Avocados are the most expensive they’ve been since 1998 as Mexican supplies dip. And unlike many of the price surges these days, this one is unrelated to the conflict in Ukraine.
Prices went up to as high as $38 per nine-kilogram box, likely due to lower availability and supply-side inflationary pressures. Output from Mexico, the world’s biggest exporter of the fruit, is expected to drop by 8% in the 2021-2022 crop year.
Prior to Russia’s invasion of Ukraine in late February, experts had already pointed out a potential price rise when inspections were halted and the US Department of Agriculture temporarily banned imports when a US avocado inspector received threats after he “questioned the integrity of a certain shipment, and refused to certify it based on concrete issues” in the western state of Michoacán, where it’s common for drug cartels to extort growers.
The US imports 80% of its avocados from Mexico, and Michoacán is currently the only state that’s certified pest-free and able to export to the US. But some supply relief may come by mid-2022, as the state of Jalisco is set to soon begin exporting the fruit to the US.
Meanwhile, Mission Produce Inc, the largest avocado distributor in the US, has marked up per-unit sales prices by 50% “due to lower industry supply out of Mexico, as well as inflationary pressures,” according to CEO Steve Barnard in an earnings statement on March. “Partially offsetting price gains was an 18% decrease in avocado volume sold, which was primarily driven by lower supply, but exacerbated by price sensitivity in select international markets that competed for lower-cost sources of fruit.”
Bloomberg reports that “U.S. per capita consumption of avocados has more than doubled since 2010 to over nine pounds, according to Rabobank’s research.” This was likely driven by the avocado toast trend of the 2010s…and the guacamole song.
Information for this briefing was found via Reuters and the companies mentioned. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.