So far, Michoacan is the only state in Mexico that has exported avocados to the US market. However, on Dec-21, the USDA authorized Jalisco to export avocados to the US pending phytosanitary authorization. For this reason, in collaboration with local growers, Federal authorities launched an operational work plan that delineates each link's responsibilities in the supply chain to facilitate Jalisco avocado producers and packers to initiate exports successfully.
As was previously reported by Tridge on Feb-22, Mexican origin avocado prices in the US market reached a historical record high by the end of Week 6 when it recorded an 80% YoY increase. The price for big size avocado (60s) was reported at USD 5.20/kg or USD 61/carton in the San Francisco Wholesale Market and kept on an upward trend for the following weeks, reaching the highest price ever recorded of USD 5.60/kg in Week 8.
The substantial price increase was largely driven by continuously increasing demand in the US market, along with soaring production costs, labor shortages, and supply chain backlogs that have triggered price hikes. Additionally, a USDA export ban was imposed on all Michoacan avocados due to security concerns about APHIS inspectors in Michoacan, which created a severe supply shortage in the US and caused the price to skyrocket.
YoY Price Trend of Michoacan Avocados in the US Market
By the beginning of April-22, the price of Mexican avocados in the US had slightly stabilized due to more supply available in the market. In the San Francisco Wholesale Market, by April 4th, Mexican origin avocado prices stood at USD 4.90/kg, which represented a 20% WoW decrease. However, even with the latest reduction in prices, this year’s average price remains 30% above last year’s prices. Jalisco’s avocados entering into the US market aim to increase avocados' availability in the US while keeping prices down.
Although Jalisco has never exported avocados to the US market, the state has actually conquered more markets than Michoacan. According to the Federal Ministry of Agriculture data, Jalisco exports avocado to 29 countries, including Canada, Japan, and the European Union. Through the 24 certified avocado packers in Jalisco, between 2018 and 2021, 350K mt of fresh Hass avocados have been sent to these destinations, representing 46% of Jalisco’s total production.
In the last six years, avocado production has doubled in Jalisco. From 2015 to 2020, production in Jalisco went from 119.6K mt to 248K mt, and in 2021, production is estimated to have reached 253K mt, with an estimated value of USD 200M. The 15 municipalities authorized to export to the US have a concentrated production of 162K mt, which is about 65% of the total state production. The municipalities holding the rest of the state's production still have not been declared free of avocado pit borers.
In 2021, the US imported USD 3B of avocados globally, with USD 2.8B coming from Mexico, holding a dominant 92% of the US market share. In terms of volume, the US imported 1.2M mt of avocados globally, with 1.1M mt coming from Mexico (89%). The supply from Jalisco alone, the second-largest avocado-producing state with more than 250K mt produced all year round, is not enough to meet the US market's volumes. However, Jalisco’s supply will definitely support this year’s low volumes of Michoacan avocado shipments, adding more availability to the market.
According to the USDA, by the end of Q1-2022, there was a 32% YoY decrease in volumes from Mexican avocado shipments to the US due to lower availability and skyrocketing prices. In line with this, Jalisco aims to increase product availability with the same quality and sizes that the US market demands. Furthermore, it intends to fill the gap left by Michoacan avocados and not allow avocados of other origins to take advantage of the shortage, supporting Mexico in maintaining its leading market share in the US.