(CNN Business) — There’s at least one supermarket item that’s falling: avocados.
The oversupply of this fruit has led to a drop in wholesale prices, which has also caused a drop in store prices.
With global food costs up 13% compared to last year, cheaper avocados couldn’t come at a better time for inflation-weary households desperate for a break from their shopping frenzy.
After rising in the first half of 2022, the wholesale price of a box of 48 medium-sized avocados fell 35% to less than $30 from a year earlier, down 67% from a peak reached in the last week of June, David said. Magana, senior analyst for fresh produce at Rabo AgriFinance.
At the store level, the average price per unit of avocados also reversed course, falling 2.6% in September from a year earlier. That’s a big drop from a 31% year-over-year increase in July and a 13.9% increase in August, according to the latest data from market research firm NielsenIQ, which tracks data from point-of-sale retailers.
What changed the price of avocados?
A confluence of multiple issues, including geopolitics, has led to an overabundance of fruit, said Richard Kottmeyer, director of food, agriculture and beverage at FTI Consulting.
As prices drop, so many avocados are 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 because of a perfect storm of unforeseen events,” Kottmeyer said. “For consumers, avocados are currently the silver lining in the food inflation cloud.”
Last month in Philadelphia, local food distribution organization Sharing Excess hosted a three-day event to give away thousands of excess 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 driving supply growth.
The American 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 down 25% compared to the record shipments we saw in 2021,” Magana said.
Buyers noticed an increase in avocado prices 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.
In April, Texas imposed increased border inspections on commercial trucks carrying groceries and other goods from Mexico, further delaying avocado shipments to the US. Those regulations were quickly repealed, but not before prompting another spike in store prices.
As shipments began to flow after a hiatus, Mexican farmers also reported a better-than-expected harvest this year.
“Most of the time, avocado crops alternate in yields from year to year. So a big crop one year is followed by a smaller one the next year,” Magana said. But sometimes they have back-to-back seasons of high performance, such as this year.
Add to this large global avocado harvests, in key producing countries such as Australia and Peru, colliding with geopolitics in a way that has exacerbated supply glut, Kottmeyer said.
“Essentially, the United States gets the majority [de sus] avocados from Mexico and Peru. Big crops tend to be sold around the world,” he said. “Europe has significant food inflation, so when avocado prices rose earlier this year, demand fell in that market.”
China, another major market, is struggling with pandemic-related disruptions, port congestion and border closures. The conflict between Russia and Ukraine has also hurt avocado exports and shipments in and around Europe, he said.
“A lot of the oversupply of avocados ended up in the U.S.,” Kottmeyer said. Avocados have a shelf life of three to four weeks, longer than most fruits and vegetables, making them easier and faster to divert to other markets, he 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 change. A jump in temperature or a sudden drop can affect production,” he said.
Avocados have recently enjoyed unprecedented popularity, appearing unexpectedly on menus and in food products: everything from avocado toast and hamburgers to grilled avocados and avocado oil for cooking and in salad dressings.
“The demand for avocados is certainly not going down,” Kottmeyer said. “The Super Bowl is the event with the highest consumption of avocados, but we’re certainly seeing a lot more opportunities to eat them.”