At least one item in the supermarket is becoming cheaper: avocados.
A substantial buttery fruit glut has triggered a drop in wholesale prices and also pushed down store prices.
With the total cost of groceries up a staggering 13% year-over-year, cheaper avocados couldn’t come at a better time for inflation-weary households desperate for a break from their grocery bills.
After rising in the first half of 2022, the wholesale price for a box of 48 medium-sized avocados has fallen 35% year over year to under $30, down 67% from its peak in the last week of June, it said David Magana, Senior Fresh Fruit Analyst at Rabo AgriFinance.
At the store level, the average unit price for avocados has also reversed, down 2.6% year-on-year in September. That’s a big drop from the 31% year-over-year increase in July and August, which was up 13.9%, according to the latest figures from market research firm NielsenIQ, which tracks retailer point-of-sale data.
What has knocked down the price of avocados?
A confluence of diverse issues — including geopolitics — has resulted in an abundance of fruit, said Richard Kottmeyer, managing director of food, agriculture and beverage at FTI Consulting.
With prices cooling, there are currently so many avocados floating around that in some cases they are being given away for free.
“This is one of those weird situations where this extreme oversupply of avocados is only possible through a perfect storm of Black Swan events,” Kottmeyer said. “For consumers right now, avocados are the green fodder for food inflation storm clouds.”
Last month, local Philadelphia nonprofit Sharing Excess held a three-day event to give away thousands of surplus avocados to anyone who wanted them. More than 300,000 free avocados were claimed in less than three hours The Philadelphia investigator.
Super avocado crops around the world are leading the supply boom.
The US avocado market is dominated by Hass avocados from Mexico, which account for 92% of the supply. A much smaller percentage of avocados come from Peru and from farms in California and Florida.
“In the first half of 2022, avocado shipments from Mexico were 25% lower than record high shipments in 2021,” Magana said.
Buyers saw avocado prices soar in February after imports from Michoacan in western Mexico were briefly suspended following a threat to a US official there. The ban was lifted a week later and imports resumed.
In April, Texas implemented increased border controls of commercial trucks transporting produce and other goods from Mexico, further delaying shipments of avocados to the United States. These regulations were quickly lifted, but not before store prices continued to rise.
As supplies began to flow following the disruptions, Mexican farmers also witnessed a better-than-expected harvest this year.
“Most of the time, the avocado crop varies in yield from year to year. So a big harvest one year is followed by a smaller harvest the next,” Magana said. But sometimes farms have consecutive high-yield seasons, as is the case this year.
Additionally, there are record-breaking avocado harvests around the world in key growing countries like Australia and Peru, which have collided with geopolitics in ways that have fueled oversupply, Kottmeyer said.
“Essentially, the US gets the most [of its] Avocados from Mexico and Peru. Bumper crops would normally be sold around the world,” he said. “Europe has significant food inflation. When avocado prices got high earlier this year, demand in this market dropped.”
China, another big market, is struggling with pandemic-related shutdowns, congestion and port closures. The Russia-Ukraine conflict has also hurt exports and shipments of avocados to and around Europe, he said.
“A lot of the avocado oversupply ended up in the US,” Kottmeyer said. Avocados have a shelf life of around three to four weeks, longer than most fruits and vegetables, making them easier and quicker to divert to other markets, he added.
Good news for consumers: The avocado glut is expected to last at least until mid-2023, according to Magana.
“However, we cannot predict weather changes. A rise in temperature or a sudden drop can affect production,” he said.
Already enjoying unprecedented popularity, avocados are popping up on menus and grocery items in unexpected ways – from avocado toast and burgers to grilled avocados and avocado oil for cooking and in salad dressings.
“The demand for avocados is certainly not decreasing,” said Kottmeyer. “The Super Bowl is the biggest consumption event for avocados, but we certainly see a lot more occasions for it.”