The difference between last year's California avocado season and this year is quite extreme and this is mainly related to pricing. "Last year around this time, growers received $2.00/lb. of avocados and right now, the price is around $1.07/lb., but the majority is sold under $1.00," says Hayden McIntyre, President of Sierra Pacific Farms and farm manager for a number of avocado growers in the state. While input costs have continued to increase, the price per pound is about half of what growers received last year.
© Sierra Pacific
Impact from Mexico
That low price is mainly caused by ample supply from other regions. There are many competing growing countries and Mexico - the main avocado supplier to the U.S. market - is experiencing an abundant crop. "We are in the market at the same time, and their volume truly affects our season," McIntyre mentioned. In addition, economic struggles also play a role as the cost of living is steep and gas prices are at an all-time high. As a result, people are watching what they are buying. While Mexico's abundant crop has driven farm-gate prices down, the retail sticker price hasn't followed. "The math on the ground tells a story of markups and here is an example of the gap: for a size 32 avocado, a grower receives roughly $0.75, but it retails for $2.15."
"The cost of living is steep and gas is at an all-time high, but while the consumer pays a premium, the grower is barely covering costs," McIntyre noted. "The system is no longer balanced."
© Sierra Pacific
The fruit set for next year is looking fantastic.
Support for California growers
Farming costs for avocados in California are roughly between $3,600 and $6,000/acre, not including the cost of land. "We are an industry that buys retail and sells wholesale, so we buy fertilizer at a retail price and markup and at the end of the day, the avocado is sold a wholesale price," explained McIntyre. Growers need to yield about 8,500 lbs./acre in order to breakeven as they typically net back about $0.70/lb. after picking and hauling. "Nevertheless, when reflecting on the past five years, the avocado industry has been more than sustainable."
For Sierra Pacific, harvest of California avocados started mid-March and sizing has been favorable. The state is expecting a total crop in the 300-million-pound range, which would make it the third year in a row above 300 million pounds. Availability of California avocados will continue through the summer. At the same time, the trees are already blooming for next year. "The fruit set for next year is looking fantastic, but it is too early to be excited," said McIntyre.
For more information:
Hayden McIntyre
Sierra Pacific Farms
Tel: (+1) 951-699-9980
[email protected]
www.spfarminc.com
