Avocado inspections in Michoacan, Mexico has restarted and avocado exports to the U.S. have resumed, the USDA announced February 18.
The USDA, working closely with the U.S. Embassy in Mexico’s Regional Security Officer, Mexico’s national plant protection organization (SENASICA) and the Association of Avocado Producers and Packers Exporters of Mexico, or APHIS, has enacted additional measures that enhance safety for APHIS inspectors working in the field, following a threat made to an employee on February 11, according to the release.
“The safety of USDA employees simply doing their jobs is of paramount importance,” the USDA said. “USDA is appreciative of the positive, collaborative relationship between the United States and Mexico that made resolution of this issue possible in a timely manner.”
In 2021, the U.S. imported $3.0 billion avocados globally, with $2.8 billion coming from Mexico (92%). In terms of volume, the U.S. imported 1.2 million metric tons of avocados, with 1.1 million coming from Mexico (89%). For the last full calendar year (2020) of available data, Mexico reported exports of avocados of $3.2 billion, of which 79% went to the U.S.
In 2020 and 2021, approximately 80% of the avocados exported from Michoacán went to U.S. markets. The peak growing season for Mexican avocados is January through March, while the U.S production season for avocado fruit runs from April to September.
Mexico and the U.S. will continue working together to fortify the strong bilateral supply chains that promote economic growth and prosperity in both countries.
“We are grateful that both countries have come to a resolution so that the U.S. and Mexico can continue our positive trading relationship,” the IFPA said in the statement. “IFPA looks forward to continuing to work with businesses on both sides of the border and their respective governments to continue to monitor and address these issues, so consumers can continue to enjoy uninterrupted access to fresh produce.”
Florida is expected to produce 44.5 million boxes of oranges this year, which would be the smallest since the 1944-45 season when 42.23 million boxes were produced, according to the USDA. This will be an even smaller crop than when Hurricane Irma hit Florida several years ago.
Citrus disease and poor growing conditions are the primary factors. Meanwhile, demand for orange juice, which has been declining for years, has increased during the pandemic.
The result is higher orange juice prices, and those increasing costs are expected to continue: Frozen orange juice futures have surged more than 50% during the pandemic.
The anticipated spike in orange juice prices comes as consumers are already facing inflation across multiple sectors. The US consumer price index rose 7% over the past year before seasonal adjustments, the steepest climb in prices since June 1982, the Bureau of Labor Statistics reported recently.
Over the past year, food consumed at home was 6.5% more expensive while prices at restaurants rose 6%. Fruit juice and nonalcoholic drink prices have already spiked 5.7% this year, and orange juice futures are up.
Florida supplies most of the country’s orange juice, but supplies have been dwindling for years.
Mediterranean Shipping Co. has become the word’s largest shipping line in terms of capacity, according to data compiled by Alphaliner and published on recently by Bloomberg.
The Danish carrier A.P. Moller-Maersk A/S is no longer the world’s largest container line.
MSC’s fleet can carry 4,284,728 standard 20-foot containers, 1,888 more than Maersk, giving both a market share of 17%.
Maersk, which first entered containerized trade in 1975, has held the top spot for decades. The carrier has been a pioneer in the industry, often breaking records by building the biggest ships.
More recently, it has invested in vessels that can sail on carbon-neutral methanol. It still has the most capacity in terms of owned vessels: MSC has about 65% of its capacity from chartered ships whereas Maersk only has 42%.
After struggling to make money for much of the past decade, the container shipping industry just had its most profitable year ever as pandemic-driven demand for consumer goods strains capacity on vessels. Freight rates out of Shanghai have jumped about five-fold over the last 18 months.
“We never set a specific target to be the biggest,” MSC Chief Executive Officer Soren Toft said in an emailed comment on Wednesday, adding that he’s focusing on growth and profitability.
Maersk CEO Soren Skou last month reiterated in an interview that holding the top spot isn’t important for the Copenhagen-based company, which is investing on expanding its land-based logistics where profit margins are higher.
Chilean fruit exporters are experiencing lower profit margins due to the increased cost of ocean freight, according to the Association of Fruit Exporters of Chile (ASOEX) and the Agricultural Society of Biobio (Socabio).
