Volatile California Avocado Crop Keeps Market on Edge

California provides just 12% of the avocados in Americans’ diets, but the state’s volatile crop has upended the market multiple times in recent years, causing shortages and high prices.

This year, California is expected to have lost over half its avocado crop, the largest decline in over a decade. Timing compounds the problem, as the state’s incidence of diminished crop typically occurs at the same time of year that Mexico routinely ships fewer avocados to US markets.

The result: Average retail avocado prices recently shot up from their normal range of $1.00-$1.40 apiece to $2.10 apiece, exceeding the previous record of $1.81 set in September 2017, according to data from AMS Retail. Organic avocados jumped from a normal range of $1.25-$2.00 apiece to $3.50, beating the previous record of $3.00 set in July 2018.

The US average avocado price rose to a record high of $2.10 apiece, which exceeds the previous record by 16%. 

Prices may drop back to earth in the fall, when Mexican shipments usually pick up again. This is what happened in 2016, when avocado production nationwide (including California and Florida) fell by 40%. The shortfall was accompanied by the highest prices in five years, though prices broke in November amid fresh imports from Mexico. In 2009, California production more than tripled from the previous year, then fell again by 45% in 2010. Such volatility wreaks havoc on supply chains. Importers are regularly called upon to fill the void left by US shortfalls.

The California Avocado Board estimates a crop for 2019 of 180 million pounds, down from 372 million pounds a year earlier, a decline triggered by a damaging heat wave in 2018.

This time, not everyone expects a return to “normal” prices and supply volumes come fall. The ever-increasing consumption of avocados in the US could make it harder for Mexico, the biggest source of imports, to fill the gap left by California’s production decline. In order to make up for the expected 192 million-pound shortfall from California, the US would need to increase imports by 480 million pounds over last year to stay on trend with consumer appetites. This would be a very large 11% increase, and the hike would be all the more difficult because it would come on the heels of a 13% import increase in 2018.

US avocado demand has grown for decades as consumers develop a taste for avocado-centric foods and chase the health benefits of “good fats.” The US is heavily reliant on foreign suppliers, chiefly the world’s largest producer, Mexico. While 90% of US imports come from Mexico, importers also find smaller supplies from Peru, Chile, and the Dominican Republic.

Some major US importers already are seeking to hedge their bets. Burrito chain Chipotle recently announced efforts to more actively diversify its procurement options for avocados. Other restaurants reportedly have begun using other, cheaper ingredients, such as squash, instead of avocados to make guacamole.

About 14% of avocados consumed in the US are produced domestically, mainly in California (blue bars in the left chart) and Florida (green bars). (Note that the chart lacks production data for 2012.) The bulk of imported avocados (shown in the right chart) are from Mexico. Imports currently are at a record high.