Chilean Avocado Market Guide

• In most cases, a grower doesn't also play the role of an exporter. This is due to the fact that when growers export directly, they are subjected to additional tax.
• Large-sized growers establish separate companies to export fruit, which significantly decreases tax liability.

Main exporters include Propal, Agricom, Jorge Schmidt Cia, El Parque, Santa Cruz, Subsole, and Cabilfrut. These top seven players account for 83% of the total export volume.

Spot purchases vs. Program deals

• A few UK-based importing firms similarly confirmed that there are only a very few spot purchases compared to program deals; spot purchases are usually done in wholesale markets which are mostly closed since many of them supply to F&B businesses, which has experienced a slow-down in operations.

• Moreover, Chilean avocado harvests aren't as plentiful as they once were: Supplies have become very limited since the climate has not been favorable for a good harvest. Pricing has not been attractive for exporters; the few Chilean avocadoes exported to the UK have been mainly absorbed by the retail chains (since the usual channels for avocados, like tourism and the F&B industry, are mostly closed.)

• Retail chains are only conducting program deals. A manager from one of the UK-based importing firms made a rough estimate that at least 75% of the deals are program deals.

Fulfillment Times: 

Q3  (July ~ September)

• Needs to settle everything by end of July, latest by mid-August as the first shipment needs to be ready to be shipped out by end of August, gradually increasing in September and hitting the peak in October

• Needs to start tapping the buyers accordingly in order to target sales accordingly

• Pre-booking & Overtaking usually takes place in July and by August, most of the suppliers are pretty much locked in

Q4 / Q1 

• October is usually the peak season for the shipments

• Shipping operations should take place in Q4  ~ Q1, meaning during this period, only operations should be executed

• The Chilean avocado season normally continues until the end of Q1, meaning that approximately 6 months will be fully dedicated for shipment operations once we lock in programs

The issues when approaching Chilean avocado suppliers include the existence of just a few main players, a decrease in production levels, and low international prices caused by COVID-19. These issues are challenging to meet but doing so will be productive since demand is greatly exceeding supplies at the moment.

Possible Issues when contacting suppliers:

1. Only a Few Main Players in the Industry

• Roughly 8 companies dominate the industry, providing only a narrow window of partnership possibilities.

2. Decreasing Production

• Drought and insufficient water supply will make the return to former production levels challenging

3. COVID-19

• COVID-19 caused a drop in prices and discouraging export levels, with a large portion of production used to meet domestic demand

• Main importing countries include the Netherlands, UK, Germany, USA, and Spain
• The low export volumes to the Netherlands and the UK in 2020 were due to the record low production volumes that year 
• 72% of export production is headed to the EU and the remaining volumes head to LATAM, East Asia, and North America
• Specific destinations for Chilean Hass Avocado from highest to lowest order includes:
  The Netherlands (27%), UK (13%), Germany (11%), USA (7%), France (6%), China (5%)

Source: Tridge Trade Data

In Chile, there are mainly four types of avocados; Hass, Fuerte, and Negra de la Cruz.

Hass

Only variety produce the whole year. In Chile, available between September and March.

Chile continues to grow other varieties that are marketed in the country, but most of the production has shifted to the Hass variety.

‍More than 99% of the avocado exported from Chile are Hass. Chilean avocados of this type are available throughout the year.

Excellent cellar life. It stores excellently in boats. Excellent response to the ethylene process.

Fuerte

Stages of the year: Beginning of August until the end of October.

Good quality avocado with smooth skin. 

Seed of medium size. It peels easily. Good flavor. 

Size: Medium to large. Between 5-14 oz. Appearance: Thin, green skin with a smooth surface. 

Its pulp is creamy and pale green. Ripening characteristics: Skin remains green. Handling: It behaves well in warehouses and boats.

Responds to ethylene treatment. 

 Negra de la Cruz

Stages of the year: Between July-August-September.

Black and smooth skin. Long and pointed shape. Good taste. 

Excellent peeling characteristics. Very good flavor. Size: Long. Ranges between 8-18 oz. 

Appearance: medium thick skin. The pulp is creamy and pale green.

The most consumed sizes in South America usually range from 48s to 84s, which is equivalent to 16 to 30 in the European market. Size popularity trends also depend on seasonality.

• Domestic harvest period: All year long, but peak production is 4th quarter every year
  

• Export Season: August – February (Export season is limited to Q3, Q4 because there is excess demand in the domestic market outside of this period; it is way much profitable for the Chilean growers to sell the goods in the domestic market between Q1, Q2)
  

Seasonality by Variety

Seasonality by Country

Seaports are the most important trade points for fresh avocados exiting Chile. The domestic movement of avocados is carried out almost exclusively by road. The transportation of goods by rail and airplane is not very developed and is used sparingly. Logistics operations in the country have been modernized, and many new distribution centers and warehouses have been built.

The length of the railway network in service is 4,300 km, while the road network is estimated at 77,801 km. 

Chile has 52 ports along its coastline, including Easter Island and the Antarctic zone. The more than 8,000 kilometers of Chilean coastline and its ports are largely the cause of Chile's competitiveness in international trade. The breadth of its coasts allows advantageous connectivity for the maritime transport of goods with strategic markets such as Asia, Europe, and the main American economies.

The main two ports for the exports of fresh produce into Asia and North America are the Valparaiso Port and the San Antonio Port.

