Question

In: Economics

Solutions on Avocados exported from Mexico and Imported from USA. Please cite sources only journal article or...

Solutions on Avocados exported from Mexico and Imported from USA. Please cite sources only journal article or books.

What could we do to improve the environmental, political and economic, and societal and cultural impacts at the individual, country, and global levels?

Solutions

Expert Solution

Exporting fresh avocados to Europe

Imports of fresh avocados to the European market have doubled from 2012 to 2016. This upward trend is driven by the consumer demand for ready-to-eat and healthy food. It creates opportunities for producers and exporters, especially for the Hass avocado variety, although competition is increasing. The best opportunities are on large consumer markets such as France, Germany, Spain and the UK, which are often supplied through the Netherlands.

Quality

The development of the avocados should have reached a physiological stage which will ensure a continuation of the ripening process. UNECE standards require a minimum dry matter content of 21% for Hass and of 20% for Fuerte (maturity requirement). Suppliers use different measuring methods and product standards may differ per country as well as per variety. For the Hass variety, Europe often prefers a dry matter of 23%. For importers that ripen avocados, 23% of dry matter is a minimum.

Avocados are generally classified into three classes according to quality:

  • Extra Class
  • Class I
  • Class II

Europe almost exclusively maintains Class I as a minimum.

Avocados should, at the very least, be:

  • intact;
  • clean and sound;
  • free from pests;
  • free from damage;
  • free from abnormal external moisture;
  • with a stalk no longer than 10 mm in length;
  • in a condition to withstand transport and handling.

Size and packaging

Fresh avocados are classified according to Size Codes 1 to 30, with a minimum weight of 123 grams (or 80 grams for Hass). In Europe, the preferred sizes for Hass avocados range between Sizes 16 and 20 (14 to 16 for the Fuerte variety).

Packaging requirements differ between customers and market segments. They must at least be packed in new, clean and quality packaging to prevent damage and protect the product properly. Discuss packaging requirements with your customers.

Some general characteristics are:

  • 4 kg cardboard boxes, often wholesale packaging
  • 10 kg plastic or cardboard crates, often for importers that ripen and re-pack avocados

Make sure to use a controlled atmosphere during the logistical process.

Labelling

Consumer packaging labelling must comply with the rules and regulations applying to the European market:

  • Labels cannot contain any toxic ink or glue
  • Products must be traceable using a coding system for individual lots
  • Labels must be in the English language, unless buyers indicate otherwise.

The following items should be on the label of fresh fruit and vegetables:

  • Product name, including the name of the variety
  • The commercial identification: class, size (code), number of units, net weight
  • Name and address of exporter, packer and/or dispatcher
  • Country of origin
  • Traceability code
  • Optional: certifications, for example organic (including name of inspection body and certification number)

Irtunities for exporters of avocado

Avocado imports from developing countries grow strongly

The total value of imported avocados in 2015 and 2016 developed even more rapidly than the volume, indicating good prices for suppliers. This trend is expected to continue in 2017.

Strong consumer demand all over Europe

Based on production and trade statistics, the total European consumption of avocados is approaching 500,000 tonnes, which is around one kilo per capita. This consumption rate is still relatively low compared to the USA, for example, where people consume four times as many avocados.

Traditionally, France is the largest market for avocados and continues to be so. The United Kingdom and Spain are experiencing very strong growth. In Germany, consumers are still getting used to eating avocados on a regular basis. Being the largest European country, it offers great potential for growth. Scandinavian countries are much smaller in terms of population but maintain one of the highest consumption rates of avocados thanks to strong promotion and the attention to health food.

Tip:

  • Avoid the mistake of prioritising quantity over quality when exporting to a growing market. In the end, wholesalers and retailers demand good-quality produce and trustworthy suppliers.

The Netherlands is the main trade hub for avocados

The Netherlands is responsible for almost half of Europe’s avocado imports. From there, large volumes are re-exported to Germany, France, Scandinavian countries and other countries to a lesser extent.