ASOEX reports rates are increasing considerably in relation to the freight paid the previous two years.
The exporters association notes a U.S. study shows 25 percent of the price consumers are paying corresponds to the freight issue.
This hike has a direct impact on fruit producers and exporters throughout Chile due to freight increases and is one of the fundamental concerns of the industry is specific commodities, such as cherries, table grapes, peaches, nectarines, and kiwis, cannot directly absorb the increase in the cost of the freight.
Socabio reports the cost of freight has risen 30 to 40 percent, which affects the profitability of the exported crops, although it depends on the crop; in the case of fresh fruit, it becomes more expensive to export because it is important to export the crop quickly.
Over the weekend, the U.S. government suspended avocado imports from Mexico “…until further notice.”
The Associated Press reported Mexico has acknowledged the U.S. government has suspended all imports of Mexican avocados after a U.S. plant safety inspector in Mexico received a threat.
The decision, confirmed late Saturday, February 11, could have a major economic impact on the Mexican avocado industry. Mexico exports nearly $3 billion of avocados a year.
The U.S. government suspended all imports of Mexican avocados “until further notice” after a U.S. plant safety inspector in Mexico received a threatening message, Mexico’s Agriculture Department said in a statement, according to the AP report. The report named avocado exports and growers as the latest victims of the drug cartel turf battles in the western state of Michoacan, the only state in Mexico fully authorized to export to the U.S. market.
“U.S. health authorities … made the decision after one of their officials, who was carrying out inspections in Uruapan, Michoacan, received a threatening message on his official cellphone,” the department wrote.
One Michoacan grower notes to reach a faster resolution of the suspension, adding more security for USDA officials may be necessary because of Mexico’s ongoing security issues.
According to AP, many avocado growers in Michoacan — where the Jalisco cartel is fighting turf wars against a collection of local gangs known as the United Cartels — say drug gangs threaten them or their family members with kidnapping or death unless they pay protection money, sometimes amounting to thousands of dollars per acre.
The U.S. Embassy, which said in a social media post that it’s “working with the Mexican government to guarantee security conditions that would allow [its] personnel in Michoacan to resume operations,” has also said that “facilitating the export of Mexican avocados to the U.S. and guaranteeing the safety of our agricultural inspection personnel go hand in hand,” the AP report said.
This is not the first time that USDA officials have been threatened with violence in Mexico, said AP, pointing to a direct threat to U.S. inspectors in the town of Ziracuaretiro in August 2019 and the killing of a Mexican employee of the USDA’s Animal and Plant Health Inspection Service on Sept. 30, 2020.
Michoacan has been exporting avocados to the U.S. for about 25 years, and commercial shipments of Mexican fresh Hass avocados from the state have been imported since 1997, according to APHIS. Michoacan is the only state currently approved to send avocados to the U.S.
The vast majority of Mexican avocados were crossing the U.S. Border into the Lower Rio Grande Valley of Texas
Dominican Republic Avocados
Dominican Republic Desbry® Tropical Avocados are available in ample supply for immediate shipping, which are grown and distributed by WP Produce Corporation, headquartered in Miami, FL.
The company’s tropical avocados remain green when ripe, are about three times larger than the more familiar Hass variety, have a sturdy texture, and stay fresh longer after being cut (slower to oxidize and turn brown).
Dominican Republic avocados are well-known throughout the East Coast of the U.S., as well as the Caribbean and many parts of the world. They are gaining popularity throughout the U.S. as retailers expand the avocado category and shoppers and chefs learn about it.
The impending shortage of Mexican avocados is happening during peak season for W.P. Produce’s tropical avocados.
“We grow and pack Desbry® Tropical Avocados on our sustainable farms and facilities in Florida and the Dominican Republic, depending on the season, and ship throughout North America 365 days a year,” said Christopher Gonzalez, VP of Sales for WP Produce and nephew of founder Willy Pardo.”
