Avocado price in the US shoots up to the highest level in 24 years due to shortages in Mexico

Source: Bloomberg (https://www.bloomberglinea.com/2022/03/29/precio-del-aguacate-en-eeuu-se-dispara-al-nivel-mas-alto-en-24-anos-por-escasez-en-mexico/)

By Marvin G. Perez

March 29, 2022 | 10:43 a.m.

Reading time: 1 minute

Bloomberg — Avocado prices hit the highest level in more than two decades as supply shortages in Mexico, the world's largest exporter of the fruit, indicate guacamole is more expensive.

An index that tracks avocado prices in the Mexican state of Michoacán, by far the country's largest source, is up 81% this year to MXN$760 (US$38) per 9-kilogram box, the highest level in data from 1998, according to government figures.

“Lower availability and supply-side inflationary pressures are the main suspects,” said David Magaña, an analyst at Rabobank International.

Mexican avocado production is forecast to decline 8% in the 2021-22 crop year from a previous season's record, according to the United States Department of Agriculture.

U.S. importers of the fruit are still reeling from a temporary ban on shipments from Michoacán last month. following threats against US inspectors.

Mexico represents more than 80% of the avocado consumed in the US. In California, which supplies about 15% of US demand, production is expected to increase this year, "but clearly not enough to meet the growing demand for avocados in the US," Magaña said.

Companies are already feeling the effects of higher prices. First Watch Restaurant Group said its costs are rising toward the higher end of its projections.

Mission Produce Inc., the largest US avocado distributor, raised prices by 50%.

“Price increases have been partially offset by an 18% decrease in the volume of avocado sold, which was primarily due to lower supply, but have been exacerbated by price sensitivity in certain international markets that were competing for lower cost sources of the fruit," CEO Steve Barnard said in a statement.

Per capita consumption of avocados in the US has more than doubled since 2010 to more than four kilos, according to studies by Rabobank.