We interviewed Arturo Medina Castro, head of ProHass (the Association of Hass Avocado Producers of Peru) to find out more about the current situation of the Peruvian avocado market.
What is the productive potential of Peruvian avocados?
Of the 15,000 hectares planted, only 11,000 hectares are currently productive. We export 95% of our harvest. This year, we will export approximately 155,000 tonnes; an increase of 52% compared to last year, with a growing trend that will continue in the coming years.
What is your current productivity level?
In Peru, we need 3 years before the tree starts producing some 3 tonnes per hectare, and 7 years for it to reach its full potential. Currently, our average productivity is of 13 tonnes per hectare.
How profitable are avocados for small producers?
Here there are large, medium and small producers, and the good thing is that many of the small ones are grouped in consortia or cooperatives and export together, and volumes are really growing. Our concern is that supply exceeds demand, and the only thing that could help would be entering new markets and continuing with our marketing campaigns.
What are the main destinations for Peruvian avocados and which neighbouring countries are exporting? 55% of our exports go to Europe and 42% to the United States. The rest are shipped to Canada and some countries in Central America. We recently entered the Chilean market, but we do not export much there. Argentina's campaign overlaps with ours and Chile buys from them, as it is the off-season. The Argentinian market is growing, although the habit of consuming avocados is not yet widespread, as it used to be mistakenly believed that their consumption led to weight increase or bad cholesterol levels and recently we found out that the opposite is actually true.
How are exports to Europe going this year?
We have been exporting large volumes and Europe has managed to keep prices at acceptable levels. We are also shipping record volumes week after week. We see that consumption is growing and that encourages us, but we'll see how the season ends.
Last season, the big supply in the European market and the overlap with avocados from other countries caused a big drop in prices. What is the strategy to avoid falling into the same scenario this year?
We harvest from March to September and we overlap a lot with South Africa and Argentina and, at the end of the campaign, also with Chile. The trees mark the campaign's development; you cannot stretch it too much, because otherwise the season is delayed and that drives prices down for the following season.
Avocados in Asia have not yet reached a great market share. What are your expectations? And your strategy?
We can still not enter Asia; we are interested in China, Japan and South Korea and we are moving forward with the paperwork. We have high expectations and we strive to start shipping by the end of this year or in early 2015.
There is a very big challenge: the Chinese eat their food boiled and avocados are intended for fresh consumption. A small cultural change is needed, but there is a lot of potential.
An effective promotional campaign in a country as large as China would be very costly. Are you willing to invest?
We believe that promotional campaigns work, which is why we invested over U.S. $ 1,000,000 in promotions for the European market. In the U.S., avocado consumption is growing by 10% annually, partly because the avocado sector invests 60 million in promotional work. We want to repeat that concept in China.
For more information:
Arturo Medina Castro
Asociación de Productores de Palta Hass del Perú-ProHass
T:+51 1 225-1626
amedina@prohass.com.pe
www.prohass.com.pe