A visit to the store indicates how expensive groceries have become, especially avocados, whose prices never seem to come down. Once reserved for royal tables, this ‘green gold’ is now a popular fruit used in many cuisines. It is no wonder that most Instagram food photos always have avocado slices.
Avocados are a dynamic fruit that could be the most traded tropical fruit after bananas by 2030. The popularity and attention around avocados are justified as they contain a high nutritional value. As the awareness about avocados’ value grows, demand increases hence the high cost.
Per-capita consumption of avocados has doubled in the past decade, which is a substantial growth for an agricultural product. As a result, avocado lovers should not expect the prices to go down soon. As an avocado trader or consumer, it is essential to understand the avocado market to help with analysis and quotations.
Are you looking to buy avocados in bulk and are wondering about the cost? Feel free to contact FrutPlanet Exporters and inquire about current avocado prices. Apart from demand, other factors influence the high cost of avocados, as covered in this article.
What Causes High Avocado Prices?
Avocados have become a delicacy for people worldwide due to their versatility and nutritional benefits. However, avocado prices have skyrocketed in recent years, leaving consumers wondering what is causing this increase. In 2022 avocado prices dramatically increased by 58.3% compared to 2021.
Global market value is projected to grow by 7.2% by 2030. Before 2019 avocado prices were between USD 1.5 and USD 1.6, but in 2023 the prices have changed to around USD 2.6 to USD 2.9 per kilo. Factors contributing to the high avocado prices are as follows;
#Factor 1. Supply And Demand
One of the lessons that Covid-19 taught the world is to live healthy lifestyles. As a result, consumers embraced avocados as a superfood and the demand has doubled over the years.
However, the global demand for avocados exceeds production as avocado trees take three to four years to reach maturity. Consequently, supply is low and, according to the law of supply and demand, inflates the prices.
Demand for avocados in European, China, and American markets continues to grow as consumers make healthy lifestyle changes. Americans consume avocados throughout the year, with the Super Bowl and other celebrations contributing to the high demand.
On the other hand, there has been a low supply from major producing countries like Chile and Spain owing to different seasons and weather fluctuations.
Another reason for the low avocado supply is that, in some years, avocado trees do not yield as much as expected. In this phenomenon called alternate bearing, some years see more avocado production than others, creating a supply disruption and fluctuation in avocado prices.
The imbalance between demand and supply results in competition and increased prices.
A survey conducted by Tetra Pak in 2021 proved that consumers opted for avocado-based snacks, which contributes to high demand. Avocados’ versatility in salads, ice cream, and guacamole continues to boost demand as consumers shift from unhealthy meals and snacks. The rise of prepackaged and frozen avocados also contributes to a higher demand for the fruit.
#Factor 2. Climate Change
Avocados may look tough on the outside, but they are affected by harsh weather elements and poor drainage. Moreover, they are hard to grow as they require warm climatic conditions and are sensitive to weather fluctuations.
Therefore, extreme temperatures, hailstorms, and droughts threaten avocado production as they impact the fruit quality. An example is the drought season experienced in Mexico in 2021 which reduced yields affecting the supply chain.
Avocado production requires a consistent water supply, and extended drought periods cause damage to the trees and result in low yields. As a result of climate change, the heat is jeopardizing avocado production, and farmers are ditching the crop for others that are not water intensive.
The reduction in the amount of rainfall required for avocado growth disrupts production. Mexico, a leading avocado producer, experiences drought seasons which affect supply leading to high avocado prices.
In a report, extreme temperature changes in California are bound to reduce avocado yield by 40% by 2050. Additionally, as avocado-producing countries face flooding and drought, supply will become unreliable, leading to high prices. Severe climate change lowers the avocado supply and disrupts avocado pricing.
#Factor 3. Global Trade Policies
Every country has unique and specific trade policies with which avocado suppliers must comply to protect their domestic markets and consumers. The policies and regulations are often focused on product quality and food safety.