Large “final” destinations in Europe are France and the UK. In general, the European market is expected to grow further in coming years, but the market remains very competitive and importers favour larger producers because of supply certainty.

Tips:

  • Make sure that your product is of competitive quality and find trustworthy partners in Europe to benefit optimally from the growing demand.
  • Consider using the established trade routes and find an importing partner in the Netherlands. The Netherlands has become the dominant importing country for the European market.
  • Find a European importer by presenting yourself at fairs such as Fruit Logistica or Fruit Attraction.

Spain complements production with import

However, Spanish traders also purchase more and more avocados from abroad to complement their own season and to comply with international supply contracts. This fact makes Spain Europe’s third-largest exporter of avocados after the Netherlands and Belgium.

Tips:

Make sure that your production expansion is in line with market demand by keeping an eye on market developments on the European avocado market and beyond; for example, on FreshPlaza, FruiTrop and FreshFruitPortal.

Hass most popular avocado variety

The green varieties are losing market share to Hass quickly. Green varieties are mostly sold loose or in small nets, while Hass dominates the market for ready-to-eat avocados. Green varieties are still sold because they have a different harvest period, but western European countries mainly favour the taste and ease of the ready-to-eat Hass variety. Green avocados are more commonly seen in Italy and Greece. There are still prospects for growth for green avocado consumption in eastern Europe and other middle-income countries that experience economic growth, although these markets do not have the same volume as western Europe yet.

Tips:

Take account of market preferences when planning new plantings. In general, consumer preference for green skin avocados is decreasing. Explore retailer requirements and consumer preferences on growing consumer markets in the Scandinavian countries and eastern Europe. For example, look for information with local distributors in these countries.

3 . What trends offer opportunities on the European market for avocados?

CBI’s Trends study provides you with general trends on the European market for fresh fruit and vegetables. This section provides more details about specific trends on the market for fresh avocados. Convenience fruit The consumption of avocado has been supported by new developments such as “ready-to-eat” and, more recently, frozen avocado. Consumers are prepared to pay a premium price for high-quality “ready-to-eat” avocados. The added value of taste and ripening fruit is setting a new standard. Avocados that are ripened in Europe and sold as “ready-to-eat” should be picked when mature but well before the ripening stage. Fruit must be picked with a dry matter not lower than 23% and must be uniform throughout the parcel.

Tip:

Make sure that your harvest and cold chain are perfectly managed. This requirement is crucial to reach the right quality that is expected by the European ripening companies and retailers.

Growing interest in sustainable fruit

Environmental and social issues are becoming more and more important in the supply of fresh fruit and vegetables. This fact is also the case for avocados; for example, in terms of water usage during production. Certification schemes that are in line with the Global Social Compliance Programme (GSCP) will have a higher chance of being accepted by European supermarkets. The general trends in fresh fruit and vegetables provide further insight into different types of certifications. See the buyer requirements for fair and sustainable fruit production below for more information.

Attention to health food

Consumers in Europe are becoming more aware of health issues and pay more attention to their diet. Avocado fits this trend well thanks to its good fats, fibre, vitamins and minerals. These health aspects are used in the promotion of avocados and contribute to their increasing consumption throughout Europe.

Organic niche

Thanks to the increased attention to health and environment, the interest in organically produced avocados is also growing. The current supply does not fully satisfy the market demand due to the difficulty of producing organic avocados. Organic avocados are a growing niche and are sold by both specialised and main retailers. It can be an opportunity for growers able to produce according to the strict guidelines linked to organic production methods to sell their produce as organic. See the buyer requirements for organically produced fruit below for more information on the requirements.

