Mexican avocados vanishing in the U.S.

Mexican avocados vanishing in the U.S.

Packer Insight - Shippers running out of Mexican avocados

If a grower’s strike in the Mexican state of Michoacan doesn’t end soon, Mexican avocados will all but disappear from store shelves and menus by Thanksgiving, according to importers.

Since Oct. 29, packinghouses have been shut down in Michoacan, including the two Mission Produce facilities and a Calavo Growers plant.

When harvesters will be allowed to return to the groves —a group of growers demanding higher prices from packers have blocked roads accessing those ranches — is unknown, importers say. But if the situation continues much longer, the industry won’t be able to shield their customers, and eventually consumers, from the aftermath.

“I would say it’s fairly easy math as the system runs out of fruit,” Jim Donovan, senior vice president of global sourcing for Mission Produce, Oxnard, Calif., said on Nov. 8.

The week of Nov. 19 — Thanksgiving is Nov. 22 — will most likely be when the U.S. supply of Mexican avocados is gone, if harvests don’t resume, he said.

The U.S. Department of Agriculture on Nov. 8 reported supplies of Mexican avocados were too light to issue f.o.b.s. At the Los Angeles terminal market Nov. 8, prices for two-layer cartons of Mexican avocados were $47-48 for 36s and $45-46 for 40s — for fruit that the USDA described as being of lower quality. Prices listed for avocados that did not have that comment were mostly $58-59 for 36s and $53-54 for 40s. Offerings were described as very light.

Since the blockades went up, U.S. importers have taken steps to stretch supplies. Between what’s in transit, in ripening facilities and distribution centers across the U.S., major importers had about a two-week supply, Donovan said. Cancelling orders and focusing on the most loyal customers, and picking up some supply from Chile can also keep the market supplied, even if at a substantial deficit.

“We are definitely running out of inventory,” Rob Wedin, vice president of sales and marketing for Calavo Growers Inc., Santa Paula, Calif., said Nov. 8, estimating that by Nov. 13 will have shipped all of its stockpile of Mexican avocados.

And without a Chilean program, Calavo Growers won’t be supplementing its supply with other imports.

Chilean exporters can only go so far to remedy the lack of avocados. According to the U.S. Department of Agriculture, Mexico exported about 32 times the volume that Chile sent to the U.S. In recent years as Mexico became a bigger supplier to the U.S., Chile has picked up exports to other markets, including Europe.

Even so, there are some reports that importers are flying Chilean avocados to the U.S. to meet growing demand.

The situation is extreme enough that Calavo invoked force majeure for the first time, a legal measure allowing it to break agreed-upon contracted prices as supplies dwindle and markets to rise.

 

When imports resume

Wedin said when harvests return, there will still be a week-long ramp-up before supplies could return to normal, even if companies skip the ripening process, thereby saving 3-4 days. That’s Calavo’s plan, he said, and other steps include moving all imports to cartons for bulk displays, avoiding delays caused by bagging and other handling.

Donovan said the damage to the market remains to be seen, but when similar strikes happened in 2016, Mission Produce had to regain the trust of some foodservice operators and retailers. Buyers require stability and reliability, he said, and rebuilding a program after a supply gap is harder to do when it happens more than once.

“Crops have to come off the trees eventually,” Donovan said, “and when they do, it’s difficult to get the customers excited about pushing them with retail ads or getting them onto menus.”

The USDA, its Mexican counterpart SAGARPA, Mexican avocado exporter group APEAM and other organizations have been meeting with growers to remedy the situation. According to Bloomberg, growers are seeking a minimum price range of 17 to 20 pesos for a kilo, which is 84-99 cents.

According to a report that originated in Mexican media, growers say the low prices can be traced to illegal avocados trucked into Michoacan, packed and then exported, undercutting legal avocados grown in Michoacan. That is the only state allowed to export to the U.S.

Wedin and Donovan said there are strict protocols for fruit headed to export markets. While they said they couldn’t rule out counterfeiting is happening at all, it cannot be happening at the levels that would affect the market.

“We do not believe fruit is coming in from other states,” Donovan said. “This program is highly regulated with SAGARPA and USDA oversight, with work plans … There’s a lot of checks and balances.”