Avocado prices jumped to the highest in more than two decades amid tightening supplies in Mexico, the world’s biggest exporter of the fruit, signaling pricier guacamole.
An index tracking avocado from the Mexican state of Michoacan, by far the biggest source in the country, climbed 81% this year to 760 pesos ($38) per 9-kilogram box, the highest in data going back to 1998, government figures showed.
“Lower availability and supply-side inflationary pressures are the main suspects,” said David Magana, an analyst at Rabobank International.
Mexican avocado output is seen dropping by 8% in the 2021-22 crop year from a record high the previous season, according to the US Agriculture Department. American importers of the fruit are still catching up from a temporary ban on shipments from Michoacan last month stemming from threats against US inspectors.
Mexico accounts for more than 80% of the avocados consumed in the US In California, which feeds about 15% of American demand, production is forecast to rise this year “but clearly not enough to satisfy growing avocado demand in the US,” Magana said.
Companies already are feeling the pinch from higher prices. First Watch Restaurant Group said its costs are rising toward the high end of its projections.
Mission Produce Inc, the largest US avocado distributer, saw a 50% increase in average per-unit avocado sales prices “due to lower industry supply out of Mexico, as well as inflationary pressures,” Chief Executive Officer Steve Barnard said in an earnings statement on March 10. “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.”
US per capita consumption of avocados has more than doubled since 2010 to over nine pounds, according to Rabobank’s research.
More supply relief may come by mid-year, when the Mexican state of Jalisco begins to send fruit to the American market.
© 2022 Bloomberg
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