Fluctuation in supply and price

Avocado has been a growing market for several years. Changes in production planning and climate lead to variations in supply and therefore also prices. Prices dropped in 2014 due to an oversupply, while they started at a higher level in 2015 and 2016 because of poor or postponed harvests in Peru and Chile. In the near future, traders expect a shortage because the production cannot keep up with the growing consumption. In general, importers on the European market favour larger producers because of supply certainty.

Tip:

Organise your supply well; get producers together or join cooperatives to increase your export potential.

Strong promotion of avocados

In order to increase the demand for avocados, associations from producing countries such as Peru, Chile and South Africa launch promotional campaigns. Similar initiatives can be seen in Europe, such as an investment from the fresh sector in a restaurant chain dedicated to avocados. These promotional offices and activities stimulate the consumption and are important for all companies involved in the avocado business.

Tip:

Join or cooperate with active associations that promote avocados from your home region.

4 . What requirements should avocados comply with to be allowed on the European market?

Buyer requirements can be divided into

(1) musts, requirements that you must meet in order to enter the market, such as legal requirements,

(2) common requirements, which most of your competitors have already implemented; in other words, the ones that you need to comply with in order to keep up with the market, and

(3) niche market requirements for specific segments. The food safety requirements for avocados are the same as for other fresh fruit and vegetables. You can find a complete overview in: the general buyer requirements for fresh fruit and vegetables; the Trade Helpdesk, providing an overview of export requirements for avocados (code 08044000) per country.

5 . Which legal and non-legal requirements must your product comply with?

Minimise pesticide residues

Pesticide residues are one of the crucial issues for fruit and vegetable suppliers. To avoid health and environmental damage, the EU has set maximum residue levels (MRLs) for pesticides in and on food products. Products containing more pesticides than allowed will be withdrawn from the EU market. Note that buyers in several Member States, such as the UK, Germany, the Netherlands and Austria, use MRLs which are stricter than the MRLs laid down in EU legislation.

Tips:

Find out the MRLs that are relevant for avocados by consulting the EU MRL database, in which all harmonised MRLs can be found. You can search for your product or the pesticide used. The database shows the list of MRLs associated with your product or pesticide. Reduce the amount of pesticides by applying integrated pest management (IPM) in production. IPM is an agricultural pest control strategy that includes growing practices and chemical management. Read more on MRLs in the EU Export Helpdesk. Check with your buyers whether they require additional requirements for MRLs and pesticide use.

Complying with phytosanitary requirements

Fruit and vegetables exported to the EU must comply with EU legislation on plant health. The European Commission has laid down phytosanitary requirements in order to prevent the introduction and spread of organisms harmful to plants and plant products in Europe. These requirements are managed by the competent food safety authorities in the importing and exporting countries.

Tips:

Verify with the National Plant Protection Organisation or food safety authority in your country whether and under which condition you can export avocados to Europe. These authorities normally work with international standards, but always check with your buyer as well. Read more on plant health in the EU Export Helpdesk.

6 . What additional requirements do buyers often have?

GLOBALG.A.P. and other certifications as guarantee

Since food safety is a top priority in all EU food sectors, you can expect most buyers to request extra guarantees from you in form of certification. The most commonly requested certification for avocado is GlobalG.A.P.. GLOBALG.A.P is a pre-farm-gate standard that covers the whole agricultural production process, from before the plant is in the ground to the non-processed product (processing is not covered). The need for GLOBALG.A.P. also depends on the destination country, market conditions and market channel. For example, it has become nearly impossible to supply northern Europe without GLOBALG.A.P., since it is a standard requirement for most supermarkets. Examples of other food safety management systems that can be required are: BRC (British Retail Consortium) IFS (International Food Standard) FSSC22000 (Food Safety System Certification) SQF (Safe Quality Food Programme) These management systems are additional to GLOBALG.A.P. and are recognised by the Global Food Safety Initiative (GFSI).

Tips:

Check which food safety management systems are most commonly requested on your target market. Expect GLOBALG.A.P. to be one of them. Read more about the different food safety management systems on the Standards Map. As food safety is a major issue, work proactively with buyers to improve food safety, and be transparent as well as up to date with buyer requirements and regulations.

