Avocado supply faces ‘big worry’ as inflation and scarcity drive prices down

For one thing, they’re deliciously creamy, versatile, and gloriously Instagrammable.

On the other, they leave a huge carbon footprintwhich hasn’t stopped consumers from slathering on everything in a way that has led to a dramatic increase in consumption in recent years.

According to Zhengfei Guan, associate professor of food and resource economics at University of Florida.

Avocado consumption has more than quadrupled over the past two decades, according to data from the Avocado Institute of Mexico (AIM), which provides the lion’s share of the US supply. This boom has made the green-skinned plant the largest fruit import in the United States. Over 2.2 billion pounds of avocados were imported in 2020.

Meanwhile, nearly 91% of those avocados come from Mexico, which exports the vast majority of its avocado crop – 80% – to its northern neighbor. The avocado market is worth over $2.5 billion and growing as prices rise. In January, the monthly average for an avocado was $1.36 per unit, which represents a 40% jump from January 2021.

A few days ago, the United States lifted a temporary suspension ban on imports of Mexican avocados, which can help ease price pressures. However, observers are still nervous, mainly due to problems with domestic production.

In California, where more than 90% of the US supply comes from, “production has gone down because acreage has gone down and California has had severe droughts,” Trent Blare, assistant professor of food economics and resources at the University of Florida. , told Yahoo Finance in an interview.

While the Golden State stock represents a small share of national consumption, Mexico continues to thrive as a producer and exporter of avocados. In 2018, Mexican imports captured 87% of the US market share, according to the USDA Annual Report.

Meanwhile, there are different varieties of avocados available in the US market and in different seasons. Small Hass avocados from Mexico are available in winter and early spring. California growers harvest year-round, but production tends to peak from spring through fall, according to Blare’s research.

“Big worry”

Daniel Donis, 30, executive chef of Baja Cantina, holds a bowl of guacamole in the restaurant’s kitchen in Marina del Rey, California, U.S., February 15, 2022. REUTERS/Nathan Frandino

Florida and the Dominican Republic grow a different, larger type of avocado, but the former’s peak production begins in the summer, while that of the latter occurs in the winter. Lately, national cultures have been ravaged by ambrosia bark beetles which infect them with a fungus, causing the death of the avocado trees.

Some fear Florida’s supply of infected avocados is a harbinger of impending doom.

“There is great concern that if this disease spreads through the United States and reaches California and Mexico, it could significantly reduce production. This has reduced our production of avocados by 30%,” Blare said. of UF.

A short-term supply squeeze and price hike may be good for a local grower, but some say the brief embargo hasn’t disrupted supply much.

“Our fruit comes from the Dominican Republic. We don’t process a lot of Mexican avocados,” said Louis Dessaint, director of tropical fruit operations for Florida-based Brooks Tropical. The family farm grows premium produce shipped throughout Florida, the Caribbean and beyond.

“It didn’t affect us or even change the price, but if the [ban] would have lasted longer, it would have affected the price,” he added.

Although the problem will be resolved quickly, Dessaint expects the demand for lawyers to continue to grow. But he worries about the inflationary pressures consumers face and how that could exclude the product from their diets.

I anticipate [avocados] up to $100 per case. So that would be an increase of almost 50%.Ruby Bugarin, Mexican restaurateur

Although some of the immediate effects of the embargo have been mitigated, independent businesses fear that more problems are on the horizon, given the aftermath of COVID-19. Restaurants and food suppliers are grappling with inflationary prices exacerbated by labor shortages and supply bottlenecks.

Ruby Bugarin, co-owner of Margaritas and Pepe’s Mexican Restaurants in Southern California, told Yahoo Finance in an interview that prices per case have jumped over $20, to $80, in the past 2 weeks. only.

“I anticipate it going up to $100 per case. So that would be an increase of almost 50%,” Bugarin added. Although it hasn’t changed in price so far, there are talks about potential alternatives.

“We considered using pulp, just because it’s so close to the natural state of the avocado,” she said. This version is “already crushed in a plastic bag,” so it’s essentially less work for those making the guacamole, Bugarin explained. It’s unclear if there’s a material cost benefit, but pulp has also been somewhat scarce.

“Our food distributors had said, no, we’re out of dough because I’m sure the big players in the field, we’re already buying it,” Bugarin said.

Meanwhile, other companies are considering removing the staple from their menus and offering additional options.

Evonne Varady, co-founder of Clean Eatz, a restaurant franchise that sells wellness-focused meal plans, told Yahoo Finance in a phone interview that she decided to replace avocados on the menu, based on cost considerations.

Instead, Clean Eatz tries to “come up with more unique things to use, to replace it” by using spinach, fresh herbs, arugula and salsa, Varady explained.

During the pandemic, restaurants have reduced menus and increased prices to deal with product shortages and rising ingredient costs. Yet Varady did not pass those costs on to the customer, because “customers will only take a portion of that inflation,” she explained.

As online grocery shopping has exploded — largely spurred by the pandemic — there are fears the supply of avocados may not be keeping up with demand.

“If the demand is going that fast, you realize that avocados, like other fruit trees, take five years to mature, you can’t just increase demand quickly from a year or supply,” said UF’s Blare. “It will take some time before the supply can catch up with the growing demand.”

Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter: @daniromerotv

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