Market recovery for avocados after oversupply larger than expected

In spite of the unprecedented growth of the avocado market, the supply was too large on the European market for a while this summer. This resulted in a dramatic price level of 3-4 euro. The market has now recovered, and the sector is preparing for the month of September and its shortages. “They predicted that 30 per cent more avocados would be shipped to Europe. That was a considerable volume, but because of the annual growth in demand of 15 to 20 per cent, it would have been manageable. However, supply was 70 per cent higher,” explains Ine Potting of Scherpenhuizen. “Everyone knew there’d be more avocados, but it was a surprise to everyone that it would be this much.”

 

“Absolutely nothing went wrong in the production countries. All countries had an on-year, resulting in this gigantic oversupply, which nobody predicted. Besides, export from Peru started later, so that the containers had to be concentrated in fewer weeks,” Ine continues. “Traditionally, prices are always a bit lower in June, but it was impossible to sell this additional volume. People then start showing up trying to profit from this green gold, although they don’t have the customers for it. Desperate people will do whatever it takes. The prices set by these people, are then seen as a reference, which results in prices dropping faster than they’re rising.”

 

When asked what the sector could do to prevent similar situations of oversupply, Ine answers: “People in Peru and South Africa will have to draw up an action plan so that not everything arrives on the market at the same time. Let this summer be a wake-up call. Demand for avocados will definitely continue growing by 15 to 20 per cent per year, but the increase in production should be proportional. There will have to be a plan to spread supply, and to ship a maximum volume per week.”

 

The market is now normalising again, and prices are heading towards 9 euro again. “There’s not much product available at the moment, stores are empty, and small sizes in particular are scarce. If it hadn’t been the summer holidays, prices would have recovered much more. I predict September will become a tricky month regarding availability. Peru and South Africa are near the end of their season, and Chile hasn’t started shipping to Europe yet. Prices will definitely rise again!”