7 . What are the requirements for niche markets?

Growing demand for organic avocados

An increasing number of consumers prefer food products that are grown and processed by natural methods. The market for organic avocados is relatively small, but it has a growing demand and a limited supply. In order to market organic products in Europe, you have to use organic production methods according to European legislation and apply for an Organic certificate with an accredited certifier. Consider organic as a plus rather than a must, and be prepared to comply with the whole organic process. Remember that implementing organic production and becoming certified is expensive.

Tips:

For more details about organic produce as a requirement, see the CBI buyer requirements for fresh fruit and vegetables and consult the Standards Map database for information about the different Organic certifications. Read more about organic farming on the Soil Association website. Find importers that specialise in organic produce who understand the market and have access to this niche. Use databases such as Organic-bio.

Social and environmental compliance

There is growing attention to the social and environmental conditions in the producing areas. Most European buyers have a social code of conduct with which they will expect you to comply. For avocados, social compliance is important, although product quality is the top priority. More and more European companies are joining the Sustainability Initiative Fruit And Vegetables (SIFAV), which aims to make imports of fruit and vegetables from Africa, Asia and South America 100% sustainable by 2020. For example, in the cultivation of avocados, water usage could become a serious point of discussion in future. Implementing GRASP provides you with a good basic social certification. GRASP is part of GlobalG.A.P. and is gaining in importance. Other, more complex social certification schemes are less common for avocados.

Tips:

For a complete overview of buyer initiatives for social compliance, see the Buyer requirements for fresh fruit and vegetables on the CBI marketing intelligence platform. Examine your company’s current performance; for example, by completing a self-assessment on the BSCI website. Consult the Standards Map database for additional information and to learn about differences between Fairtrade labels. '

8 . What competition do you face on the European avocado market?

For general information on market competitiveness for fresh fruit and vegetables, you can have a look at CBI’s Competition study, available on the CBI market intelligence platform. The platform also provides Tips for doing business with European buyers. In this section, market entry opportunities and barriers for avocados as well as competition at the company and product level are listed. Company competition

Main retails channels are difficult to access

The majority of fresh avocados on the European market are sold through large supermarket chains, even more so in north-western Europe. The buyer power of large supermarkets is very strong and so is the obligation to comply with their strict requirements. The companies that supply these supermarkets are well organised and often have control over an important part of the supply chain, from production to distribution. The negotiating position of avocado suppliers in relation to European importers is gradually improving, mainly thanks to the positive market developments. However, competing with large experienced suppliers and selling directly to retail clients is a very different game. As a smaller exporter, it will be extremely difficult to reach the main market channels for avocados if you are not part of a larger supply combination. Tip:

Improve your company’s performance by building relationships with experienced buyers and become part of a long-term retail programme.

More producers cover increasing demand

The worldwide production of avocados is increasing and competition is fierce. Temporary shortfalls in supply or demand (e.g. through border closures or the climate) have a huge impact on prices. Mexico is by far the largest producer with 1.5 million tonnes in 2014 and a forecast of 1.8 million tonnes in the 2016/2017 season. For Mexico, the European market is an alternative to its usual North American focus and its export to Europe has gone up significantly since 2015. After Mexico, there are several countries producing between 0.2 and 0.4 million tonnes of avocados per year, among which the Dominican Republic, Peru, Indonesia, Colombia and Kenya. However, most avocados in Europe originate from Peru and Chile. Colombia is positioning itself as a new upcoming supplier thanks to an enormous increase in production, although quality issues remain a major area for attention. Guatemala is expected to become a more significant supplier in future as well. Here, producers have developed considerable production volumes and started their export to Europe in 2017. Their exports in the first quarter of 2017 amounted to around ten containers destined to the Netherlands and the United Kingdom, but their full effects will probably take a few more years.

