Guacamole Costs to Jump as Avocado Shortage Sparks Record Prices

Back Bloomberg May 1, 2017 By Marvin G. Perez and Megan Durisin

That bowl of guacamole on Cinco de Mayo will be more expensive this year, as avocado prices rise to a record on surging demand and a smaller crop in Mexico and California.

A 22-pound box of Hass avocados from the state of Michoacan, Mexico’s biggest producer, cost 530 pesos ($27.89) on last Thursday, April 28, according to the government. The price, which is subject to seasonal swings, is more than double what it was a year earlier and the highest in data going back 19 years.

The jump in demand in recent years has been dramatic. American per-capita consumption was 6.9 pounds in 2015, versus 3.5 pounds in 2006, according to the U.S. government. People are being drawn to the fruit not just for its taste but also for its healthy oils and fats, a trend borne out in the U.S. by Starbucks’ announcement last month it’s selling avocado sandwich spread.

“You have increased consumption in China and other areas of the world, like Europe,” says  Roland Fumasi, an analyst at Rabobank in Fresno. “They’re pulling a lot more of the Mexican crop, so there’s less available for the U.S.”

Mexico supplies 82 percent of the avocados eaten north of the border. Its shipments into the U.S. surged to 1.76 billion pounds in 2015 from just 24 million pounds in 2000, according to data from the Hass Avocado Board in Mission Viejo, Calif.

Avocado trees are alternate-bearing crops, with large harvests one year and smaller ones the next. A lighter crop is expected this season, Fumasi said. In California, which accounts for the rest of supply in the U.S., production will be down about 44 percent this year, the state’s avocado commission forecasts.

U.S. restaurant chain Chipotle Mexican Grill said earlier this week the shortage of avocados is putting pressure on costs. Hass avocados retailed in the U.S. for $1.27 each on April 21, up from 98 cents a year earlier, U.S. Department of Agriculture data show.

Cinco de Mayo

None of this is good news for those celebrating Cinco de Mayo next week. The date of the Mexican Army’s victory over French forces at the Battle of Puebla in 1862 has become a broader celebration of Mexican-American culture. It’s also turned into one of the top occasions to consume guacamole in the U.S., besides the Super Bowl.

Avocado prices will “remain at relatively elevated levels. It could be all the way through summer,” Fumasi says. Buyers will have to wait until the fall, and hope next season’s Mexican crop is bigger, before there’s enough volume to push prices considerably lower, he said.