California avocado crop, but he does not expect the category to reach that ratio this year.
Illustrating the strong demand that currently exists for organic avocados, Lucy said even the smaller 60 size fruit was commanding $58-$62 FOB. He said there will be organic avocados for retailers to sell for the Cinco de Mayo holiday, but he does not expect promotional pricing.
In explaining the current demand-exceeds-supply situation for organics, Lucy said Mexico had a good organic crop, but much of it went to the US market in the October-through-December period. The market, however, was much lower than it is today.
The next change in volume will most likely come with the beginning of organic avocados from Peru in late May, with those shipments most likely peaking in July. “Peru has a lot of young trees with organic fruit. We should see greater volume this season,” Lucy said.
In explaining the current demand-exceeds-supply situation for organics, Lucy said Mexico had a good organic crop, but much of it went to the US market in the October-through-December period.
Rob Wedin of Calavo Growers Inc., Santa Paula, CA, agreed that Peruvian organic shipments during June, July, and August will help, but he was reluctant to call that volume “a market changer.” He reasoned that when Mexico is shipping good organic avocado supplies to the US market, it is averaging 1.5 million pounds per week. Peru’s shipments on a weekly basis will be measured in the tens of thousands of pounds, Wedin said, and that volume cannot make up for the decline from Mexico.
Rob Wedin, Calavo Growers
The gap between conventional and organic is about a 25-percent premium, and Wedin believes the organic price has reached a level in which there is buyer resistance.
“Peru has a lot of young trees with organic fruit. We should see greater volume this season.” – Patrick Lucy
The Calavo veteran said there are two situations driving organic volume and pricing, which are sometimes at odds with each other. Packers want to have organic fruit as part of their mix, so they are offering a field price that is not always in sync with the FOB sales price, especially on some sizes. “Right now, the field prices are very high, and it is challenging to get that sales price on some of the sizes,” Wedin said. He does expect that the organic FOB price will remain strong throughout the spring and summer.
Gahl Crane of Eco Farms, Temecula, CA, agreed that the organic avocado market is strong, but he said it is not a “crazy market” and predicted that it would remain steady. He sees the current market being in the low to mid-$60s and staying there for the time being. “Supplies are decent, and we have a good market,” he said, adding that some smaller chains have been able to promote organic avocados.
According to Crane, the retail price point for organics has cut into consumer demand a bit. He believes there is currently a good balance between supply and demand. “We have seen an uptick in California volume as we are seeing that about 10 percent of California’s fruit is organic, which is where we want to be.”
Gahl Crane, Eco Farms
Eco Farms will be sourcing organic fruit from Peru in June, July, and August. Crane said Peru appears to have a good crop and is expecting to ship more volume to the US market this year, which should include a greater volume of organic avocados.
The consensus is organic avocados will be available for the coming months in relatively good supply, but don‘t expect promotable FOB pricing.