USA: Inflation does not stop, according to price report 1:03
(CNN Business) --
There is at least one item in the supermarket that is going down: avocados.
An oversupply of this fruit has led to a fall in wholesale prices, which has caused prices in stores to drop as well.
With global food costs rising 13% compared to last year, cheaper avocados couldn't come at a better time for households tired of inflation and desperate for a respite from their shopping sprees. .
Inflation data shows US prices were uncomfortably high in September
After rising in the first half of 2022, the wholesale price of a box of 48 medium-sized avocados has fallen 35% to less than $30 from a year earlier, down 67% from the peak reached. in the last week of June, said David Magana, senior fresh produce analyst at Rabo AgriFinance.
At the store level, the average price per avocado unit has also reversed course, declining 2.6% in September from a year ago.
That's a big drop from July's 31% year-over-year increase and August's 13.9% increase, according to the latest figures from market research firm NielsenIQ, which tracks point-of-sale data. from retailers.
What has changed the cost of avocados?
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The oversupply of avocados worldwide has caused a significant drop in prices.
Credit: Rachel Wisniewski/The Washington Post/Getty Images
A confluence of multifaceted issues, including geopolitics, has led to an overabundance of the fruit, said Richard Kottmeyer, managing director of food, agriculture and beverage at FTI Consulting.
Avocado exports from Michoacán to the United States resume
As prices cool, there are so many avocados in circulation that in some cases they are given away.
"It's one of those rare situations where this extreme oversupply of avocados is only possible due to a perfect storm of unforeseen events," Kottmeyer said.
"For consumers, avocados right now are the silver lining in the clouds of food inflation."
Last month in Philadelphia, local food distribution organization Sharing Excess hosted a three-day event to hand out thousands of surplus avocados to anyone who wanted them.
More than 300,000 free avocados were claimed in less than three hours, according to The Philadelphia Inquirer.
The perfect Storm
Bountiful avocado harvests around the world are leading the supply push.
The US avocado market is dominated by Hass avocados from Mexico, which make up 92% of the supply.
A much smaller percentage of avocados come from Peru and from farms in California and Florida.
"In the first half of 2022, avocado shipments from Mexico were 25% lower compared to the record shipments we saw in 2021," said Magana.
Buyers saw prices rise for avocados in February after a brief suspension of imports from Michoacán, in western Mexico, following a threat to a US official there.
The ban was lifted a week later and imports resumed.
Avocados from Mexico account for more than 90% of the US supply. Credit: Luis Antonio Rojas/Bloomberg/Getty Images
In April, Texas enforced increased border inspections on commercial trucks carrying produce and other merchandise from Mexico, further delaying avocado shipments to the US. These regulations were quickly lifted, but not before prompting a new spike in prices. prices in stores.
As shipments began to flow after the stoppages, Mexican farmers also saw a better-than-expected harvest this year.
"Most of the time, avocado crops alternate in yield from year to year. So a big crop one year is followed by a smaller one the next," Magana said.
But sometimes they have back-to-back seasons of high performance, as is the case this year.
Add to this the bumper global avocado harvests, in key producing countries like Australia and Peru, colliding with geopolitics in a way that has amplified the supply glut, Kottmeyer said.
The successful "crossover" of the Mexican avocado to the US market
"Essentially, the United States gets most [of its] avocados from Mexico and Peru. The bumper crops are often sold around the world," he said.
"Europe has significant food inflation, so when avocado prices went up earlier this year, demand went down in that market."
China, another big market, is grappling with pandemic-related lockdowns, port congestion and border closures.
The conflict between Russia and Ukraine has also hurt avocado exports and shipments to and around Europe, he said.
"Much of the oversupply of avocados has ended up in the US," Kottmeyer said.
Avocados have a shelf life of three to four weeks, longer than most fruits and vegetables, making it easier and faster to divert them to other markets, she added.
How long will it last?
Good news for consumers: The avocado glut should last until at least mid-2023, Magana said.
"However, we cannot predict climate changes. A spike in temperatures or a sudden drop can affect production," he said.
Avocados are enjoying unprecedented popularity lately, appearing on menus such as avocado toast and burgers.
Credit: Blake Nissen/The Boston Globe/Getty Images
Avocados are enjoying unprecedented popularity lately, making unexpected appearances on menus and in food items: everything from avocado toast and burgers to grilled avocados and avocado oil for cooking and in salad dressings.
"Demand for avocados is certainly not going down," Kottmeyer said. "The Super Bowl is the biggest consumption event for avocados, but we're certainly seeing a lot more occasions to eat them."
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