Holy guacamole! Avocados are expensive
Avocados have been expensive for a while now. Typically, most Canadians would expect to pay $1 per unit. Many have noticed that avocado prices have been high in most parts of the country. In the last few months, it’s almost impossible to find them below $2.
And, if you do buy an avocado, it will likely be smaller, darker and much less appetizing. However, if you’re expecting avocados to be cheaper, you’ll need to wait a while longer. The same high price is happening in the United States due to rising trade and border tensions between that country and Mexico.
The production of California avocados was down this past year as a result of dry weather. Yields were much lower and forced the U.S. and Canada to go elsewhere to purchase avocados. And, since July is a low point for Mexico’s production cycle for avocados, prices are not going to be dropping any time soon. In Canada, 95 per cent of all avocados come from Mexico. The country produces 34 per cent of the world supplies of avocados.
What’s adding pressure on avocado prices is its popularity. Avocados are in high demand. Canadians spend almost $300 million on avocados a year.
In an era where you see many new diets become mainstream, avocados are fairing quite well compared to other commodities. Vegans and vegetarians stay away from meat products. Ketogenic loyal fans stay away from bread, potatoes and many other products. Avocados are appealing because they are immune to many of the dietary trends.
Consumers greater interest and awareness of healthy eating is certainly a driving force, headed by guacamole’s increasing popularity. Also, the improvements that have been made in the supply chain in areas such as ripening and grading have also helped and made the product more attractive to an increasingly demanding western consumer. Avocados on toast is more fashionable than ever. Over the last few years, the quality of avocados we find in Canada has improved vastly.
The food service industry is trying to cope with these prices by using less avocados for guacamole and salads. Some opt to either serve something else or to serve a substitute. Some are using edamame, broccoli, green peas or even asparagus instead of avocados to make guacamole. These are cheaper ingredients and restaurateurs save by reducing the number of avocados they are using. Whether or not restaurants are telling the consumer about these subtle changes is another matter. Nevertheless, many restaurants are changing recipes.
On the supply side, the avocado market is a unique case. Without a futures contract, the avocado market can be relatively opaque. For any commodity, farmers are typically price takers, but the avocado industry is marred with secrets, imperviousness and will make farmers even more vulnerable. Transactions are not as transparent as in other sectors such as livestock, wheat, barley or rice. According to some reports, avocado farmers in Mexico have had land seized by cartels and drug lords. Some have suggested that avocado marketing boards are managed like unregulated cartels. Some have called products coming from Mexico “bloody avocados.” The crop’s reputation is sadly tainted by violence and corruption causing some restaurants to cease serving avocadoes to customers. Not the best image if growth in the western world is a priority.
It is easy to see how the market for avocados will only continue to expand, and no doubt, Mexico will have more competition from emerging producers such as China, Australia and elsewhere which could supply Canada with a more socially acceptable product. With more segmentation, innovation, expansion and new styles of merchandising, growth can easily be attained for avocados. If someone can bring a seedless avocado to Canada, consumers will likely return the favour by buying more of the green stuff.
As for retail prices in Canada, the good news for avocado lovers is that prices are expected to lower by October as Mexico ramps its production back up again. Yet until then, hold on to your guacamole!