MARKET ANALYSIS REPORT NO 1 OF 2015: AVOCADO

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1 MARKET ANALYSIS REPORT NO 1 OF 215: AVOCADO INTRODUCTION The following text is a review of the avocado marketing environment. This analysis is updated on a quarterly 1 basis. The interval covered in the current issue is from quarter 4 of 213 to quarter 4 of 214. This period is subdivided into five, three-month long quarters. The key issues discussed in the review are the trends in producer prices, production volumes and gross values, sales in the National Fresh Produce Markets (NFPMs), and volumes and gross values of both exports and imports. During the period under review the average producer price for avocados decreased by.23% on a year-on-year basis, total production increased by 12.58% while sales at the NFPMs recorded 14.69% change compared to last year at the same period. The total volume of avocado exports increased by 37.92% while volumes of avocados imported increased by.46%. 1. AVERAGE PRODUCER PRICE OF AVOCADOS Figure 1 illustrates the average producer prices of avocados for the period under review. The average producer price for avocados during the fourth quarter of 214 reached R per ton. The price was 34 % less as compared to the previous quarter (quarter 3, 214) and.23% higher as compared to the previous season at the same time (quarter 4, 213). As can be seen on the graph, avocado prices usually start peaking in third and fourth quarters mainly due to drop in production. One could anticipate an increase in prices for the next coming quarter due to usual lower production in the first quarter. 1 Quarter 1 (January to March), Quarter 2 (April to June), Quarter 3 (July to September), Quarter 4 (October to December)

2 Average price (Rand/Ton) 14. Figure 1: Average producer price of avocado Source: Statistics and Economic Analysis, DAFF 2. TOTAL DOMESTIC PRODUCTION OF AVOCADOS Q4 213 Q1 214 Q2 214 Q3 214 Q4 214 Price (Rand/Ton) The total quarterly production volumes and gross values of avocados during the period under review are presented in Figure 2. A total volume of 9 48 tons of avocados were produced in South Africa during the fourth quarter. The volume was 78% lower than the production value of the previous quarter (quarter 3 214) and 12.58% higher as compared to previous year at the same time (quarter 4 213). As can be visualised on the below graph, production usually start declining in the third quarter after reaching its peak in the second quarter, and remain at its lowest during the first and fourth quarters. Undoubtedly so, one can confidently expect an increase in production during the next coming quarter. Avocados worth the value of R67 million were produced in South Africa during the fourth quarter (quarter 4 214). This value was 85.54% less as compared to previous quarter and 12.84% higher as compared to last season at the same quarter. 2

3 Volume in Tons Gross value in Rands (millions) Figure 2: Quartely production and gross value of avocado Q4 213 Q1 214 Q2 214 Q3 214 Q4 214 Volume in Tons Gross Value (R million) Source: Statistics and Economic Analysis, DAFF 3. SALES AT NATIONAL FRESH PRODUCE MARKETS (NFPMs) The quarterly sales and average prices of avocadoes sold in the NFPMs during the period under review are presented in Figure 3. A total volume of tons of avocados were sold through the NFPMs during the fourth quarter of 214. The volume sold was 33.89% lower as compared to the previous quarter (quarter 3, 214) and 14.69% higher compared at the same time in the previous season (quarter 4 of 213). The volume of avocados traded on the NFPMs is generally lower during the fourth and first quarter because production volumes are also generally lower during this period. Volumes traded at the local markets increase in the second and third quarters of the year in response to increased production. During the fourth quarter of 214 avocadoes sold at the NFPMs reached an average price of R per ton. The price was 24.36% higher than the quarterly price of the previous quarter (quarter 3, 214) and 1.93 higher when compared with the average price in the same time in the previous season. 3

4 Volume in Tons Average price (Rand/Ton) Figure 3: Quartely sales and average prices of avocado at NFPMs Q4 213 Q1 214 Q2 214 Q3 214 Q4 214 Volume in Tons Price in Rands/Tons Source: Statistics and Economic Analysis, DAFF 4. EXPORTS AND IMPORTS Quarterly export volumes and values of avocados during the period under review are presented in Figure 4. The figure indicates that tons of avocados worth R19 million were exported by South Africa during the fourth quarter of 214. The volume exported during the third quarter was below the current quarter (quarter 4 214) by 94.83% and was 37.92% higher as compared to last year at the same quarter. The volume of exports is mainly influenced by external factors such as total volume of production, local demand, exchange rate as well as quality of produce. Europe was South Africa s largest export destination for avocados during the fourth quarter of 214, absorbing almost all the exported avocadoes (97.8% or tons) in the same quarter. The remaining 2.2% went to Africa. 4

5 Volume in Tons Gross value in Rands (millions) Figure 4: Quartely exports of avocado Q4 213 Q1 214 Q2 214 Q3 214 Q4 214 Volume in Tons Gross Value (R Million) Source: Quantec Easydata Figure 5 illustrates the quarterly import volumes and values for avocados during the five quarters under review. As can be seen on the below graph, South Africa did import 73 tons of avocadoes worth R17 million. 5

6 Volume in Tons Gross value in Rands (millions) Figure 4: Quartely imports of avocado Q4 213 Q1 214 Q2 214 Q3 214 Q4 214 Volume in Tons Gross Value (R Million) Source: Quantec Easydata 5. GROWTH, VOLATILITY & STABILITY ANALYSIS Table 1 presents the results of growth and coefficient of variation estimations. They were calculated using quarterly statistics and covered the same five-quarter period under review beginning in quarter 4 of 213 and ending in quarter 4 of 214. The coefficient of variation is a measure of volatility or stability. When the coefficient of variation is less than one, the variable in question is said to be relatively stable, meaning that there were minimal changes. When the coefficient of variation is more than one, it is said to be volatile, meaning there were major changes during the period under review. Table 1: Avocado industry growth rates & variation coefficients (Quarter 4, 213 Quarter 4, 214) Category Subcategory Growth Rate (%) Coefficient of Variation Producer price Price.6.22 Production Gross Value (GV) Volume Sales at NFPMs Price/(GV) Volume Export GV Volume Import GV.3.65 Volume.1.89 Source: Calculated from data from Statistics and Economic Analysis and Quantec Easydata 6

7 As shown in the table above the avocado industry generally experienced positive growth from quarter 4 of 213 to quarter 4 of 214. All variables experienced a positive growth during the period under review. The table also shows various levels of volatility at different levels of the avocado industry s quarterly figures over the reference period. Low volatility was indicated by the coefficients of variation that were less than one (<1). All variables with exception of exports have coefficients of variation that are less than one, meaning that they displayed minimal changes during the five quarters under review. 7

8 6. ACKNOWLEDGEMENTS Acknowledgement is given to the following information sources: Directorate: Statistics and Economic Analysis Quantec Easydata For more information contact: Director: Marketing Department of Agriculture Private Bag X 15 Arcadia 7 Tel: (12) Fax: (12) MogalaM@daff.gov.za Website: Deputy Director: Commodity Marketing Tel: (12) Fax: (12) ElvisNak@daff.gov.za Senior Agricultural Economist Tel: (12) Fax: (12) JulyM@daff.gov.za Disclaimer: This document and its contents have been compiled by the Department of Agriculture, Forestry and Fisheries for the purpose of detailing avocado industry. Anyone who uses this information does so at his/her own risk. The views expressed in this document are those of the Department of Agriculture, Forestry and Fisheries with regard to agricultural industry, unless otherwise stated. The Department of Agriculture, Forestry and Fisheries therefore, accepts no liability that can be incurred resulting from the use of this information. 8