Valparaiso Port

Tradicionalmente conocido como el principal puerto de carga de Chile. Se encuentra ubicado en el suroeste de Sudamérica en la Región de Valparaíso a 110 Km de la capital Santiago. El puerto de Valparaíso está perfectamente localizado, conectado por una extensa red de carreteras y ferrocarril que permiten mover al cabo de año un gran volumen de importaciones y exportaciones.

San Antonio Port

The port of San Antonio is located in the central area of ​​the country, 100 km from the capital of Santiago. It has a strategic location and connection to the main roads. In addition, the port has an intermodal rail connection. The depth of its waters, long length, terminal specialized in solid bulk, and a terminal protected against adverse weather are some of the characteristics that can be attributed to it.

Valparaiso and San Antonio, as we have seen, are the two main cargo ports in Chile and, therefore, strategic areas of influence in the logistics and maritime freight transport sector.

Agricultural products such as avocados require export authorization from SAG (Servicio Agrarario y Ganadero) and are also subject to seasonal restrictions.

- The customs office must clear all goods leaving Chile. An export declaration must be submitted to customs. If the value of the goods exceeds USD 1,000, the exporter must submit a DUS - - (Documento Unico Salida) or an embarkation order.

- Export TaxesExports are not subject to customs duties or VAT.

- In order to comply with international agreements and to collect statistics, an export license may be required, and for the export of certain goods, the exporter must obtain government permission to export before departure. 

- A phytosanitary certificate is required prior to exporting any agricultural products (wood, wine, raisins).

Exporting certain products requires an export licence, as well as phytosanitary ceftificates and quality control certificates for products subjects to health services control (Instituto Nacional de Salud Pública), agricultural products (Servicio Agricola y Ganadero, SAG) and fish (Servicio Nacional de Pesca, SERNAP).

The Department of Defense (Ministerio de Defensa Nacional de Chile) is responsible for exports of commercial goods that may have military applications (dual-use). The application of licenses depends on, among other factors, the technical features of the product, its destination, end-use and end-user. Controled products include chemicals, fish and endangered wildlife, defense services and articles, weapons and ammunition, nuclear materials, equipment and technology, fuels, medicines and medical devices.

Exporting fresh avocados out of Chile requires: 

- Export license, as well as phytosanitary certificates 

- Quality control certificates for products subject to health services control (Instituto Nacional de Salud Pública), agricultural products (Servicio Agricola y Ganadero, SAG) and fish (Servicio Nacional de Pesca, SERNAP).

Additionally, Chilean avocado exports need to meet all health sanitary requirements requested in the destination market. 

The processing of the Phytosanitary Certificates must be carried out in the SAG Sector Offices that are in charge of the different exit points for the export of forest products.

The exit points correspond to airports, seaports, and land border points officially designated by the SAG.

Global Market

• Global Market Size: 6.58 B (2020)
• 235% Increase (Over the last 10 years, 2011 vs 2020)
• 51% increase (Over the last 5 years, 2016 vs 2020)

Avocado Export Markets (2020)

• Mexico 2.74 B
• Peru: 759 M
• Spain: 442 M
• Chile: 219 M (Normally 300 M)
• Kenya: 169 M
• US: 164 M
• Columbia: 146 M

Avocado Import Markets (2020)

• EU: 72.4%
• LATAM: 11.6%
• Asia: 8.6%
• North America: 7.4%

Trends and Characteristics

• In 2020, Production / Export levels were the lowest due to the climate issues
• Dominated by a few key players in the market, 80% big players vs 20% small/medium players
• A saturated supply market as the large players only get larger
• With Chile's domestic consumption increasing significantly, Chilean suppliers are showing a growing preference towards supplying to the domestic market

MY 2019/2020

• Chile exported 133K mt of Avocados
• 8 Companies exported 110K tons of the total 133k mt, which is more than 80%. As seen, these exports were heavily dominated by a few players

MY 2020/2021 (2020 Aug – 2021 Feb)

• This Marketing Year recorded a historic low in production and export volumes due to heavy drought
• The Peruvian and Colombian Avocado market took market share from that of Chile's

MY 2021/2022

• Production: Set to be higher than that of the previous year. It remains uncertain, however, whether it will recover to previous production levels 
• Chilean Avocado Production estimates are particularly difficult to achieve, due to the fact that most avocado-producing orchards exist in hills. The great variability of hill structure and compositions, compounded by uneven topography make estimations difficult to perform
• Markets are more stable than last year, and internal consumption has grown significantly, which is set to put minimal pressure on exports
• It is worth noting that growers are making more money selling in the domestic market rather than exporting abroad
• Positive import trends will remain in China. Chinese buyers have demonstrated their willingness to pay high prices for Chilean avocados given the particular oily quality that Chilean avocados possess, as opposed to other avocados like Peruvian avocados. For instance, in September 2021, a Chinese buyer paid for Chilean avocados, at the rate of USD 10/kg

Besides the UK, the markets that have growth their value on Chilean avocado imports the most are;

- France - 117% YoY in 2021

- South Korea (new market) - 300% YoY in 2021

- China - 28% YoY in 2021 

- Germany - 35% YoY in 2021

The UK Is Ranked 2nd in Chile's Hass Avocado Export

• In 2020, the UK imported a total of 122,298 mt Avocados from countries including Peru, Chile, South Africa, Israel, Spain, Colombia, etc.
• The UK is seen to be one of the most profitable markets for Avocado, given its increasing consumption trend relative to its population of 67.22 million (2020)