Global Market Update: Avocado

Published Aug 27, 2019

The global demand for avocados has been steadily increasing for the last decade, and the trend is expected to continue.

The 6-digit Harmonized Tariff System code prefix for avocados is 080440.

There are two main types of avocados produced and consumed across the world: Hass avocado and green-skinned avocados such as Fuerte, Bacon, Gwen, MacArthur, Pinkerton, Reed, and Zutano avocados. Around 80% of avocados produced and consumed worldwide are Hass. Compared to green-skinned avocados, Hass avocados are richer in fat and thus creamier. The global demand for avocados has been steadily increasing for the last decade, and the trend is expected to continue.

Price

As of August 26, 2019, the global average wholesale price of avocados was 3.05 USD per kg.

The price of avocado in the US has increased significantly due to low production in both California and Mexico. The average US price of a Hass avocado was 2.10 USD as of July 5, 2019, compared to 1.17 USD on July 6, 2018. The price increase in the US caused many global avocado exporters to direct shipments to the US instead of Europe. This caused a price increase in Europe as well. Prices for Mexican avocados have been soaring. Due to increased demand from the US and decreased production, combined with the threat of sanctions from the US, prices have risen sharply.

Production

In 2018, around 6 million tons of avocados were harvested worldwide. Mexico is the largest producer, with a yield of around 1.9 million metric tons. Other major producers of Hass avocados are Peru, Chile, California, South Africa, Colombia, Israel, Australia, and Spain.

Supply and Demand

In 2019 the demand for avocados exceeded the available supply. A lower than expected harvest in Mexico and the US increased prices of avocados across the globe. Especially in Europe, the demand for avocados far exceeds current availability. Global demand for avocados is expected to increase as Chinese consumers increase their appetite for the product. Current Hass avocado production capacity in Colombia cannot meet global demand as new Asian markets such as Japan and China have significantly increased consumption of the fruit.

Export

The value of exported avocados in 2018 was 5.7 billion USD representing a quantity of 2.5 million tons. The top exporting countries are:

Mexico (2.4 billion USD, 41.8%)
Netherlands (904.2 million USD, 15.8%)
Peru (722.3 million USD, 12.6%)
Spain (346.9 million USD, 6.1%)
Chile (323.2 million USD, 5.6%)

From 2017 to 2018, the value of exported avocados from Mexico, Spain, and Chile decreased. Chile’s export value decreased by 36%. Export values for the Netherlands and Peru increased by 15% and 24%.

Other major exporters are the United States (179.6 million USD), Kenya (119.1 million USD), and South Africa (116.7 million USD).

As shown in the graph, the value of global exports has followed an upward trend for the last 10 years.

Import

The global avocado import value in 2018 was 6.1 billion USD representing a quantity of 2.5 million tons. The top importing countries are.

USA (2.4 billion USD, 25%)
Netherlands (538.6 million USD, 8.8%)
France (409.9 million USD, 6.7%)
Germany (317.8 million USD, 5.2%)
Spain (280.3 million USD, 4.6%)

From 2017 to 2018, the value of imports from the USA, the Netherlands, and France decreased, whereas the value of imports from Germany and Spain increased.

Trends

Europe's Avocado Shortage

The shortage of avocados in Europe can mainly be attributed to the US market. The price of avocados in the US has increased significantly. During the first week of July 2019, the wholesale price of a 25-pound box of Mexican avocados was around 84 USD on the US market, compared to 37 USD around the same time last year. Due to the price premium in the US, major avocado exporters such as Peru and Mexico are sending almost all their avocados to the US instead of to European countries, causing a shortage in countries such as the Netherlands, Belgium, France, and Germany. European importers expect this shortage to continue until mid-August when imports are expected to arrive from additional countries such as Chile and Spain.

The price increase in the US is not solely caused by potential US-Mexico border and trade disputes. The price increase is mainly attributed to lower than expected yields from Mexico and California, which has driven up US prices since the end of April.

Adverse Weather in Kenya Affects Supply, but the Chinese Market Represents a Promising Opportunity

2018 was the worst reason for Fuerte avocados in Kenya in recent years, due to weather. This resulted in average traders seeing a 20% drop in avocado exports. In the 2019 season, avocado production levels in Kenya are expected to continue to fall as well, as a result of unfavorable weather conditions.

The most significant development in the Kenyan avocados market is a pending trade agreement with China. Although China has started producing avocados domestically, the country still relies heavily on imports. China currently imports from Mexico, Peru, and Chile, but the Chinese market has capacity for more exporters. When the agreement with China goes into full effect, more than 40% of Kenyan avocados are expected to be sold to the Chinese market. As of now, Kenyan avocados are mainly exported to Europe or to the US. Kenya is a leading avocado producer in Africa, and if the trade agreement with China goes through, there will be many opportunities for Kenyan avocado producers/exporters.

High prices in Mexico

The demand for Mexican avocados has been rising. This year, Mexican production decreased by 10K tons, or 1.2%, compared to the previous year. Together with increased demand from the US and the threat of sanctions by the US government, prices have risen immensely. Especially with the supply of Mexican avocados between May and August falling short compared to past months, current prices for avocados are too high for many Mexican buyers to bear. This has led to a “guacamole crisis,” with many restaurants opting to make guacamole without avocados. However, prices are slowly falling, as the new season for Mexican avocados starts in September.