Avocado supply pipeline won’t be full until after Thanksgiving

Author: 
beckman@theproducenews.com (Tim Linden)
Date: 
Thursday, 15 November 2018 - 5:08am

After a 16-day harvesting strike, Mexican avocado growers were back harvesting their crop on Wednesday, Nov. 14, but it is expected to take at least two weeks — and probably longer — before the pipeline is full, according to several sources.

Jim Donovan, senior vice president of global sourcing for Mission Produce in Oxnard, CA, said there will be good supplies of fruit before that, but there is not expected be the full assortment of ripe fruit loose and in bags until the week of Nov. 26 or Dec. 3.

“There will be fruit for sale at the border tomorrow,” he said Nov. 14, “but it’s only going to be hard, green fruit.”

Avocados are fairly unique in that they are picked and packed green and unripe and then typically sent to forward distribution centers for preconditioning. From there, orders are filled for retailers, wholesalers and foodservice operators around the country.

Fruit is preconditioned to varying levels depending upon the need and desires of the customer. The same is true for both bulk and bagged avocados, the latter becoming an increasingly important element of most retailers’ merchandising programs. It can easily be a two-week process from harvest to the retail shelf. Because supplies for U.S. consumption were very thin as the harvest strike moved into its third week on Nov. 12, Donovan said it will take time to fill the pipeline.

The first fruit across the border will probably head directly to retailer shelves so they have something to sell. It will take at least two weeks before there is fruit in the ripening rooms in different stages, which will allow packers to begin churning out their full complement of options for their customers.

Consequently, Rob Wedin, vice president of fresh sales and marketing for Calavo Growers Inc. in Santa Paula, CA, said there will be several stages involved in “getting back to normal.”

In fact, Wedin believes it will be well into December, and maybe into the new year, before the avocado distribution system is humming along like it was prior to the strike. And even then, he said some customers will continue to be reluctant to promote the fruit with the same confidence that they had before the work slowdown.

APEAM, the Mexican avocado grower organization that negotiated the end of the work stoppage and announced the agreement, seemingly acknowledged that issue in its press release.

“In spite of the damage and the wear and tear of the links of the chain and of the society in general and of disappointed and dissatisfied consumers, we apologize for all this and we will do what is necessary so that this does not happen again, all within the framework of legality and sustainability as we are a world class industry,” the APEAM statement read.

The harvesting strike began Monday, Oct. 29, and picking resumed on Wednesday, Nov. 14. Longtime observers predicted there would be some fruit for sale at the U.S. border as early as Thursday, Nov. 15, but border crossing probably wouldn’t reach pre-strike levels until the following week (Nov. 19) — and that’s Thanksgiving week, which means another set of challenges.

While the Thanksgiving holiday in the United States might not have an impact on harvesting in Mexico, it will have an impact on the supply chain in the United States.

The APEAM press release detailed the agreement that ended the strike and it seemingly did not specifically address one of the major issues that was the apparent cause of the strike. It was reported during the first week of the strike that growers were unhappy with declining prices. Mexico has a larger crop this year and the f.o.b. price on avocados started to decline in September.

The fourth point in the agreement does talk about price but only in the most general of terms: “The parties agree that the prices referring to the market will be adjusted to the principle of the OFFER AND DEMAND [capitalized in the document], for which the producers will have the freedom to sell their fruit with the packing of their confidence and convenience that they consider to be beneficial to your interests.”

Several people interviewed by The Produce News said there was no mention of a floor price, as growers had wanted, as that is basically illegal. However, one person did say that there are rumors that an unofficial floor price has been agreed upon.

The first two points in the agreement addressed what appear to be lingering concerns of growers. Point one called for producers and packers to take care in assuring that all the fruit being packed in Michoacán originates in that Mexican state. Michoacán is the only state that has access to the U.S. market at this time and there appears to be some concern that fruit from other states was making it into the pipeline.

One U.S. distributor of Mexican avocados had not heard of that complaint before and believes that the certification process within Mexico is quite robust and guards against fruit from non-certified groves from getting to the U.S. market.

Point two of the agreement calls for more transparency and information between packers and producers. The agreement calls for the dissemination of weekly information from APEAM to local boards with regard to market price, volume being packaged and shipped, and the destination of those shipments.

The sixth and final point of the agreement attempted to add some clout to the agreement, but again it was left fairly vague. It reads: “Finally, it is agreed that, if the above points are not respected, both packers and producers will be sanctioned according to the Plant Health laws, the Binational Work Plan between Mexico and the United States, and related laws related to the matter.”

What sanctions might be imposed are left unsaid. Again, a U.S. distributor said that point seems to imply that if growers are unhappy as the season moves forward, they reserve the right to again address the issues.

For its part, APEAM used the press release to attempt to assure U.S. trading partners that Mexico was again open for business and the trade organization will “refocuses its efforts on the promotion of our fruit in international markets to recover the trust that for more than 21 years has been built thanks to the unity among its members.”

While it is estimated that more than 100 million pounds were not harvested and shipped to the United States during the harvesting strike, there appears to be no clear cut answer as to whether that is lost opportunity or whether that volume can be made up through the balance of the season.

About D. Otani Produce

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