Avocado Prices Rocket To Decade High As Mexican Production Set To Plunge
Even before the war in Ukraine, a majority of American households were under pressure from record-high food inflation and consumer prices at a four-decade high. The conflict and following sanction inflation have made everything worse. One food unrelated to Ukraine and found mainly in Mexico is avocados. Prices of the fruit are now at a decade high as supplies tighten (in terms of USD).
Ahead of Super Bowl 56, on Feb. 13, the U.S. Department of Agriculture (USDA) suspended U.S. imports of Mexican avocados due to one of its inspectors being threatened by drug cartel members. At the time, we pointed out avocados prices had never been higher for the big football game.
Even though U.S. imports of avocados have been restored, prices have continued to rocket higher since Super Bowl 56. For a 20-pound box of avocados from the state of Michoacan, Mexico (the central hub of Mexican avocado production), prices soared 40% to around $38, a new decade high.
Two decades of data show prices for avocados have never been higher for this time of year.
The cause of the price surge is not as much related to trade disruption but instead tightening supplies.
“Lower availability and supply-side inflationary pressures are the main suspects,” David Magana, an analyst at Rabobank International, wrote in a note.
Keep in mind that 80% of all U.S. avocados originate from Mexico, and the rest are from the U.S.
USDA expects Mexican avocado output to plunge 8% in the 2021-22 crop year from a record high harvest in the prior growing season.
Bloomberg notes, “American importers of the fruit are still catching up from a temporary ban on shipments from Michoacan last month stemming from threats against U.S. inspectors.”
Mission Produce Inc, the largest U.S. avocado wholesaler, has marked up prices by more than 50%.
“Partially offsetting price gains was an 18% decrease in avocado volume sold, which was primarily driven by lower supply, but exacerbated by price sensitivity in select international markets that competed for lower-cost sources of fruit,” CEO Steve Barnard told Bloomberg in a statement.
Factor in soaring costs of fertilizer, diesel, and freight, avocado prices are likely to remain elevated and or keep rising until millennials can no longer afford the yummy fruit, otherwise known as demand destruction.
Tue, 03/29/2022 – 21:05