However, when governments put high tariffs on avocado imports and exports, the burden of high prices falls mainly on the consumers. Additionally, trade policies and restrictions can block avocados’ market access, making them expensive.
For instance, for decades since 1914, the USA restricted Mexican avocados from entry to the American market due to some pest risks and fruit flies. The US authorities lifted the ban in 1997 but with heavy monitoring at the border. Furthermore, Mexico exports 80% of its avocados to USA and Trump’s potential 5% tariff on Mexican imports in 2019 would have heavily impacted the pricing.
The trade policies create avocado shortages, forcing traders and restaurants to increase their prices, eventually hurting customers. In April 2022, Texas implemented stringent border truck inspections ferrying avocado and other products from Mexico and that delayed avocado supply to the USA.
Before the restrictions were lifted, consumers had already felt the pinch of costly avocado prices. Also, when requirements for phytosanitary certifications are expensive, production costs increase, compelling suppliers to increase avocado prices.
On the other hand, reducing trade barriers and free trade agreements makes it easier to supply avocados and stabilizes prices.
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#Factor 4. High Transportation costs
Current skyrocketing freight costs have an impact on avocado shipments and prices. Avocados are highly perishable and require proper storage and refrigeration for shipment over long distances, which increases transportation costs.
Between 2021 and 2022, freight costs to some USA destinations increased by 50% ahead of the Super Bowl.
Additionally, the Ukraine/Russia war caused a disruption in worldwide shipping which increased transportation costs. With logistic firms suspending their services and Russian forces limiting shipping routes, air freight rates increased, affecting fresh fruit transport.
Similarly, minimized transportation caused delays in supplies during the Covid-19 lockdowns.
Consequently, restaurants hiked avocado prices in a bid to control the shortages. Freight rates also increased by 15% during the pandemic, and avocado shipments were not a priority as most companies shipped vaccines and PPEs. Additionally, the burgeoning demand for avocados leads to high fuel prices, which significantly contribute to increased wholesale prices.
#Factor 5. Economic Factors
The avocado industry is dynamic and easily affected by economic changes like inflation and the high cost of agricultural input.
High inflation impacts the avocado industry by increasing the cost of machinery, labour and fertilizer. In mid-2022, Mexico had challenges sourcing fertilizer from Russia due to the ongoing war resulting in a 15% hike in avocado prices.
Fertilizer is an essential component in avocado production, and when the price goes up, avocado prices also increase. Numerous companies faced additional costs during Covid -19 due to the need for more stringent hygiene measures and the purchase of personal protective gear. The pandemic was to blame for Inflation, as food prices increased by 3.3%.
However, it seems that the prices of most commodities are not going down. When the world was recovering from the aftermath of Covid, Russia invaded Ukraine, and war broke out. The war affected the price of agricultural products as the two countries are vital agricultural players. The conflict worsened the post-pandemic effect of Inflation, exerting pressure on food and energy prices.
Conclusion
Avocado prices seem to rise and may continue skyrocketing as the supply exceeds demand. Increased awareness of the fruit’s benefits has caused demand to double, increasing the price. Climate change is also to blame for high avocado prices.
Hailstorms and floods also adversely affect avocado production and supply forcing consumers to pay more. In addition, as long as countries impose heavy tariffs on imports, avocado prices will continue increasing. Bans and restrictions may be to the country’s advantage, but it suppresses supply and soars avocado prices. Requirements to comply with food safety regulations are essential to avoid substandard fruits, but it also causes prices to go up.
In the wake of high avocado prices, it might be tasking to know where to source price-friendly avocados. Luckily, FrutPlanet exporters is your trusted supply partner. As experienced experts in the industry for years, we partner with the best logistics providers to offer a reliable and economical supply of avocados. We assist in the supply of premium avocados that comply with food safety standards and shield our clients from inflated prices. Please request a quote today and enjoy our friendly prices.
