Peru's 2023 Avocado Season at Risk due to Drought and High Temperatures

According to the World Bank, Peru will be one of the countries hardest hit by rising temperatures, with a predicted average temperature increase of 1.0°C to 4.0°C in the dry season by 2050, severely increasing the risk of water scarcity and water quality deterioration. Water shortage is a global crisis that already impacts a significant proportion of the global population. However, in Peru, during the agricultural export boom of the past several decades, the increased demand for groundwater pushed the Ica basin's water balance into an unsustainable level since more water is withdrawn than is replenished.

The Peruvian Water Authority (ANA), responsible for conserving water resources, has recorded a decline in the groundwater table in Ica, up to 1.5 m per year in some places. The lack of water in the Ica region, which account for around 30% of Peru's export volume and generally has no access to dams or water reservoirs, is at significant risk of substantially decreasing its production volume. Besides this, the entire yearly production in this region is at risk of developing small-size avocados due to insufficient water.

In November 2022, extreme droughts were reported in the Peruvian mountains. According to Jose Torres, Tridge’s Origination Manager in Peru, droughts during November have caused serious concerns among avocado producers in Peru. “Drought in the Peruvian highlands has caused worry among avocado producers. This weather can stress the avocado trees, reducing their production and causing the need for more investment in pesticides due to possible diseases and delays in the harvest period”, he reported.

In addition to the expected water shortage in the 2023 harvest, Peruvian avocado exports ended a particular 2022 export season with a record price drop. Between January and September 2022, Peru exported 614 thousand mt of avocado at a value of USD 976 million, the period in which the country executes 99% of its shipments. Thus, the export volume increased by 11% YoY, but its value decreased by 10%, as the average price achieved in this campaign stood at USD 1.59/kg, one of the lowest prices in recent years.

The 2022 decrease in price was driven by higher volumes of fruit arriving from other origins due to logistical constraints. Spikes in freight rates and route cancellation led to shipment delays, causing multiple loads to be unloaded together at destination ports and creating an oversupply in main importing markets.

The greater risk of water availability in the region has caused further implications for the Peruvian avocado industry. According to ANA’s projections, Peru could lose between 55% and 70% of its arable land as climates that are too wet or too dry become incompatible with crop growth. The reduction refers to the decrease in highly sustainable land for Avocado production, meaning that Peruvian growers can still use this land for production, but they will be less competitive in the market than they were.