While California growers have been given the go-ahead to ship California avocados to China, shipments may not begin until next season.
At the end of May, the U.S. Department of Agriculture (USDA) and the Office of the United States Trade Representative (USTR) announced that several U.S. agricultural products, including California avocados, received approval to be exported to China. The agreement is phase 1 of the U.S.-China economic and trade agreement.
“We know there’s tremendous potential just based on the sheer population of China,” says Ken Melban of the California Avocado Commission based in Irvine, Ca. Melban notes that four years ago, the association did a market assessment of three cities in China--Shanghai, Guangzhou and Beijing—and at the time, the assessment showed that collectively there were more than 100,000 millionaires. “The potential is there and that would be our target—top-tier consumers,” he says.
Next season potentially?
Melban does add though that California growers may not get to exporting their product this season. “We’re just getting access now and that took quite a long time,” he says. “We’re also more than about halfway through our season this year and these things take time to flesh out. I’m not sure with all of the challenges we’re currently facing with COVID, etc., how much attention will be placed on China frankly. Probably we’ll be looking more into next season to see what can come from that.”
Competing with California product in China will be countries that are already largely shipping into the U.S. and who’ve been sending product into China already including Mexico, Peru and Chile. And what could be challenging to U.S. growers is the significant 60 percent tariff attached to California avocados. “There are conversations with the administration around this and I do believe the hope is to, in phase 2 of this agreement, alleviate some of these tariffs. I don’t know if they’d be fully wiped clean or reduced. But that’s the hope,” says Melban.
Opportunity for California growers
The move gives California growers a new significantly sized country to export its product to, particularly on alternate-bearing years. “We have variations within our total volume. Last year was really low at 220 million lbs. This year we’re projecting 370 million lbs. so 70 percent greater volume,” Melban says, noting California currently exports to markets such as South Korea, Japan, Hong Kong, Canada and more. “With the ebb and flow within the volume from year to year in some instances, that’s where we need outlets because volumes of offshore product coming in continue to increase. It’s good to have those options.”
The high-value market of China is also quite attractive. “We have to work hard to ensure our growers get the best return for their product. California growers face higher input costs than anywhere in the world be it water, labor, regulatory costs, etc. There’s a much higher cost of doing business here in California,” he says. “So commensurate with that, they need a premium return on their avocados.”