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US: Avocado prices increase due to a lower supply and a higher global demand

The avocado is fast becoming the favorite fruit in the United States. According to the US Department of Agriculture, even though local production is stagnating, imports have more than tripled in the last ten years. Annual consumption of the average American has increased from around one kilo of avocado, in 1989, to more than 3.5 kilos, in 2016; the total consumption that year stood at 1,150 million kilos.

However, the United States' enthusiasm for avocados can be affected by the high increase in the fruit's price. The wholesale price of a box of 48 avocados peaked at US $ 83.75 last September. A year earlier it cost US $34.45, according to data from the American Restaurant Association. Some restaurants were forced to increase the price of guacamole or eliminate it from their menus. Others absorbed the cost.

The increase in prices is partly explained by a drop in supply, due to a proliferation of droughts, storms and uncontrolled fires in California, Chile, and Mexico. California's production decreased by 44% in 2017. That year, Mexico's production decreased by 20%. In addition, the succession of strikes in that country further reduced the offer.

The growing global demand is also driving prices up. Both Chile and Peru have made trade agreements with China, eliminating customs taxes on their avocado exports. Avocado sales from Peru to China, although small in volume compared to Chile and Mexico, increased by 3,700% in 2016. Other countries, including Canada and Japan, have also increased their appetite for this product, increasing aggregate imports by 32% between 2014 and 2016.

Increasing production will be quite difficult. The avocado is a complicated plant to grow, said Mary Lu Arpaia, of the University of California at Riverside. The soil need to have a certain level of salinity, the terrain can not be too steep, and the temperature must be stable. In addition, erratic weather conditions can kill the crop easily.

Source: The Economist 

Publication date: 2/22/2018


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