Founded in 1984, WP Produce is a family-owned, multi-regional grower, packer and shipper of fresh, tropical fruits and roots. WP Produce has been a pioneer in the tropical avocado market since 1992 and is now the largest importer and distributor of Dominican Tropical Avocados worldwide. With farms and partnerships with growers in Florida and the Dominican Republic, WP Produce offers a wide variety of tropical produce and root vegetables under the premium Desbry® brand.
LGS Specialty Sales, a leading importer of citrus, avocados and grapes, has started its Moroccan W. Murcotts season with a strong supply of winter mandarins available now through April 2022.
LGS of New Rochelle, NY has been supplying Mandarins from Morocco to the U.S. for over 15 years between the months of January and April, and from the Southern Hemisphere in the summer until fall. These next few months will serve as the peak of their imported window with good tasting and quality fruit.
“As the largest importer of mandarins in the U.S. out of Morocco, supplying W. Murcotts has allowed us to keep up with this ever-growing demand for easy-peelers,” said Luke Sears, president and founder of LGS Specialty Sales.
“Mandarins are known for their overall excellent quality and taste, and this season’s fruit is nothing short of that. During this time of year, we see high consumption among shoppers looking for ways to incorporate more vitamin C and citrus into their lifestyle.”
The New Zealand apple and pear season is underway with light volume and reports show optimism for the season ahead.
The pear harvest started the last week of January, with apples getting underway the last half of February. Most packers will start running Galas at the end of Feburary with peak volumes expected the first half of March.
An official estimate has yet to be released, but the industry expects to easily match the 23million cartons of apples packed in 2022.
Vanguard International of Issauah, WA reports the spring was hotter than normal with fair amounts of rains to counter any of the potential negative effects of the heat. Recent weather has been hot and dry, but starting mid-January, there was milder weather and rain that should allow trees to catch a break from the heat, stabilize, and recuperate. Sizing is expected to be one size larger than in 2021 across all varieties.
Vanguard was founded in 1991 and is a leading global vertically-integrated fresh fruit growing, packing, marketing, and sales organization with several branches located around the world.
What will it cost to put out that appetizing spread for the Big Game this year? It will cost about 8% to 14% more than 2021, depending on whom you draft to be on your team for one of the biggest food events of the year.
You will need to work on your blocking and tackling for this year’s big game. Your offensive line of carbohydrates and vegetables will need to keep your rampaging snackers from sacking your quarterback of proteins. While the cost of chips and dips, vegetables and other appetizers are up approximately 2% to 5%, they represent your best value to feed those hungry feasters who are all fired up by the clever ads or big plays.
The action on the gridiron will be tame compared with the action on the grill, where prices are up 12% to 18%. Who’s to blame? Just like an armchair quarterback, everyone has an opinion (sometimes powered by the beer or wine, up 4% to 5%). To say the least, it is as confusing as a broken play with three separate penalty flags on the field and instant video challenges.
Let’s work our way through your shopping list:
Chips/dips
Potato chips: In periods of increased supply disruptions and higher food inflation, the humble potato chip offers a stout defense. The U.S. Bureau of Labor Statistics’ (BLS) January pronouncement of inflation(2) shows a subpar increase of 1% versus this time last year. We can thank American farmers’ and food manufacturers’ strong preparation and deft execution for keeping a lid on the price pressure.
Chips/dips
Potato chips: In periods of increased supply disruptions and higher food inflation, the humble potato chip offers a stout defense. The U.S. Bureau of Labor Statistics’ (BLS) January pronouncement of inflation(2) shows a subpar increase of 1% versus this time last year. We can thank American farmers’ and food manufacturers’ strong preparation and deft execution for keeping a lid on the price pressure.
Guacamole/avocados: There is great news in the ever-popular avocado and guacamole category, with food inflation showing about a 1% increase from a year ago3. Most avocados and guacamole come from our Mexican and South American friends. They continue to expand production and execute, keeping the supply ample. Muchas gracias, amigos!
Salsa: Salsa is an all-important complement to the guacamole. It will be more expensive than the chips and the guacamole in terms of price inflation. Salsa is up 6% from last year. Once again, it’s due to labor, packaging, and shipping, rather a lack of chilis and tomatoes.
