Food prices are soaring. But this favorite dish is getting cheaper | CNN Business

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CNN Business
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At least one item at the grocery store is getting cheaper: avocados.

A significant overabundance of buttery fruit supply triggered a drop in wholesale prices, also driving down store prices.

With the overall cost of groceries up 13% from a year ago, cheaper avocados couldn’t come at a better time for inflation-weary households desperate to take a break from their purchase invoices.

After surging in the first half of 2022, the wholesale price of a case of 48 medium-sized avocados fell 35% to less than $30 year-over-year, down 67% from the peak reached the last week of June, said David Magana, senior fresh produce analyst at Rabo AgriFinance.

At the store level, the average unit price of avocados also reversed its trajectory, falling 2.6% in September compared to a year ago. That’s a sharp drop from the 31% year-on-year peak seen in July and the 13.9% rise in August, according to the latest figures from market research firm NielsenIQ, which tracks retailer point of sale data.

What made the price of avocados swing?

A confluence of multifaceted issues — including geopolitics — has led to a glut of fruit, said Richard Kottmeyer, managing director of food, agriculture and beverage at FTI Consulting.

While prices are falling, there are so many avocados floating around right now that in some cases they are being given away for free.

“It’s one of those weird situations where this extreme oversupply of avocados is only possible because of a perfect storm of Black Swan events,” Kottmeyer said. “For consumers, avocados are currently the green lining of the storm clouds of food inflation.”

Last month in Philadelphia, local food distribution association Sharing Excess held a three-day event to distribute thousands of excess avocados to anyone who wanted them. More than 300,000 free lawyers were claimed in less than three hours, according to The Philadelphia Investigator.

Bumper harvests of avocados around the world are leading the supply boom.

The American avocado market is dominated by Hass avocados from Mexico, which represent 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 25% lower than the record shipments we saw in 2021,” Magana said.

Buyers saw a spike in avocado prices in February after a brief suspension of imports from Michoacan in western Mexico following a threat against a US official there. The ban was lifted a week later and imports resumed.

In April, Texas implemented enhanced border inspections of commercial trucks transporting produce and other products from Mexico, further delaying shipments of avocados to the United States. These regulations were quickly lifted, but not before causing another spike in in-store prices.

As shipments began to pour in following production shutdowns, Mexican farmers also saw a better-than-expected harvest this year.

“Most of the time, avocado crops alternate yield from year to year. So a big harvest one year is followed by a smaller harvest the next year,” said Magana. But sometimes farms have back-to-back high-yielding seasons, as is the case this year.

Added to this are bumper global avocado harvests, in key producing countries like Australia and Peru, which are clashing with geopolitics in a way that has amplified oversupply, Kottmeyer said.

“Essentially, the United States gets the most [of its] avocados from Mexico and Peru. Bumper crops would usually be sold around the world,” he said. “Europe is experiencing significant food inflation, so when avocado prices rose earlier this year, demand fell in that market.”

China, another big market, is facing pandemic-related shutdowns, port congestion and lockdowns. The Russian-Ukrainian conflict has also hurt avocado exports and shipments to and around Europe, he said.

“Much of the excess supply of avocados ended up in the United States,” Kottmeyer said. Avocados have a shelf life of about three to four weeks, longer than most fruits and vegetables, allowing them to be diverted more easily and quickly to other markets, he added. .

Good news for consumers: the glut of avocados is expected to last until at least the middle of 2023, Magana said.

“However, we cannot predict weather changes. A sudden temperature spike or drop can impact production,” he said.

Avocados are already enjoying unprecedented popularity and appearing in unexpected ways on menus and grocery items – from avocado toast and burgers to grilled avocados and avocado oil for cooking and dressings.

“The demand for avocados is certainly not diminishing,” Kottmeyer said. “The Super Bowl is the biggest avocado eating event, but we certainly see plenty of other eating opportunities for it.”