Price gap closes for organic avocados - The Packer

Price gap closes for organic avocados

03/28/2014 10:43:00 AM
Tom Burfield

Organic fruit only accounts for about 7% of California’s avocado crop, according to the Irvine-based California Avocado Commission, but many growers say they’re experiencing growth in the category every year.

“There’s continued interest in organics, and we’ve got growers who continue to devote acreage to it,” said Jan DeLyser, the commission’s vice president of marketing.

Pricing on organic avocados continues to be higher than conventional, but to some extent, the gap is closing, said Steve Taft, president and chief executive officer of Eco-Farms Corp., Temecula, Calif.

Labor remains costly, and fertilizer has become more expensive, he said, but the cost is “not as dramatic as it once was.”

Meantime, he said, demand seems like it’s still growing, not tapering off.

Most organic avocados come from California and Mexico, he said. Chile does not produce many organic avocados, and so far Peru has not sent many to the U.S.


Price rise possible

Tight supplies of organic avocados this spring and summer “could send pricing through the roof,” said Dave Fausset, national sales manager for Mission Produce Inc., Oxnard, Calif.

Some growers go back and forth between organic and conventional avocados depending on the trend they see, he said.

If they can get returns on organic that are up to 50% greater than those on conventional fruit and not suffer significant yield losses, growers will go organic, he said.

“But if their margin erodes, they may switch back to conventional to get the yields back,” he said.

That would enable them to earn greater returns on the higher yields.

“It’s going to be a real dogfight, especially May through August, when Mexico is out (of the avocado deal),” he said. “It’s going to be a very tough market.”

With about 20% of its volume dedicated to organics, Del Rey Avocado Co. Inc., Fallbrook, Calif., is one of the state’s leading organic avocado growers.

“We have a very large market share in organic in California, and we’re very proud of that,” said partner Bob Lucy. “It carves out a very nice niche for us and for our growers.”

Retail support is an important factor in the growth of the organic category, said Bruce Dowhan, vice president of
The Giumarra Cos., Los Angeles, and general manager of Giumarra Agricom International LLC in Escondido, Calif.

Mainstream retailers now often offer organics, not only specialty chains, he said, and that has exposed the category to more consumers.

“Organic is an increasingly important part of our program,” he said, adding that volume and demand are increasing dramatically.

Five years ago, organics accounted for only 1% of the company’s avocados, he said. Today that figure has grown to 5%.

“Consumers are looking for a healthier lifestyle,” Dowhan said, and more diets now include organic fruits and vegetables.

About 5% of the avocados produced by Santa Paula, Calif.-based Calavo Growers Inc. are organic, said Rob Wedin, vice president of sales and fresh marketing.

The company packs them in bulk cartons and consumer bags.

Willing to pay

Demand continues to increase, and consumers remain willing to pay the premium required because of the higher production and labor costs, he said.

“Acreage on organic has definitely increased,” said Gahl Crane, director at Green Earth Produce, Vernon, Calif.

Ground that started the three-year certification process a few years ago now is coming into production, he said, and demand is on the rise from retailers who carry strictly organic product as well as those who carry organic and conventional.

Del Rey launched its organic program when two of its large growers decided to take that course, Lucy said.

The company’s field department then sought additional organic growers, and the program took off.

“It has gone very, very well for us,” Lucy said. “The costs are a bit more, but the premium you get is worth it.”

Del Rey markets its organic avocados in a box that resembles a wood crate and has a “farm stand look” and carries the Del Rey Farms label.



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