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Exporting Green Gold: The Colossal U.S. Market Is Now Officially Open to Colombian Avocado Growers

Posted On September 15, 2017
By : Andy East
Comment: Off
Tag: Animal and Plant Health Inspection Service, avocado, California, Colombian Agricultural Institute, Colombian Avocado, Dutch Ministry of Economic Affairs, Esteban Meneses, Feature, Hass avocado, Hass Avocado Board, ICA, juan manuel santos, mexico, Mike Pence, MinCIT, Ministerio de Agricultura, Ministry of Agriculture, Ministry of Commerce Industry Ministry of Commerce Industry and Tourism, netherlands, procolombia, united states, usda, washington, William Wepsala

New rules governing the importation of Hass avocados from Colombia into the United States took effect yesterday, marking a new era for Colombian growers. Now, avocado farmers in the country can officially apply for permits from the U.S. Department of Agriculture that would allow them to begin selling their valuable fruits to the world’s largest avocado market.

The rules, which were given the green light by the U.S. Department of Agriculture’s Animal and Plant Health Inspection Service on August 14, include a series of regulations designed to ensure sanitation standards and minimize the risk of introducing pests into the United States, including the avocado seed weevil, pink hibiscus mealybug, and avocado seed moth.

The U.S. avocado market has grown astronomically in recent years. In 2016, the country imported 2.2 billion pounds of avocados — double the amount in 2011.

In an interview with Finance Colombia, William Wepsala, a spokesman for the USDA’s Animal and Plant Health Inspection Service, confirmed that the rules have gone into effect and that permits are expected to take around 30 days to process. “That means that Colombian growers will then be able to apply for permits to import into the United States,” said Wepsala. “The permits will verify that the growers are in compliance with the rules.”

Though the rules are in place, Colombia growers won’t likely be able to take a significant bite out of the U.S. market this year, according to Esteban Meneses, director of supply and certification at Hass Colombia, an association of Hass avocado growers based in the Colombian department of Antioquia that represents more than 50 growers whose main export markets include the Netherlands, United Kingdom, and Scandinavian countries.

“It’s probable that this year we’ll be sending some sample containers [to the United States],” Meneses told Finance Colombia. “But it will probably be two years before we see shipments on a regular basis.”

The Logistics of Exporting Avocados

The agreement to allow Colombian avocados into the United States, following a lengthy formal clearance process that began last year, was officially confirmed by U.S. Vice President Mike Pence during his visit to Cartagena last month. The news was a long time coming: Pence’s announcement was the culmination of more than 10 years of agricultural negotiations between the two countries, MinCIT said in a statement.

Colombian growers who wish to export to the United States must register with the Colombian Agricultural Institute (ICA), the department of the Colombian Ministry of Agriculture charged with ensuring compliance with the export agreement. Currently, 58 producers of Hass avocados, by far the most popular variety consumed in the enormous U.S. market, are registered with ICA, according to the Ministry of Ministry of Commerce, Industry, and Tourism (MinCIT).

ICA representatives must inspect avocado production areas and packing facilities monthly, starting “at least two months before harvest and continuing until the end of the shipping season,” according to the regulations. The packing facilities are required to package the fruit in insect-proof packaging within 24 hours of being harvested. If a facility is an area of the country that has not been declared free of pests, it must have a one kilometer “buffer zone” around its perimeter. ICA must then monitor and take samples in the facility and buffer zone to ensure no pests are present.

Avocados as an Agricultural Boom for Colombia

The move by Washington to allows imports from Colombia has been touted as a win/win scenario for Colombian growers and U.S. consumers.

The Colombian government, which passed a revised peace accord with the Revolutionary Armed Forces of Colombia (FARC) in December that ended 52 years of conflict, is looking to ramp up agricultural production in the country’s new “post-conflict” era.

“It’s probable that this year we’ll be sending some sample containers [to the United States]. But it will probably be two years before we see shipments on a regular basis.” – Esteban Meneses of Hass Colombia

The idea is that rural areas long plagued by violence and lacking development will now find new levels of stability and farmers can lead an agribusiness boom.

President Juan Manuel Santos believes that avocado farming can create “thousands of jobs.” In December, during an address in front of the Food and Agriculture Organization of the United Nations, the Colombian head of state said that peace “benefits the world on many fronts, and one of them is food security and agricultural development.”

He added that, “our countryside also was a victim of the armed conflict that diminished productivity in the rural sector, increased the social gap with urban areas, and deepened the iniquities in our country.”

The U.S. market for avocados dwarfs every other country, and the rapid growth shows little sign of stopping. If Colombian growers can export avocados in large quantities, the economic potential is vast. (Chart via USDA)

The U.S. market for avocados dwarfs every that of other country, and its rapid growth shows little sign of stopping. If Colombian growers can export avocados to the United States in large quantities, the economic potential is vast. (Chart via USDA)

Competing with Mexican Avocados

The United States, on the other hand, estimates that injecting Colombian avocados into the market could stabilize or lower prices if the volume is high enough. Currently, Mexico dominates the U.S. market, providing 77% of the avocado supply in 2016, according to the Hass Avocado Board, a California-based group that promotes and tracks the consumption of Hass avocados in the country. Much of the rest of the U.S. supply comes from California.

