Avocados: Large Supplies To Soften Prices

Continued Large Supplies To Soften 2012/13 Avocado Prices

The California Avocado Commission indicated the State’s avocado crop will likely increase again in 2012/13, with volume up around 11 percent from last season. On the basis of this expected growth rate and NASS’s 2011/12 production estimate, ERS projects production in California for this season at around 257,000 tons (or around 514 million pounds), relatively above average of the past 10 years (even with the huge crops in 2005/06 and 2009/10). Last season’s “on year” crop rose by as much as 53 percent from the “off year” crop in 2010/11, reaching 231,500 tons (equal to 463 million pounds)—also fairly above average in size.

Aided in part by moderately higher production, Mexico’s Hass avocado exports to the United States are expected to continue to increase in 2012/13. Supported by good weather over the growing season, the mild winter, and continued implementation of phytosanitary pest control programs, USDA’s Foreign Agricultural Service (FAS) forecast Mexico’s 2012/13 production to increase to a record 1.30 million metric tons (2.87 billion pounds), up 3 percent from 2011/12. Favorable demand in both domestic and international markets continue to encourage avocado growers in Mexico to expand production area, with planted area up 6 percent in 2011/12 from the previous year and another 6 percent increase projected in 2012/13, reaching 150,000 hectares. Hence, in the absence of major weather problems, avocado production potential in Mexico is likely to grow in the years ahead as these new orchards come into production. Most of Mexico’s production is destined for the domestic market but favorable pricing in international markets and full-year access to the U.S. market have driven the growth in exports.

Meanwhile, Chile is faced yet with another year of reduced avocado production in 2012/13 (shipments to the United States run from July-June of the marketing year). In addition to the removal of old, unproductive orchards in recent years, the decline in Chile’s production may be attributed to adverse drought conditions that have already destroyed some orchards and is affecting a larger production area in 2012/13 than the previous year, according to FAS.

Severe drought conditions also were behind lower production and exports in Chile in 2011/12, along with that year being an “off year” for some of Chile’s production areas. Still, U.S. Census Bureau data show U.S. avocado imports from Chile in 2011/12 (July-June) increased 38 percent from the previous year, totaling 165 million pounds. This increase was likely influenced by fairly strong U.S. prices during most of Chile’s shipping period. The increase in Chilean imports partly coincided with California’s absence in the market and which immediately followed a below-average production year for the California avocado industry. California supplies almost 90 percent of domestic production.

**Source: ERS/USDA