The Evolution of a Market

Jeff Long takes a look at the past, present and future of the US avocado market.

Once known rather unappetisingly as the ‘alligator pear’, Hass avocados have taken the produce world by storm over the last two decades as demand for the fruit has exploded from Beijing to Berlin.

Now in cultivation on every continent, the avocado originated in either southern Mexico or Central America – where it has been part of the diet of indigenous peoples since at least 5,000 BCE.

Various varieties made their way to Southern California by the late 19th century, becoming locally popular but otherwise remaining largely unknown elsewhere in the country.

Then, in 1926 near Los Angeles, a part-time farmer and full-time postman named Rudolf Hass propagated a tree from a random seed he had acquired and discovered he had a new variety on his hands, which he promptly named a er himself. Since then, notwithstanding a few “bumps” along the way, the Hass variety has emerged to become the dominant avocado cultivar of the 21st Century.

California was once the sole source of Hass consumed in the US, but over the last decade it has given way to the world’s leading producer, Mexico. This is all the more remarkable when you consider that for much of the last century, Mexican avocados were prohibited from entering the US due to pest issues.

However, with the ratification of the North American Free Trade Agreement in 1993, which required trade barriers to be validated by science, it became only a question of when – not if – Mexican Hass avocados would gain access to the US.

Chilean Hass had already been allowed into the US since the mid1980s as research had proved that imported fruit grown under certain cultural practices posed no phytosanitary threat to domestic avocados.

Adhering to these protocols, the first Mexican Hass in 83 years crossed into the US in 1997. While distribution was initially limited to 17 eastern states, full market access for Mexican fruit became a reality within 10 years.

According to a recent Rabobank study, as of 2019 Mexican Hass accounted for 82 per cent of the 1.13m tonnes of avocados consumed in the US; by comparison, California’s market share, due in part to an abnormally short crop, amounted to just 9 per cent, with the balance primarily coming from Peru and Chile.

Conceding that their Hass monopoly in the US was soon to be lost, California growers decided to take a proactive approach to their problem. Led by the California Avocado Commission (CAC), the industry pushed for federal legislation that would allow foreign and domestic producers to collaborate on promoting the Hass variety. CAC’s efforts culminated in creation of the Hass Avocado Board (HAB) in 2003.

By imposing a levy of US$.25 per lb on all Hass avocados distributed in the US, HAB had, by 2017, managed to collect nearly US$500m, rebating 85 per cent of the revenues to CAC and importer associations for their marketing efforts with the balance retained for nutritional research, generic promotion and operational expenses.

The results have been nothing less than spectacular. As recently as the 1990s, only about 159,000 tonnes of Hass avocados flowed through US distribution channels with per capita consumption estimated at just 1.51lbs (0.68kg). According to a University of California-Davis study, up until that point “avocados had a product image problem… regarded as a food high in fat and calories and not particularly desirable on a health and nutrition basis”.

Fast-forward to 2018 and per-capita consumption of Hass avocados in the US had soared by 406 per cent to 8.1lbs (3.67kg) with approximately 1.13m tonnes circulating in the nation’s distribution channels. At the current rate, according to Rabobank, US avocado consumption may hit 9lbs (4.08kg) per capita by 2021. If the 8 per cent per annum pace of the last ten years continues, consumption could approach 12lbs (5.44kg) per capita by 2025.

“This growth,” notes the University of California study, “is largely due to California producer and importer-funded research and promotion programmes that have changed avocados’ image to that of a healthy super-food among US consumers.”

Unless derailed by the COVID-19 pandemic or other unforeseen developments, it may be that the only thing that can squelch America’s love affair with avocados could be a lack of supply.

Despite rising demand, California’s avocado acreage has been on a slow decline over the last 30 years. According to CAC, bearing acreage has fallen from around 31,000ha in 1988 to just over 19,000ha last year. Escalating costs for water and labour, and compliance with food safety regulations, have prompted many growers to convert their groves to other purposes.

By contrast Michoacán – the one Mexican state certified for exporting to the US – continues to expand its Hass acreage. However, escalating cartel violence has lately become an existential threat to the Michoacán industry. A cartel assault on US plant quarantine inspectors in August 2019 prompted the USDA to announce that it would be forced to suspend operations if the health and safety of its personnel could not be guaranteed.

Jalisco’s Hass acreage is also steadily increasing and had received USDA phytosanitary approval for its fruit as of 2016. Final sign-off on the exporting work plan has yet to happen, reportedly due to Mexico’s refusal to admit imports of US fresh potatoes.

Another potential obstacle that could limit Mexico’s exports to the US market has been the loss of critical monarch bu erfl y habitat in Michoacán and Jalisco to avocado production. Reports of between 6,000 and 8,000ha lost annually to deforestation in Michoacán alone have consumer groups in both the US and Europe calling for a boycott of Mexican fruit.

Peru is the second-leading foreign source of avocados to the US, with 85,000 tonnes imported during 2019. Acreage is virtually all Hass, with planting continuing at a frantic pace over the last two decades.

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