New markets provide stable growth

With new markets coming up, such as China and India, the expectation is that the worldwide demand will still be growing for a number of years. Worldwide, the production is also increasing rapidly, but it will take a number of years before saturation is reached.

Competition between buyers

Professionals in the avocado industry expect shortages in the near future. The avocado plantations worldwide are expanding rapidly, but they take time to reach full capacity and to catch up with the demand. At the same time, new consumer markets such as China have stepped into the global avocado trade. Buyers in Europe are concerned that their suppliers will switch to markets with less strict requirements, such as Asia and the Middle East. This competition between buyers can be a blessing for exporters that seek more flexibility in product size and certification. Certification or fulfilling both legal and non-legal requirements are major market entry barriers to producers and exporters. For avocados, quality during harvest and shipping is crucial and Corporate Social Responsibility (CSR) is becoming increasingly important. Buyers also expect supply chain transparency and information sharing, in addition to which they look for long-term partnerships in order to ensure product supply and quality.

Tip:

Establish a credible track record, including transparent information on your company and product quality.

Product competition

In the last decade, the diversity of fruit and vegetables supplied to the European market grew; this development increases competition from other products. Avocados are a multifunctional fruit that can be used in salads, sandwiches, spreads and sauces. As there are no other products similar to avocados, the risk of replacement is limited.

Tips:

Do not compete on price alone, but build partnerships with buyers/ripening facilities, and strive for excellent product quality and handling. Use storytelling (e.g. show the origin and the producer), novel packaging and premium quality as methods for setting your product apart. Ready-to-eat avocados are increasingly popular, but they require excellent logistics processes.

9 . Through what channels can you get avocados onto the European market?

For more general information about market channels and segments, you can have a look at the Market Channels and Segments section available on the CBI market intelligence platform. This section provides some information about the various marketing channels through which fresh fruit and vegetables are marketed in Europe.

Importers in the Netherlands form an important hub for the rest of Europe

The Netherlands and France are the main entry ports for avocados in Europe. Dutch wholesale exporters deliver avocados to many buyers throughout Europe.

  • The Netherlands: main trade hub for avocados;
  • France: large consumption market for imported avocados;
  • Spain: main producer of avocados in Europe, but also an important processor and importer.

Tip:

If your focus is the European market as a whole, find your importing partner in a main trade hub for avocados such as the Netherlands.

Avocados are mainly sold by retailers

Avocados are sold mainly in the retail. Large retail stores (so-called hypermarkets) in Spain and France are a dominant market channel. Large retailers in north-western Europe are premium markets that generally consume high-quality and “ready-to-eat” avocados. Eastern Europe and Spain (for processing) are able to absorb other avocado qualities as well.

Tip:

Choose an importer based on the size of your company or strategy, keeping in mind that importers/distributors differ in their relationship with the retail sector. Some are suppliers for private-label products, others have their own brand, while still others market the brand of a producer (cooperation).

10 . What are the end-market prices for avocados? Consumer prices for avocados fluctuate

Consumer prices for avocados fluctuate

according to quality, availability and segment. Supermarkets in western Europe generally sell a good-quality avocado for between € 1 and € 1,50 apiece (“ready-to-eat” Hass quality). Organic avocados are sold with a premium of 20% or even higher. Unripe or lower-quality avocados are sold for much less. Prices in street markets are also usually lower than supermarkets. When trade prices are rising, the market can resort to smaller-size avocados and maintain a similar price per unit this way. Pricing is slightly lower in peak season

European avocado prices are slightly lower during the summer months when the product is available from strong suppliers such as Peru and South Africa, whose peak harvest season extends from May to August. The beginning and end of seasons are especially challenging to maintain product quality, requiring you to keep a close watch on the maturity to avoid claims.

