A Brief Introduction into
the Complexities of an Agribusiness Sector
VII. Selling Avocados and
the Role of Value-Added
A. Packaging
B. Processing (again)
VII. Selling Avocados and the Role of Value-Added
Given the biological and economic nature of avocado production -- that is, money must be spent early in the season with uncertain end-of-season yields, prices and revenue. For an avocado grower, whatever is produced is sold. More precisely, the production of a grower goes on to a packer who packs the avocados and acts as a middleman between the grower and the end-users or other middle-men.
We have already seen that consumption of avocados by consumers varies by region but is well below levels of countries like Mexico. Part of this is due to seasonality and part is due to price. Growth in consumption is critical to increasing the income of producers, so the key is figuring out how to increase consumption.
In terms of modern-day production of avocados (or any
agricultural commodity for that matter), a critical player in getting avocados
to the consumer is the packer. Years ago, the only avocado product was
the fresh avocado. This meant that the role of the packer was simply to
provide grocery stores and other retailers with boxes of avocados. Over
the past twenty years, there has been an increasing trend towards increasing
value-added to agricultural commodities. This has recently involved such
approaches as differentiating commodities by methods of production, nutrient
fortification, specialty packaging and simple branding. Value-added, as
described much earlier in this tutorial, also includes processing the commodities
to varying degrees. An important rationale behind value-added activities
in agriculture is to offer consumers more choices in how they purchase
an agriculturally-based product. In doing so, it is assumed that more people
will buy more of the agriculturally-based product and generate more income
for producers.
In the case of avocados, value-added activities can be
broken down into packaging and processing. One of the largest packers of
avocados in the US, Mission Produce Inc., has played a key role in developing
a variety of packaging solutions to aid retailers in selling avocados.
Some of these solutions include selling ripe avocados by twos in mesh bags
which include
guacamole seasonings and a recipe for guacamole.
The idea behind the packaging approach is to assist consumers who want
to make their own guacamole but are unsure of how to do so. By selling
a "do-it-yourself"
guacamole kit, retailers hope to convince people
to buy avocados that might have hesitated before or who had bad experiences
of buying avocados but could not follow through with the guacamole.
Another packaging idea is to indicate on the package how long until the
avocado is ripe. An extension of this is to offer a selection of bags of
different ripeness so that consumers can accurately plan ahead when buying
avocados.
As an alternative to basic packaging strategies, value-added activities also include the processing of avocados. This tutorial has already discussed how Mexican processors have exported processed avocado products to the US. In the US, Mission Produce formed a joint venture with the J.R. Simplot Company to process, market and sell avocado products -- primarily frozen guacamole -- to consumers and institutional clients such as restaurants.
It is important to point out how important value-added processing is in terms of providing flexibility to the avocado agribusiness sector. We have already discussed how general value-added strategies can potentially increase overall consumption. An additional benefit of value-added processing is that it can potentially lessen the biological constraint facing any producer of a fresh agricultural commodity. In very simple terms, if someone sells a fresh agricultural commodity, there is a limited window for selling and consuming that good. If consumers hesitate in buying avocados because of price, it is more likely that a larger amount of production will go unsold and spoil. Processing can often increase the shelf life of avocados in that, once the avocados are processed, they end up being package in cans or jars or they end up being frozen. One way to think about processing is that it is a means of "storing" avocados -- you can sell the avocado (albeit in a processed form) well after harvest with less concern about spoilage and lost revenue.
The next, and final, section of this tutorial addresses some of the current issues in the avocado sector.