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Avocado prices starting to come down as more supplies arrive

A worker packs avocados at a packaging warehouse
Mariana Bazo | Reuters
A worker packs avocados at a packaging warehouse

Relief is in sight for guacamole lovers as avocado supplies have started increasing and prices are expected to come down over the next several weeks.

"The brief delay in shipment of avocados from Mexico has been resolved, and as a result, pricing is returning to seasonal levels," said Ramon Paz, an advisor for the Avocado Producers and Exporting Packers Association of Mexico (APEAM). Mexico has imported more than 100 million pounds of the fruit in the past two weeks.

A grower strike in Mexico reduced shipments of avocados starting in July and the dispute just ended last month. Supplies of the popular fruit have only just started to bounce back. The supply issue caused prices to double in some cases and left grocers and restaurants scurrying for avocados.

The trade publication Produce News did its own independent survey of retail prices and reported Friday "avocados were still commanding close to $3 apiece in many California stores."

According to APEAM, weekly projections now through December have been increased from earlier estimates by around 10 percent. Mexico supplies the majority of avocados consumed in the U.S.

Several restaurant companies discussed the avocado shortage on their recent earnings conference calls. The avocado problem led some Mexican restaurant chains to briefly run out of guacamole.

"Avocado supply declined during the summer, and we, again, experienced higher pricing, although we had hoped that this would be a temporary spike," Chipotle CFO Jack Hartung said during the Denver-based company's third-quarter earnings call last week.

He added, "In recent weeks, though, supply has become even tighter, and pricing had become much more volatile than expected. In fact, we have seen that some competitors recently have posted signs on their doors saying they are out of avocados altogether."

Chipotle said it remained in supply of avocados despite the industry shortage. But case pricing on the fruit has risen from an average of about $30 per case during the first half of the year to approaching $80 in October, Hartung said.

Prices for some avocados still remain in the $56 to $59 range, according to Produce News.

BJ's Restaurant cited higher overall commodities costs in the third quarter and said it was due in part to avocados and indicated the company expects costs "to stay high through at least the fourth quarter."

Fresh Del Monte Produce, a major producer and distributor of produce, said its margins have been impacted by the avocado situation and it has been critical of the Mexican growers.

"Particularly in the last six weeks, the prices in Mexico have gone so high," said CEO Mohammad Abu-Ghazaleh. "And that was actually by design of the growers, that they stopped picking fruit and stopped picking the avocados, which made a huge shortage in the pipeline. And that pushed the prices up to $70, $80 a box, which is really absurd."

Abu-Ghazaleh added, "The pipeline is already back normalizing the supply. However, the prices haven't come down as much as we would like to see.... I hope within the next 30, 40 days, we will see a more normal situation."

The Florida-based company is in the process of constructing its own avocado packing operations in Mexico, which the CEO said will give it an advantage. Also, Fresh Del Monte plans to put its own production in Mexico and other countries, so it's not as dependent on Mexico.