Veggies Make sure you stack your offensive line with vegetable all-stars. We’re playing “Moneyball” here for the win. Carrots, celery, and tomatoes (depending on your format and brand) are roughly the same price as last year. Between checking the BLS and Nielsen numbers, we can see that there are lots of options that are flat (or slightly down). As a smart general manager, you should review your options to buy in bulk and prepare them yourself. This requires some prep time before the Big Game, but hopefully your diners will appreciate your Moneyball savvy.
Wings and things The proteins are where the trouble has shown up in terms of price increases. The grill represents your spending point of pain. There are a lot of moving pieces to the price increases. Is it the “infamous Big Meat”? Or, higher feed costs for all the animals due to corn and soybean spiking close to 100% over that last couple of years? Maybe, COVID’s impact on processing and supply-chain are to blame? Of course, the answer is all those things and more. Your real question looking at the draft board as it stands is, who should you pick with your next draft choice?
Chicken wings: There is nothing but pain in this category. The USDA says prepared chicken wings are up 14% to 26% (bone-in and boneless respectively). The IQF (individually quick frozen) chickens are up 26%. It would seem the IQF is the bigger loser, but that misses the point that they are still $3.57 per pound versus $7.24 (the average) for the prepared wings. Is that the sound of an air fryer I hear? A great call by the GM for drafting a diamond in the rough.
Pork chops: I am moving pork chops up on my draft picks. The BLS is reporting that they are 7% more expensive than last year, but given protein inflation, that makes them a buy. They might not have the cachet of the next item, but steak is packing a world of pain on the pricing front.
Steak: Steak has always been an all-star, but with a 23% price increase from a year ago, is it having a prima donna moment? The BLS shows $11.06 per pound for USDA choice sirloin (versus $8.98 a year ago). The cattle and beef industry is working both structural and temporary issues at this point. The Biden administration has announced initiatives and money to help and regulate the industry. Those could help, but they won’t help this year.
Cocktail wieners: Here’s one that seems popular by different regions, and they are a crockpot powerhouse. The Nielsen data shows them 7% higher than last year. That moves them higher on my draft board. Maybe a couple of extra pounds in the crockpot will help you manage fourth quarter defense against those going back for seconds (or even thirds).
Hamburger: The BLS says ground hamburger is up 17% from a year ago. It’s nation-wide price shows $4.60 a pound. This isn’t nearly as bad as the steak, but it still represents a real commitment. One of the differences for steak versus hamburger is the sourcing and the demand. The U.S. brings in meat to grind into hamburger from Australia and Brazil (to mention the big two), and the U.S. exports high-end cuts to Asia. These market dynamics led to less price pressure for hamburger versus the steaks.
Shrimp on the Barbie I guess there are two ways to look at featuring shrimp at this year’s big game. It is up sharply from last year’s $3.60 per pound (at the wholesale import level, according to Urner Barry) to close to $4.40 per pound (same index). That’s a 22% increase. However, last year’s price represented a multi-year low due to COVID reducing restaurant demand. Back in January 2018, the index showed the same shrimp being priced at approximately $4.40 a pound. That is about the same price range as today. Now, unless you are buying by the metric ton, you will pay much more at retail prices, but they should move in a relative strong relationship to what we see in the wholesale pricing.
In the cooler
Soft drinks: Food inflation continues to rear its ugly head in the soft drink world. The labor, packaging, and transportation costs are crimping the industry’s ability to match last year’s prices. Here again your general manager skills will need to be applied. According to the BLS, the 2-liter bottles jumped the most by increasing 12%. In contrast, the 12 pack of cans is up 6%. Both represent big jumps compared to general food inflation. Even so, that 2-liter bottle represents a better value if you can get your attendees to agree on the type and flavor.
Beer: The beer industry continues to struggle with modest demand strength and higher input costs. The BLS reports that beer prices are up 4% from a year ago. No doubt, the brewers are facing higher labor, packaging and shipping costs just like the soft drink segment, but the overcapacity in the industry has muted the price increase. Not a bargain like the carbohydrates and vegetables, but it helps the budget.
