Focused pricing for avocados will sustain the industry

Avocado growers are set to start the new year with a range of new market options as years of negotiations have come to fruition. This is especially prudent since South Africa is expecting an increase in yield in 2024.

Focused pricing for avocados will sustain the industry
The avocado harvest is expected to increase in 2024 from the 2023 crop.
Photo: Lindi Botha
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Avocado growers are set to start the new year with a range of new market options as years of negotiations have borne fruit. This is especially prudent since South Africa is expecting an increase in yield in 2024.

Last year saw 18,5 million 4kg cartons exported. Since much of the crop sold on local markets is done so informally, these figures are not available and the industry measures its size based on exports, which is estimated to make up 50% of the total.

Derek Donkin, CEO of Subtrop, said that the alternate bearing trees having an ‘on’ year in 2024, and more trees coming into production would result in a bigger crop.

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Giving context to the numbers, Emile du Plessis, senior economist at Nedbank, noted that avocado production in South Africa has steadily increased by 27% over the last 15 years. Exports have increased by 40% over the last 20 years, with 63% of the crop destined for the Netherlands, followed by Ukraine and Russia.

Last year, both the Chinese and Japanese markets opened for South African avocados, with the first shipments due this year. Donkin said that in both markets South Africa would be competing against Peru, as it did in the European market. Having more options for markets was, however, crucial to spread risk.

In the local market, avocado consumption has been increasing, but future consumption could be curtailed by economic pressure on consumers.

Mariette Erasmus, commercial executive at research company Ask Afrika, said that avocado consumers are decreasing since consumers were slipping into lower economic brackets.

“Avocados have, however, become a household necessity, and are no longer just an impulse buy. To ensure continuous demand for avocados, it is important to understand how consumers perceive avocados and what influences purchases.

“Research shows that 66% of consumers will pay more for ripe and ready avocados, although they are still on the lookout for special offers. If the avocado costs under R10 for two, they feel that the quality is compromised. Value for money sits at R15 per avocado, while the optimal price is R35 to R40 for two. At R46 for two avocados, people start pulling back on purchases.”

The top factors influencing purchases are quality and ripeness, then price. Previously consumers showed no preference for different cultivars, but are now starting to lean towards green skins.

In terms of specific varieties, Hass, Fuerte and Reed get the most mentions from consumers when asked which avocados they like.

Erasmus said that pricing strategies needed to be developed that would ensure sustainability for farmers, and continuous demand from consumers.