Combined, according to data from the Hass Avocado Board, Mexico and California were responsible for 93% of the U.S. avocado supply in 2016. This is largest percentage seen in recent years as the trend of only having two supply sources has continued to grow as imports from Chile have waned. In 2011, for example, Mexico and California combined for 84.5%, but that number was just 75% inIn 2007, with Chile supplying 24%.

Avocado producers in Mexico also have become increasingly dependent on U.S. consumption. Nearly 77% of the country’s avocado exports went to the United States in 2016 — up from 30% in 2002, according to data from the Mexican Secretariat of Economy.

But in 2016, a drop in supply due to a growers’ strike in Mexico, compounded by drought and reduced yields in California caused prices to spike. The cost of a single avocado reached $1.44 USD during the third quarter of last year. The average price between September and November was $1.25 USD — some 22% higher than the costs seen during the rest of the year.

Though the surge has since eased, the price of non-organic Hass avocados jumped again this year, rising from $0.89 USD per avocado to $1.17 USD between January and June of this year.

Peace “benefits the world on many fronts, and one of them is food security and agricultural development.” – Colombian President Juan Manuel Santos

The USDA estimates that Colombian avocados could lower prices. “Colombia is expected to export between 8,000 to 12,000 metric tons of fresh Hass avocado fruit, with 10,000 metric tons being most likely,” stated the USDA Animal and Plant Health Inspection Service. “If the United States were to import between 10,000 and 12,000 metric tons of fresh Hass avocado fruit, considering a 20% displacement of fresh Hass avocado fruit imports from other sources, the decline in avocado prices may range from 1% to 1.5%.”

The Market for Colombian Avocados Is Global

Though bringing the massive U.S. market into the fold could be an unprecedented boon for Colombian growers, many other countries are already ramping up their imports.

Colombia has seen its annual avocado exports skyrocket in recent years, from a paltry $5,700 USD in 2007 to over $35 million USD in 2016, according to data obtained from ProColombia, a government organization that promotes exports and foreign investment. And the trend continues: Avocado exports also increased 9.9% during the first quarter of 2017 compared to the same period in 2016.

Currently, the Netherlands is the top destination for Colombian avocados, representing 40% of all exports of the fruit in 2016. Though it is a fraction of the colossal U.S. market, the Netherlands was the second-largest importer of avocados in the world in 2016, according to Statistics Netherlands, a department within the Dutch Ministry of Economic Affairs.

The Netherlands, however, is primarily a “re-export” market, meaning that the Dutch turn around and export much of the fruit to other European countries. Of the 185 million kilograms of avocados the Dutch imported in 2016, nearly 79% were re-exported, according to Statistics Netherlands. The top destinations for the re-exported avocados are Germany, France, and Scandinavia. Colombia was tied with Israel as the eighth largest exporter of avocados to the Netherlands in 2016.

Capitalizing on the Avocado Craze

Though Colombian growers have doubled the volume of avocados exported to the Netherlands every year since 2013, the U.S. market has proven elusive for Colombian growers. Only four avocado shipments were sent to its North American ally between January 2007 and March 2017, according to data collected from shipping manifests.

The U.S. market has grown astronomically in recent years. In 2016, the country imported 2.2 billion pounds of avocados — double the amount in 2011, according to the Hass Avocado Board.

The average U.S. consumes nearly seven pounds of avocados in a given year, according to the Agricultural Resource Marketing Center. The rise of guacamole as a snack staple has helped spur the jump in consumption, with the Hass Avocado Board estimating that 104.9 million pounds of avocados were consumed this year on Super Bowl Sunday alone.

The market has also grown due to the supposed health benefits of avocados, a fruit that has been branded as a “superfood” by some. The U.S. National Library of Medicine says preliminary data shows that the fruit’s properties and nutrients could help reduce the risk of cancer and heart disease.

The Hass Avocado Board estimates that 104.9 million pounds of avocados were consumed this year on Super Bowl Sunday alone.

But the avocado craze is not limited to the United States. Earlier this year, an avocado-based restaurant opened in Amsterdam, featuring a €15 burger with “avocado buns” and an avocado and chocolate smoothie.

Apparently, there are some downsides. In the United Kingdom, the growth in popularity has reportedly led to an increase in people injuring themselves attempting to cut open the fruit with a knife, according to the British Association of Plastic Reconstructive and Aesthetic Surgery (BAPRAS). Plastic surgeon Simon Eccles told the BBC in May that he treats “about four patients a week” in London for avocado-related injuries. His staff now even has a name for the wound: avocado hand.

“While BAPRAS hasn’t specifically called for safety labels on avocados, we are naturally concerned about the increasing number of avocado-related injuries recorded and would like to remind people to take a common sense approach to avoid injuries,” the organization said in a statement.

Whatever the reason for the avocado craze, the Colombian government is striving to put Colombian avocados on dinner tables around the world. And officials have now overcome the biggest hurdle in clearing the red tape to enter the U.S. market.

Now, it will be up to avocado growers in Colombia to expand production. If successful, they can become the earliest success story in the country’s hope for a post-conflict agro-boom and at the same time help feed the seemingly insatiable avocado consumers in the United States.

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