Off year for Chilean avocados could cut into Chile’s supplies to Europe - The Packer

Off year for Chilean avocados could cut into Chile’s supplies to Europe

09/15/2010 01:40:49 PM
Jim Offner

Ongoing economic troubles and talk of national bailouts continue to spread across Europe, and shippers of Chilean avocados are wondering what sort of market awaits their product across the Atlantic.

“Avocados will go to where the money’s at,” said Jim Donovan, vice president of global sourcing of Oxnard, Calif.-based Mission Produce Inc. and chairman of the Irvine, Calif.-based Hass Avocado Board. “I believe that it’s possible that we could see a little less fruit go to Europe as a percentage of their crop and perhaps a little more to the U.S. as a percentage of its crop.”

But Donovan said there are no guarantees.

“Whatever happens, it will be determined by the market,” he said. “If the European market is stronger, we could see the opposite happen. We’ve grown so much in the U.S. market, the demand has continued to increase.”

Another factor: After a bountiful production year in California of around 400 million pounds, domestic supplies likely will be leaner next year in the U.S., said Dana Thomas, president of Index Fresh Inc., Bloomington, Calif.

“This year, we’re looking at 20% to 30% less product in the United States, although it’s still early on the estimate,” Thomas said. “They have opened up more marketing in Europe, but they haven’t finalized how much.”

Shippers note that as much as a quarter of Chile’s avocado production is designated for European markets.

“We always send 23% of our total volume there, which is a very small amount,” said Maggie Bezart, marketing director for the Chilean Avocado Importers Association, Washington, D.C. “It’s a developing area. Consumption there is nowhere near consumption here in the United States. We’re probably looking at that same volume, if not a little less, depending on the economy.”

Thomas also said that European demand for avocados was increasing.

“The market has been growing, especially for the Chilean avocados. It’s become a bigger part of the deal,” he said.

Europe provides a much-needed outlet for Chilean fruit, said Phil Henry, owner of Henry Avocado Corp., Escondido, Calif.

“It has taken some pressure off Chilean exports that would have to be shipped to the United States,” Henry said. “That takes pressure off and helps them a lot. That means they can afford to take a closer look at timing of what they’re doing in California.”

Economic circumstances will dictate Chile’s European plans, Henry noted.

“It’s not just the European economy, but the relationship between the euro and the Chilean peso will affect that deal, as well, just as the Chilean peso and U.S. dollar affects somewhat what they’d do in the United States,” he said. “But the economy in the U.S. hasn’t been that great either, and demand has been strong.”

Manuel Jose Alcaino, president of Santiago, Chile-based Decofrut SA, noted that the European Union was becoming a bigger player in Chile’s avocado deal.

“Last season, Europe increased its market share to an unknown-before 27%, and considering the increased yield, the volumes to Europe were more than tripled,” he said.

Alcaino also said Europe’s precarious economic situation could be a key factor in Chile’s participation this year.

“This season, perspectives in Europe look shadier with the weak euro and reduced demand; therefore, the U.S. seems to regain the market share it used to have,” he said. “I would like to see Argentina to maintain or increase its volume due to intensive promotion campaigns there, thus increase its market participation.”

If Chile scales back its shipments in the upcoming deal, other production regions, perhaps a little closer to home, will compensate, said Rob Wedin, vice president of sales and marketing for Calavo Growers Inc., Santa Paula, Calif.

“You never know how that works out,” he said. “There’s other sources of product for Europe. And you never know what’s going to happen with the exchange rates. Growers will emphasize the part of the program where they’re going to make the most money, and exchange rates have a lot to do with that.”

Ample production in California and Mexico this year likely will provide some incentive for Chile to send some early shipments to Europe, but it’s difficult to predict, Wedin noted.

“Where you may see that come into play is late summer or fall of 2011,” he said. “I think it’s going to be good sailing in 2010, because the volume available to the U.S. is going to be down starting in October 2010 to August 2011.”



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