JAKRTA - Avocado prices have soared to their highest level in more than two decades as supply tightens in Mexico, the world's biggest fruit exporter, signaling that guacamole, or Mexican avocado sauce, is more expensive.

An index that tracks avocados from the Mexican state of Michoacan, by far the country's largest source, rose 81 percent this year to 760 pesos ($38) per 9-kilogram box, the highest in data since 1998, government figures show. .

“Lower availability and supply-side inflationary pressures are the main culprits,” said David Magana, an analyst at Rabobank International.

Mexico's avocado production is seen falling 8 percent in the 2021-22 harvest year from the previous season's record high, according to the U.S. Department of Agriculture.

American fruit importers are still pursuing a temporary ban on shipments from Michoacan last month, stemming from threats against US inspectors. It is known, Mexico accounts for more than 80 percent of avocados consumed in the US.

In California, which meets about 15 percent of American demand, production is expected to increase this year "but clearly not enough to meet the growing demand for avocados in the US", Magana said.

The effects of this increase are felt, including companies that are already feeling pressure from higher prices. First Watch Restaurant Group said its costs increased towards the end of its forecast.

Mission Produce Inc, the largest avocado distributor in the US, saw an average 50 percent increase in avocado sales prices per unit "due to lower industrial supply from Mexico, as well as inflationary pressures", chief executive Steve Barnard said in a statement last March.

"Partly offsetting the price increase was the 18 percent drop in avocado volume sold, driven primarily by lower supply, but exacerbated by price sensitivity in certain international markets competing for lower-cost sourcing of the fruit."

To note, US per capita avocado consumption has more than doubled since 2010 to over nine pounds, according to Rabobank research.

Meanwhile, more supply relief may come in the middle of the year, when the Mexican State of Jalisco begins shipping fruit to the United States market.


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