Holy guacamole! Avocados are expensive

Avocados have been expensive for a while now. Typically, most Canadians would expect to pay $1 per unit. In the last few months, it’s almost impossible to find them below $2. And, if you do buy an avocado, it will likely be smaller, darker and much less appetizing. However, if you’re expecting avocados to be cheaper, you’ll need to wait a while longer.

Dry weather in California resulted in lower avocado production and forced Canada to go elsewhere to purchase avocados. And since July is a low point for Mexico’s production cycle for avocados, prices are not going to be dropping any time soon. In Canada, 95% of all avocadoes come from Mexico. The country produces 34% of the world supplies of avocados.

What’s adding pressure on avocado prices is its popularity. Avocados are in high demand. Canadians spend nearly $300 million on avocados a year. Consumers’ greater interest and awareness of healthy eating is certainly a driving force behind the avocado's popularity, headed by guacamole’s increasing popularity. Also, the improvements that have been made in the supply chain in areas such as ripening and grading have helped make the product more attractive to an increasingly demanding consumer.

The food service industry is trying to cope with these prices by using less avocados for guacamole and salads or serving a substitute. Some are using edamame, broccoli, green peas or even asparagus instead of avocados to make guacamole. Whether or not restaurants are telling the consumer about these subtle changes is another matter. Nevertheless, many restaurants are changing recipes.

On the supply side, the avocado market is a unique case. Without a futures contract, the avocado market can be relatively opaque. Commodity farmers are typically price takers, but the avocado industry is marred with imperviousness and will make farmers even more vulnerable. Transactions are not as transparent as in other sectors such as livestock, wheat, barley or rice. The crop’s reputation is tainted by violence and corruption. According to some reports, drug cartels have seized land from avocado farmers. Not the best image if growth in the western world is a priority.

It is easy to see how the market for avocados will only continue to expand, and no doubt, Mexico will have more competition from emerging producers such as China and Australia. But growth can be attained with more segmentation, innovation and new styles of merchandising. If someone can bring a seedless avocado to Canada, for instance, consumers will likely return the favour by buying more of the green stuff.

As for retail prices in Canada, the good news for avocado lovers is that prices are expected to lower by October as Mexico ramps its production back up again. Until then, hold on to your guacamole!