Chilean avocado export season to begin in August 2021

Fresh Avocado

Fruits

Chile

Market & Price Trends

Published Aug 3, 2021

Chile harvests avocados year-round due to favorable weather conditions, well-established orchards and facilities, and a very strong domestic market during summer-fall and winter. The export season starts picking up every season from July until the middle of February, peaking from September to December of the corresponding year. Season 2019/2020, about 72% of the avocados were exported across Europe, and the remaining are exported across the world with North America and Latin America being the major destinations. The Port of Rotterdam in The Netherlands (37.9%) has the largest share in Chile’s avocado destinations, followed by Germany (16.7%), U.K (13%), China (6.2%), and Spain (4.8%). Historically, the Chilean avocado industry thrives on exports and made Chile one of the most dynamic growing avocado exporting countries.

Source: Tridge.

Avocados are mainly grown in the Valparaiso Region (Aconcagua and Petorca Mountain regions), which represents 67% of the total avocado-grown area, followed by Metropolitan and Coquimbo with a share of 14% and 13.2% of avocado producing area. Every season the Avocado growers will sell their avocados to Export Companies who have Commercial connections with the distributors and retailers in the destination country. Some of these exporters are growers themselves, who have set up an Export Company to export avocados so that they are favored with the existing tax structure. There are a few giant players in the Chilean Avocado Export industry, with less than 10 companies who account for 83% of the total avocado exports.

According to Juan Andres Ferrari, Director at Strategic Sourcing at ACF Global sourcing, in MY 2020/21, Chile’s avocado production was impacted by heavy drought, and increasing temperatures across the main producing regions. Export volumes remained historically low during this period because of limited supply in Chile. With the closure of the foodservice industry worldwide due to COVID-19, most of the avocados were sold to retailers both domestically and internationally. He further added that for the 2021/2022 season, it is expected that avocado production will recover and the final quantities will depend on worldwide market. According to USDA, the production is estimated to reach 220 thousand tons in 2021 but the actual figures may vary, and the exact quantity remains unknown.

Chilean avocado exports remain concentrated between August and February as Chile consumes domestically the balance of the avocado production during the rest of the months. The quantity of avocados exports starts picking up pace from September and last till February, unless favorable market conditions allow shipments to continue. Historically in the last quarter of every year, Chile aggressively targets the Netherlands, US, UK, and China, as they account for a large share of import volumes during these months. The focus gets concentrated solely on the Netherlands to be resold and re-export to other countries in Europe during December-March.

Source:ITC Trademap. HS Code: 080440

The logistics for this coming season is showing troublesome signs, and due to surge in costs of sea-freight along with the lack of containers is encouraging many avocado suppliers from Chile to evaluate and explore exports to neighboring countries in America. Further, the overall delays and layovers in ports of different countries while in transit to destination markets, coupled with longer transit can result in several problems and claims. Under normal circumstances, a container takes 25- 30 days to reach China from Chile, however, right now, the lead time has increased to upwards of 40 days, which poses a serious challenge for a perishable commodity like avocado. Container lines that gain trust from Growers and Exporters because regularity and on-time schedules are now facing competition from chartering services that were left 18-20 years ago as by far the main method of fresh fruit transportation from Chile to its markets due to their cost and regularity.

For the upcoming seasons, avocado exports are likely to be shaped by the prevailing market conditions. Chile is likely to emerge as a net importer of avocados by the end of this decade due to the rising demand and profitability of avocados in the domestic market. According to Ferrari, international avocado demand is recovering as the lockdowns ease, foodservice and hospitality markets are going back to normal activity in all markets, with record volumes traded last month in the US at record high prices according to Hass Avocado Board and could open export opportunities for Chile.

At the same time, due to the Chilean economic bonanza in the last 15 years, the consumption of avocado in the domestic market has gained huge importance, with Domestic Distributors having to import Avocados from March to July, with surprisingly high import volumes from Peru. This situation created a two-segment market (domestic and imported avocados) that lasts few months until the Domestic avocado is basically out of the Chilean avocado market until the new season kicks off. This segmented market has further increased the prices for Chilean avocados and has made it more profitable for the growers to supply avocados within the country in this period. Chile is likely to continue its exports to markets like the USA, Europe, and China where there is a higher willingness to pay for oily Chilean avocados during their prime export season.