The economics of avocado production rely heavily on supply and demand. To take advantage of the production, you must take advantage of supply and demand. In this article, we’ll discuss some factors affecting avocado production and recommend how your business can benefit from them.
But you don’t have to stress out about enormous economics. You can contract FrutPlanet exporters and have us source and deliver your bulk avocado orders. We have an extensive understanding of the different worldwide producers and know the best time to order, how to diversify, and how your business can get friendlier rates. You can contact us or request a quote from us, and our customer team will help you through this.
Factors Affecting Balancing Supply and Demand
Avocado Consumer Trends
One of the most influential supply and demand factors is consumer trends. The average compound annual growth rate of the avocado market is about 7.3% between 2023 and 2030. Changes in consumer trends are one of the benefits that we owe for this increased demand.
Some consumer trends include, for example, the increasing health consciousness among millennials. People’s increasing awareness of avocados’ nutritional value has boosted demand. In addition, there has been a shift in consumer preferences for homemade food, including fruits such as avocados.
Another consumer trend that increases avocado demand is Halloween, Thanksgiving, New Year’s celebrations, and events like the NFL. For example, the 4th of July in 2023 propelled it as the highest avocado consumption event on record.
On the other hand, a handful of similar events lower the demand for avocados. For example, during winter, avocado consumption is lower. This drop in demand during cold seasons can be attributed to consumers keeping off fatty diets during a time when outdoor activities are less.
These fluctuations in demand and supply consequently affect the price of avocado per Kg. During high demand and low supply seasons, especially when there are upcoming events, the price of avocado per kg may be as high as $2.5 per kg. However, when the supply is high, the price lowers to as low as $1.25 per Kg.
Climate and Weather
Climate and weather are predictable, yet it has some of the most hazardous effects on the avocado industry. It affects avocados’ balancing of supply and demand by impacting growth, disease risk, and fruit quality. For example, the increasing greenhouse emissions result in unpredictable temperature changes, resulting in sickly avocados.
Avocados need a pH level between 5.5 and 6.5 and temperatures between 16 and 24 degrees centigrade. When these temperatures go beyond the 33-degree mark, the exposed fruits suffer sunburn damage. Such events in high avocado production regions like Mexico, Peru, and Colombia may result in a global reduction in supply, leaving consumers to compete with the few available fruits in the market.
On the contrary, when the weather is ideal, the rainfall is at 1000mm and spread out during the growing seasons, and the temperatures are great, production is high. The high avocado production leads to a bountiful harvest and, consequentially, an increase in supply. As a result, avocado prices per Kg will drop until the supply matches the demand. The market experiences this effect during the peak season when the supply surpasses the demand by a large margin. The same effect happens during the
Trade and Government Policies
Trade ways and rapid government policy changes affect the balancing of supply and demand at the global export markets. During trade wars, countries impose tariffs and enact trade policies that may restrict avocado trade. For example, production increases when a country enacts policies that promote avocado production through offering farmers subsidies.
Apart from policies, many political factors come into play and promote or alter supply and demand on the global scene. For example, when Mexico is unstable, the supply of avocados is reduced in the international market. To Mexico’s competitors, there will be a lot of demand for their avocados as the market demand still needs to be met.
The US adopted friendly policies towards Mexican avocados in 1997. Before, the supply of Mexican avocados surpassed the demand, leading to lower wholesale prices. However, once the tariffs were lifted and friendlier policies adopted, the United States imported most Mexican avocados. In addition, most farmers in Mexico have ventured into avocado farming, therefore increasing the supply even more.
Changes in government policies can significantly influence the supply and demand for avocados. On the other hand, government policies like subsidies to avocado farms can greatly promote production and increase supply.
Agricultural Practices
Agriculture practices are at the heart of supply and demand. For adequate avocado production, the trees need adequate land management practices. In addition, organic and inorganic manure is needed to improve the mineral concentration in the avocado fruits. Also, you must mulch or water the avocado trees to reserve enough moisture for quality.
On the contrary, degraded, polluted, and highly reaching soil is poor for avocado production. A high soil reaching rate does not hold minerals and ingredients; consequently, the manure you apply does not help the tree or the fruits.
When agricultural practices favor avocado production, supply increases; therefore, the price of avocados decreases to match the low demand. However, when agricultural practices are poor, production is low, resulting in reduced supply in the global market.
How to Balance Supply and Demand
Now that we’ve covered the factors that influence supply and demand, how can you balance supply and demand?
Planning
You need to plan if you are a wholesaler and often buy avocados in bulk. Take advantage of the peak seasons and order in bulk when prices and demand are low. But first, you need to understand the regions you will be ordering from and their peak seasons. For example, if you’re considering ordering from Peru or Colombia, the peak season in the two regions ranges between May and August. With that information, you can order your avocados within these months.
Market Diversification
You need to diversify when you source your avocados to avoid being a victim of either of the factors affecting supply and demand. We advise our clients to have access to at least three leading avocado producers from whom they can source avocados. That way, if avocado production changes in one country, they can always rely on other sources.
Market diversification will shield you from any internal issues that may affect one of the sources. But how can you keep up with market diversifications? One way to implement diversification is contracting a Supplier or exporter to handle the sourcing for you. FrutPlanet is one of the leading exporters and can help you source avocado from leading avocado producers. We ship avocados globally; some of our previous clients were from regions such as China, Europe, and India. You can contact us for an engagement on how we can help you.
FAQs
Which country is the largest producer of avocado?
The largest producer of avocados is Mexico, which produces 2442 thousand tonnes annually. The country exports most of its avocado production to the United States.
Who is the largest buyer of avocados?
The United States is the world’s largest buyer of avocados, spending over 3.3 billion US dollars on them. Most of its avocado imports are from Mexico, which exports about 86% of its total exports.
Which country produces the most avocados in Africa?
Kenya is the largest exporter of avocados in Africa. Its annual avocado production exceeds Ethiopia’s, which is second, by threefold. Most of its avocados are destined for China and the Netherlands.
