Chilean avocado growers and shippers have a world of customers with whom they can do business, but more of them are sending fruit to customers inside Chile.
“Our economy is strong and will grow at least at 4% during 2013, so we expect to have a strong demand (for) avocados,” said Adolfo Ochagavía, president of the Chilean Hass Avocado Committee.
That has been the trend for some time, said Rankin McDaniel, owner of Fallbrook, Calif.-based McDaniel Fruit Co.
“Chile’s domestic market plays a big role in the avocado deal because the demand for avocados domestically in the national market has grown very much larger than we thought it would ... and done a very good job of building their markets,” McDaniel said.
A more prosperous consumer base has led to higher avocado sales, McDaniel said.
“The Chilean organizations that are responsible for building programs domestically have done a very good job, and Chilean society, if you will, has become more middle class-oriented, and there’s more money to spend on these types of products, so they’re building their market,” he said.
That affects what is exported, McDaniel said.
The growth of Chile’s domestic avocado market is one of the industry’s “biggest success stories,” said Rob Wedin, vice president of sales and marketing with Santa Paula, Calif.-based Calavo Growers Inc.
“At some point, they’re going to max out on that, but just about any food that’s eaten down there is eaten with avocados,” Wedin said.
Per-capita consumption of avocados is growing in Chile, said Chris Varvel, sales/distribution manager for Henry Avocado Corp., Escondido, Calif.
“When they’re processing where to market their fruit, exporters have turned and looked at their own domestic market as maybe the best market for fruit they’re getting from growers there, without dealing with the time involved in shipping and the exchange rate,” Varvel said.
It’s a limited market, though, with only about 14 million people, Wedin said.
“That’s got to spread into Argentina and eventually into Brazil and Colombia and places like that for that concept to pay off,” he said.
But, there are still plenty of avocados to ship to the U.S. and other markets, McDaniel said.
“The global market is expanding just as fast as the U.S. market ... and there are opportunities globally from Chile’s perspective that they’re making sure that they’re totally aware of and taking advantage of, if it’s the right thing to do at that given time,” he said.
Currency exchange also plays a role in how much goes in which direction, McDaniel said.
“That has had an effect in previous years, and I’m assuming that will continue to play a role in determining what is exported to the U.S. when you compare the U.S. dollar vs. the peso in the exchange rate,” he said.
The exchange rate likely won’t be a factor this year, McDaniel said.
The peso was trading at about 510 pesos to $1 as of Sept. 1. A year earlier, it was about 480 to 1.
“I’m not aware that that is a big issue at the moment,” McDaniel said.
European sales also have a say in how much Chilean volume makes its way to the U.S., and Europe will compete for that product this year, Ochagavía said.
“We are looking at the recuperation of the economies like the U.S. and Europe, so our expectation is that we will have a good demand from both,” he said.