Retail prices do not reflect trade prices

Large retail chains or supermarkets often have programmes for avocados together with their suppliers. The retail prices and promotions are managed independently from those on the free market (spot). A retail programme provides stability and the security of a steady supply volume, but prices are not negotiable.


Related Solutions

Environmental Impact on Avocados exported from Mexico and Imported from USA. Please cite sources only journal...
Environmental Impact on Avocados exported from Mexico and Imported from USA. Please cite sources only journal article or books. Discuss the significance of each of the countries’ locations: Is the importer/exporter located in the North or the South? Why is this significant? How has the environment changed due to the globalization processes associated with the exportation/importation of the food?
Societal and Cultural Impact on Avocados exported from Mexico and Imported from USA. Please cite sources...
Societal and Cultural Impact on Avocados exported from Mexico and Imported from USA. Please cite sources only journal article or books. How has the import/export of the food affected the culture in each of the countries? Which theory – cultural homogenization or hybridization – is most applicable? (There is no right or wrong answer – provided that you make a compelling argument.) Who benefits from the import/export of the food? Who is most harmed?
Globization prospectus on avocados. Exported from Mexico and imported to USA. Where is the food produced...
Globization prospectus on avocados. Exported from Mexico and imported to USA. Where is the food produced now? How much does it cost in USD? Which countries consume the item? Where are the respective countries located (e.g., in the global North/South)? Why is a country’s location significant? Who benefits from the import/export of the food? Who is most harmed? How has the import/export of the food affected different groups/local communities in each of the countries?
Assume that Mexico and Brazil are the only two countries in the world and they produce soybeans and avocados.
Assume that Mexico and Brazil are the only two countries in the world and they produce soybeans and avocados. Mexico 150 million hours of labor per month 5 hours to produce 1 pound of soybeans 3 hours to produce 1 pound of avocados Brazil 300 million hours of labor per month 1 hours to produce 1 pound of soybeans 3 hours to produce 1 pound of avocados For each good, state and explain which country has the comparative advantage.
How is HR is strategic for Amazon. Please use data and research from sources and cite...
How is HR is strategic for Amazon. Please use data and research from sources and cite them. Things to include... -Size -Imitation -policy/procedure -best talent -culture -maintain with pace
If we moved from mexico to USA, Florida, and still have rental property in Mexico and...
If we moved from mexico to USA, Florida, and still have rental property in Mexico and we file taxes seperately, how do we file in US and Mexico?
Suppose a new study reveals major health benefits from the consumption of avocados, of which Mexico...
Suppose a new study reveals major health benefits from the consumption of avocados, of which Mexico is the world’s largest producer. As a result of the study, U.S. citizens start eating more avocados. Using a model of exchange rates, explain and illustrate the effect of this change in consumer preferences on both Mexican pesos and U.S. dollar markets. Please draw graph
Please answer this question with as much detail as possible. Please CITE your sources. Check the...
Please answer this question with as much detail as possible. Please CITE your sources. Check the California Bay Area papers for the best mortgage rates and suggest what terms you should use to buy a $648,000 home (average in the Bay Area). State your sources and provide your calculations. Calculate the income necessary to qualify for the best loan. Find what a 3 bedroom, 2 bath house rents for in your area. Which is the better deal?
Beta Company sells blouses in Washington, USA. Blouses are imported from Pakistan and are sold to...
Beta Company sells blouses in Washington, USA. Blouses are imported from Pakistan and are sold to customers in Washington at a profit. Salespersons are paid basic salary plus a decent commission of $5 on each sale made by them. Selling price and expense data is given below: Selling price per blouse                                  $          73.00 Variable expenses per blouse:             Invoice cost                                         $          25.00             Sales commission                               $          5.00 Total Variable Expense:                                 $          $31.00 Annual fixed expenses:             Rent                                                    $          $100,000...
please write a 2-3 sentence summary of a primary resesrch article and cite the article i...
please write a 2-3 sentence summary of a primary resesrch article and cite the article i need it ASAP
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT