Chilean avocados upsetting U.S. growers: large shipments come in lumps, skew prices.

San Diego County's $146 million avocado industry--the No. 1 producer nationally--faces a shakeout due to increased competition throughout the United States from Chile and Mexico.

A particular sore spot is Chile--once viewed as a boon to the industry. But over the past year boatloads of Chilean avocados have driven down prices and hindered promotional efforts.

California growers say the Chileans flood the market in January in advance of the Super Bowl, when more avocados are consumed than any other time of the year.

"Competition is OK, as long as they don't crash the market," said Jerome Stehly, an owner of Stehly Farms, which manages groves throughout North County, including about 1,000 acres of avocados. "The Mexicans have been very respectful of the market and have kept the value up. The Chileans are less respectful of it, and they're sending a whole bunch of fruit. You've got 10 to 20 million pounds of fruit that nobody knew was coming."

While consumers might reap the benefits of lower prices, the heated competition could shrink the ranks of San Diego County growers.

"It's terrible," said Burnet Wohlford, owner of Heritage Ranch Management in Escondido and a fourth-generation grower. "We used to do December through October. But now Chile has so much fruit coming in (to the United States), they have taken our whole early market."

What San Diego County's growers are left with, he said, is marketing their fruit from March through July. "Last year, we planned an average of about $1 a pound for their fruit, now it's looking at 80 cents this year," he said.

But Leslie Flores, an Orange-based consultant for three Chilean exporters, said that Chile has no interest in spoiling the U.S. avocado market.

"I've worked with Chilean growers, and they are very savvy," she said. "They understand the U.S. market better than the U.S. does. They have to, because they have a bigger risk."

Quality issues

Flores attributed problems this season to misunderstandings and miscommunication. While the Chilean crop was larger than expected, she added, it should have been no surprise.

In their sniping, California farmers have also raised quality issues. Eric Larson, executive director of the San Diego County Farm Bureau, says that Chilean avocados are smaller and often become overripe while in transit. Flores claims that Chile "has standards that are equal to or higher than those California sets."

Although there are 500 avocado varieties, the most popular commercially grown type is the Hass. In the 2002-2003 growing season, traditionally from Nov. 1 to Oct. 31, some 670 million pounds of Hass avocados were distributed throughout the United States, most of them grown in Southern California. Volume is expected to increase to almost 1 billion pounds over the next five years.

James McCormac, a third-generation avocado grower in San Diego County, views the foreign imports as "double-edged swords, depending on which way they are cutting."

"Chile has come up with too much fruit, but this is typical of agriculture," he said. "If it looks good, it gets overproduced, then we have a falling-out period."

Mexico, the world's largest producer of avocados, could represent a more troublesome competitor because of a decision by the U.S. Department of Agriculture to allow that nation's avocados to be exported to 47 states. The decision was based on the government's diminished concerns that allowing the fruit would bring pests into the United States. A ban on exports to California, Florida and Hawaii continues until 2007.

"Chile, Mexico and the United States all need to work together, because once the prices have gone down, they won't come back up," said Wohlford. "Groceries are not willing to do much fluctuating. It will be tough to get the prices back up to where it is profitable."

Ross Wileman, vice president of sales and marketing for the Oxnard-based Mission Produce, one of the major shippers in California, expects an economic shift.

"It will be unsettling and confusing for about two years," he said. "But there is a huge appetite in the United States for avocados, and if consumers are given good quality product, reasonably priced, we will take care of the production-driven problem."

But can California's growers weather the confusion?

"It depends on how they've been growing avocados," said Wileman. "The guy who has 2 acres in his back yard will have a difficult time with it. Those with 10 acres or larger should be able to weather the storm."

The key to reversing the problem, he said, will be tapping underserved markets, such as in the Midwest and on the East Coast, as well as increasing demand from those who are already regular avocado consumers.

"If prices are right, people will buy," he said. "Consumers want avocados for under a dollar. That's the magic number and, with promotions for two for a dollar, we'll see consumption rise. I am very optimistic. The only doubt I have is, how do we weather the storm for the next two years?"

Top Avocado Markets

City            Pounds Shipped *
                 (in millions)

Los Angeles          97.7
San Francisco        31.7
Sacramento           25.5
San Antonio          23.1
Dallas               22.5
Phoenix              21
Houston              20.5
San Diego            19.1
New York             17.5
Chicago              16.6

* 2003-2004 growing season

Source: California Avocado Commission