The Chinese authorities' expected decision to lift quarantine measures for Chilean avocados in the regions between Valparaiso and O'Higgins took longer than expected. The decision was expected to take place in April, but it was only adopted in September, and it was the decisive boost to start massive exports of Chilean avocado to that market, which has been open to this fruit since mid-2014.
Up until September 2015 shipments amounted to a little more than one hundred tons due to the low volume available for China, as nearly 80% of the domestic production lies within the regions that were quarantined because of the presence of the fruit fly. In the fourth quarter, after the quarantine measures were lifted, the export volume soared reaching more than 800 tons in November and December, excluding the fruit that was sent to Hong Kong.
More than 131 containers had been shipped by the end of 2015, a number that is well above the one hundred containers that the national exporters projected would be shipped this year.
This results demonstrate that the prospects for the future are good regarding the growth potential of the Chinese market, which is just getting acquainted with the avocados, and in prices, as the avocado prices in this market are higher than those obtained in traditional destinations for this fruit.
In the medium term, the challenge for exporters is to carry out promotion and education campaigns focused on importers and traders, so they know when the fruit is ripe and in what recipes it could be included because the Chinese are still unfamiliar with the black tone and roughness of the Hass avocado, which causes them to have doubts about its quality.
Attractive prices
According to the industry, the prices achieved this year were very attractive. However, there was an adjustment in prices in the last months of the year because of the increased supply from Mexico, which affected the domestic industry.
"We knew the price last year in China was not real and that it would stabilize, because we only sent one container, but it's still a very attractive market compared to Europe and the United States," says the manager of the Avocado Committee, Juan Enrique Lazo.
Despite this positive assessment, he said, exporters shouldn't take the good reception the Chilean avocados received in Asia lightly so they can gain ground in the coming seasons without sacrificing prices.
"The Chinese market is still very small. The big cities can easily eat between five and ten containers per week, but if 20 containers arrive they'll start restricting themselves. There was a moment in October when we got 30 containers from Mexico and prices fell a lot," he said.
According to the sector, a 5.6-kilo box (which is the format that Mexico exports) went from being sold between 180 and 200 yuan -equivalent to nearly $28 and 31 dollars- to less than 80 yuan or $12 dollars in those days, which also affected exports.
"We shipped four kilo boxes, which were sold at roughly the same price. When the price of the Mexican avocado collapsed it brought down our prices. However, our avocado is currently being sold at between 10 and 20 yuan-about 1.5 and $3 dollars; higher than the Mexican avocado," said Juan Enrique Lazo, adding that Chile had a comparative advantage over the Mexicans because their avocado had no tariff, while the Mexican avocado had a 25% tariff.
The preference for the Chilean avocado can be explained because of its longer shelf life and organoleptic conditions, which would be giving it a good reputation in China; something that the industry wants to promote in coming seasons.
Educating to win
The Prize exporting company and its associates decided to incorporate avocados into their export supply for China in 2015 because China accounts for nearly two thirds of its total sales and because of their experience marketing cherries, blueberries, grapes, apples, and kiwis in the Chinese market.
Although they were only able to realize 10% of the shipments they had scheduled because of the delay in lifting the quarantine on fruit flies, the company considers the avocado will be a very successful product in the coming years, as it can be adopted into the Chinese diet. Thus, they believe it is crucial to teach consumers how it can be used within their meals and how to recognize when it is ripe enough to eat.
"The Chinese do not know the avocado on a massive scale and they still evaluate it through its appearance, mainly through its colors and roughness, which has nothing to do with its quality. It is very important that we teach this market about the quality and taste of Chilean avocado. If we do it, and they learn how to eat it may help increase the growth in demand," said Alejandro Garcia Huidobro, general manager and partner at Prize.
Huidobro also stated that exporters shouldn't focus on achieving high prices, but that they should focus on the opportunity presented by this market to diversify the destinations for this fruit. "China is the future market for Chilean avocados, because the United States is invaded by Mexican avocados and, although Europe had a good year, we don't think it's the market that will have a lot of growth for any product. A market like China, with competitive prices, allows us to diversify our supply and pressure the other exporters, and that is a tremendous long-term benefit" said Alejandro Garcia Huidobro.
Source: economiaynegocios.cl