Avocado assessments, promotions pay off, study finds - The Packer

Avocado assessments, promotions pay off, study finds

12/30/2013 03:54:00 PM
Mike Hornick

Hass avocado assessments and promotions have paid off in growing demand and stable prices for growers, a study by the University of California’s Giannini Foundation of Agricultural Economics finds.

The study, “Demand Growth and Commodity Promotions for Fresh Avocados,” is by University of California-Davis researchers Hoy Carman, Tina Saitone and Richard Sexton.

U.S. consumption of fresh avocados surpassed various benchmarks in the last decade or so, from 2 pounds per person in 2001 to 5 pounds in 2012. Supply more than doubled, but inflation-adjusted prices received by California growers were nearly constant — an outcome due largely to industry-wide promotion, according to the researchers.

Return on assessment costs varied from 2.12 to 1 to 9.28 to 1 in four simulated models that looked at a range of variables, including supply elasticity, over five years. The average annual increase in the grower price due to promotions was 2.6% at the low end, 12.3% on the high.

Assessments on Hass avocados sold in the U.S. remain 2.5 cents per pound for 2014, a number first set in 2003. The study’s models included the effect of a hypothetical increase to 3 cents.

Besides funding its own promotions and operations, the Hass Avocado Board rebates 85% to the California Avocado Commission and to importer associations for Chilean, Mexican and Peruvian fruit.

The importer associations and the Hass Avocado Board boosted promotional spending on average from $18.3 million annually from 2003 to 2007 to $30 million from 2008 to 2012. California producers spent $50 million total in the first five years but about 10% less up to 2012 due to two relatively small crops.

Since assessments began in 2003, avocado imports and total U.S. supplies — hass and other varieties — continued to increase to more than 1.6 billion pounds in 2012. Mexican avocado exports to the U.S. rose sharply after Mexico gained year-round access to all states except California and Florida in 2005, and to all states in 2007. Mexican imports of 933.8 million pounds accounted for over 58% of the total U.S. supply of fresh avocados and for 86.7% of total fresh avocado imports in 2012.

Market share for imports increased from 30% in 2000 to 67% in 2012.

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Sidney Robinson    
Homestead  |  January, 02, 2014 at 12:24 PM

Wouldn't it be nice if Florida Avocados growers could boast of such good rewards with promotions & assessments.

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