Overview of avocados from Peru in the U.S. market, complemented by charts from Agronometrics. Original published on October 16, 2022.
The volume of remittances grew 11%, but there was a 10% drop in the value sent. This is due to the price reduction in the international market.
Currently, Peruvian avocado is exported throughout most of the year. However, from January to September is when 99% of shipments are made. In this period of 2022, avocado shipments totalled 613,947 tonnes with a value of US$ 976 million. This result represents a significant growth of 11% in volume, but with a drop in cost of 10%. This contraction can be explained by the decline in price in key markets, thus on average Peruvian exporters received only US$ 1.59 per kilo. This price is the lowest recorded in the last four years.
On the production side, avocado is still one of the main crops in the country. In 2017, there were around 18,000 hectares, and by the end of 2022 it is forecast to reach around 43,000 hectares; that is to say that in the last five years, the areas cultivated with avocado have more than doubled. The regions that are the most prominent, production wise are La Libertad, with 34% of the share; Lambayeque, with 20%; and Lima, with 15%.
This productive growth is reflected in exports. During 2021, avocado was the third agricultural product with the largest shipments and it is expected that with the growth obtained in 2022, it will still remain in the top 5 of the agro-export basket. However, this growth in national production does not seem to have coincided with a good moment for the value of avocado.
CHALLENGES AT THE INTERNATIONAL LEVEL
Due to the global logistical crisis, many of the world’s major markets chose to prioritize the import of products from origins closer to their region. The European market is a great example of this: due to this crisis, large importers such as the Netherlands and Spain gave more space to producers from closer proximity such as Israel, Slovenia and Morocco. This has generated an important increase in competition for Peruvian avocado, which has been reflected especially in the cost received. Currently, the European market pays around US$ 1.44 per kilo of this product (26% less than last year). This drop in price in the region has resulted in many Peruvian exporters deciding to redirect shipments to markets with better prices, such as the North American or Asian markets.
In connection with The United States, this has affected its imports of Mexican avocado due to the drop in production in key states. This shortage also occurred because this country temporarily suspended avocado imports in February. This measure was motivated by the threat of organized crime to American inspectors in the state of Michoacán, seriously affecting the rate of Mexican avocado imports at the beginning of the year.
Also, avocados produced in California, which typically account for 10% of North American consumption, have been affected by severe droughts and heat waves. This, in addition to the rising cost of water, has resulted in many local growers removing small parts of their land from avocado production, further contributing to the shortfall.
Although it seemed to be a good opportunity for Peruvian producers, despite the fact that the United States continues to be one of the best paying markets for Peruvian avocado (US$ 1.90 per kilogramme), there have been some changes in demand due to the readjustments in the family basket due to inflation. There has also been a prioritization of staple and easily consumed products over others considered “exotic”, including avocado. This was mainly seen in the 6% decrease in price, despite the existing shortage of Mexican and Californian avocado. However, Peruvian avocado shipments obtained positive results by increasing both their volume and value in this market.
Until September 2022, the main destinations for Peruvian avocado were the Netherlands (29% share), the United States (28%) and Spain (14%).
Exports to the Netherlands totalled 195,208 tonnes for US$ 285 million, 8% more in volume, but with a decrease of 18% in value compared to the same period of last year. In this market, the average price of Peruvian fruit was US$ 1.46 per kilo, 24% lower.
As for shipments to the United States, these reached 145,736 tonnes for US$ 276 million, 46% more in volume and 37% higher in value compared to the previous period. The price paid in the North American market for the Peruvian product was US$ 1.90 per kilo, 6% less.
Shipments to Spain were 99,100 tonnes for US$ 141 million, 13% higher in volume than last year, but 19% lower in value. The price paid in Spain during the period analyzed was US$ 1.42 per kilo, 28% less than the previous period. This makes Spain the lowest priced market of the year.
The News in Charts is a collection of stories from the industry complemented by charts from Agronometrics to help better tell their story.
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Translation: Valeria Concha