OVERVIEW GLOBAL AVOCADO MARKET

A few weeks ago, exports from Peru fell due to the impact of rainfall, but now the market has again stabilised. At the beginning of the year, the country was expecting a large increase in its production, but due to El Niño, the results ended up being disappointing. The weather phenomenon has caused higher temperatures to be recorded during the flowering period, causing the trees to suffer more stress. This resulted in the fruit not developing as well as desired. Due to the low solid content in the fruit, the avocados later matured unevenly in the ripening cells. Demand for Peruvian avocados this season has been very good in various continents.

In the Dominican Republic, preparations are underway for the new season. Local consumption and exports are growing every year, so they are looking for opportunities to expand its own production. It is once again allowed to export to the US. Growers who heard the news took a sigh of relief, as the US is a major consumer. Some common varieties for domestic consumption and for export include the Pollock, Semil, Choquette, Dr. Depuis and Carla. The most important variety is the Semil. The Dominican Republic is ranked # 7 in the ranking of the world's largest avocado producers. The country's avocado production has increased by almost 14% between 2002 and 2014.

When it comes to Hass avocados, Kenya has a great production potential, as it has the right climatic conditions. This variety hits the market in May, while the Fuerte is available from March to September. Most growers are close to the capital, Nairobi. Thanks to improvements in production and logistics, it is now also possible to export to the Middle East and the EU. Kenyan avocados are shipped to different markets around the world, from Russia to Egypt. It is expected that exports will increase further in the coming years.

The South African season is coming to a close, but for now there are still some volumes. In South Africa this year there were severe shortages, and the volume dropped by 40%. The country suffered from extreme drought and the impact of a hailstorm in early February in the Tzaneen region, which literally beat the fruit from the trees. Producers are selling their products in various market segments in order to maximise their revenues. Part of the avocados remain in South Africa and are intended for the processing industry. The export volume in 2016 is estimated at 12.8 million boxes, slightly higher than the 12.6 million boxes of 2015.

In New Zealand, the avocado harvest kicks off between mid and late August, depending on the ripening. The warm, wet autumn has had a positive impact on the fruit and the calibres are fine. Last week, there was some heavy rain and winds, but it is still too early to determine whether the harvest will be negatively affected by them. For now, the quality and sizes look good. A good season is expected with great prices and strong demand from Australia and Japan.

Last season, frosts caused significant losses in Israel, but this year the season is expected to be a good one. Not all avocado trees are estimated to have fully recovered, but for now prospects are much better than last year. This is because the trees that were not affected by frost will have higher yields and some of the younger plantations are now coming into full production. That's good, as demand in the country is rising. Last year, prices were high, and this season they are expected to reach good levels, probably with some product shortages. Also when it comes to exports is the outlook positive. This year, some 100,000 tonnes are expected to be harvested, which is an increase of more than 10% compared to last season. Israel has become one of the key players in recent years as a supplier to the European market. Avocados are considered to have a great potential and therefore the acreage is growing larger every year. The 'adult' acreage already stands above 8,000 hectares and is expanding by an average of 200 hectares per year.

There is a good demand for avocados across Europe, with good consumption and high prices. This is due to a low supply from Peru. Furthermore, not a lot of fruit from South Africa has become available and the Brazilian season is already finished. Kenyan avocados suffer quality problems. The Chilean season has yet to begin. Prices in some European countries range between 11 and 13.50 Euro per box. These market conditions are expected to continue. Consumption will likely decrease somewhat if the price is too high, as that would become a deterrent for the consumers.

Spain is becoming a gateway to Europe for Latin American exporters. The country is one of the largest importers and re-exporters of avocados in Europe. Latin America ships many avocados to Spain and Spain re-exports a share of these further in Europe. The domestic market in Spain is doing well. Consumption is growing by 15 to 20%. The avocado consumption in Europe is also increasing rapidly, by an average of 1 kg per capita per year and is expected to reach two kilos soon. The Spanish production amounts to around 80,000 tonnes and the yield is about 5 to 7 tonnes per hectare. The acreage in Spain is not growing very quickly, but a lot of investments are going to the modernization of the avocado crops.

Despite a growing demand, avocados remain a niche product in Italy. It is becoming popular especially among health freaks and vegetarians. Italian importers speak of critical shortages caused by low volumes this year. Green Pinkerton avocados were almost nowhere to be found, so consumers had to make do with the Hass or Zutano. In Italy, there are some South African avocados on the market. Their prices are very high. Some of the wholesalers do not import them, because they do not have the money. Even though it is still a niche market, it is expected to grow in the years to come. There are also plans to grow more avocados domestically. The season in Sicily will start in September/October and last until April/May. Wholesale prices in Italy ranged from 2.30 to 4.30 Euro per kilo.

In the coming months, more shortages are expected. The situation for imports will be especially difficult in late August and September, because the harvest in Chile is actually expected for late September. Prices are currently rising. The large deficit in the fruit's supply recorded already for a few weeks has been causing prices to reach sky high levels. When it comes to Hass avocados, the market is again strongly affected by a more limited supply. Especially South Africa had a smaller production this year due to the impact of hailstorms. Additionally, that country also had to deal with extreme drought, so the fruit sizes are extremely small this year. Peru also suffered from the impact of El Niño. This has resulted in much smaller volumes going to Europe. Conversely, the impact of El Niño was positive for Chile.

Prices in the avocado market remain sky high. There is a shortage of green avocados and the market for Hass avocados is good. The fruit flies from the shelves and importers can only barely meet their programs. Prices stands at up to 13 Euro for green avocados, 12 euros for the Hass and 14.50 Euro for the RTE. Importers also expect good market conditions in the short term. The total volumes are not greater than last year's and consumption has already been growing faster than the production for a few seasons, which largely explains the tight market conditions. In particular, the demand for ready-to-eat is rising. The supply from Peru is not overly large; South Africa will continue shipping until early October and the exports from Tanzania and Kenya are underway.