Wine: The wine industry mirrors the beer industry with its woes. The BLS reports wine prices up 3%, just like beer. Our California wineries and vineyards continue to struggle with much higher labor, water, and transportation costs. However, global supply capacity is making it difficult to pass those cost increases along. This will definitely work in our favor as we prepare for the Big Game.
Tips for keeping costs low
Go for the guac. With avocado prices holding nearly steady since last year, this is a good bang for your buck.
Pick pork. Although prices are up 7%, it’s a bargain for your meat this year. Things to chew on: pork tacos, pork meatballs, and pork sliders.
Bring on the beer. Prices are somewhat stable. Brews will be a good buy for your buck.
As for the Big Game itself, it’s the Cinncinati Bengals vs. the Los Angeles Rams at SoFi Stadium in L.A.
Is the severity of the “supply chain crisis” a direct result of the COVID pandemic? Probably. Are 15 months of consecutive Year-Over-Year freight cost increases a direct result of COVID and the “supply chain crisis”? That question is not as easily answered. Most of us in the freight business work in a right here and right now world. We win and lose looking into a crystal ball that has been very cloudy the last few years. We work hard to find commonalities with past trends to help give us even the slightest advantage. Even with years of experience and more real-time data than ever before at our fingertips, every tight truck market is the “tightest we have ever seen”, while a loose truck market seems to add hours to every day.
As everything these days is a “crisis”, it is not uncommon to hear that the national reopening that followed the COVID shut down was the beginning of the current capacity “crisis.” It’s true, that average truckload prices did increase approximately 80% from the end of the COVID shutdown through the close of 2020. This trend continued through 2021. Only as 2021 closed, did we see the Year-Over-Year gap shrink to reasonable comparisons. With all that has happened since we found ourselves adjusting to a new and often unwelcome reality, it’s easy to forget that before The COVID Shutdown, The Great Reopening, The Workforce Shortage, The Supply Chain Crises, and Surging Inflation, there was January, February, and March of 2020. I recall having numerous, maybe daily, conversations with colleagues in those three months in which we opined, “This the tightest market we have ever seen.” It wasn’t. In fact, it didn’t really come close in comparison to the capacity challenges we faced in June and July of 2018.
The industry, and those of us that work in it every day, were simply conditioned by an unusually long 24 to 26 month cycle of demand and rate decline. It is likely that the COVID pandemic was just an unpredictable pause of the inevitable rebound we are still dealing with today. 2022 is not showing any signs of a downward correction. Most are predicting mild 3-5% increases when compared to 2021. The reality is that we won’t know until the year concludes. That’s the way transportation works. Hindsight is crystal clear. The only thing crystal clear about the future in transportation is that it will be different than it was the previous year. The market doesn’t recognize any calendar or bid cycle. It doesn’t show mercy for the unpredictable. When the market destroys your budget, it shouldn’t destroy solid relationships that have been built over years.
2021 proved, yet again, that any commodities market is measured by a simple supply and demand equation. From 2018 through 2019, that equation favored the shipper. For most of 2020 through today, and for the foreseeable right here and right now future, it has forced shippers to battle for capacity. Trusted resources and strong relationships have never been more important. That crystal clear hindsight view will verify those relationships.
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Gerald Ebert began his career with Allen Lund Company as a transportation broker in the San Antonio office. In 1999, Ebert transferred to ALC Richmond and was promoted to the manager of the Richmond office in 2000.
The 2022 pre-season forecast by the California Avocado Commission of Irvine, CA projects a 306-million-pound crop, which is nearly a 15% increase over the last fiscal year.
About 80% of the California avocado season volume is expected to occur from April through August, with the season winding down starting in September. The Commission’s fiscal year runs from November 2021 through October 2022.
Market conditions will be a key factor for when California avocado growers begin harvesting; although some growers have already begun to pick. Volume is expected to ramp up in earnest around March.
California avocado growers received welcomed rains in December and January. This moved the region from severe drought to moderate drought conditions, and rain usually has a positive impact on tree health and avocado sizing.
The majority of the harvest will be the Hass variety; Lamb Hass, GEM and other varieties also are being commercially grown.
California has about 3,000 growers in the Golden State. The California Avocado Commission serves as the official information source for California avocados and the California avocado industry.
