Markets In Action: Price Volatility in the Market for Avocados

This video looks at recent price volatility in the market for avocados. Having surged to record highs in 2017, wholesale prices for many grades of avocado are now falling quickly. It is a good case study in the changing conditions of supply and demand.

The global market for avocado is a terrific example of how changing conditions of supply and demand can have a direct impact on the prices that consumers pay for “green gold”.

In 2017 there was a strong surge in avocado prices in large part because of fast-rising demand - especially in Asian markets - and also some supply shortages affecting producers in the main growing countries. Retail prices soon followed the increased wholesale price and health conscious avocado lovers had to dig deeper into their pockets for their regular supply of avocado on toast!

Then in the second half of 2017 and continuing throughout most of 2018, world prices for avocado have been fallen back. In part this the result of much better than expected harvests which has increased supply relative to demand. Supply has also increased as more growers enter the industry and invest in crops that are more resilient to disease and which can be grown, processed and transported at scale to markets in advanced and emerging countries.

In a future video we will look at the avocado market again and focus on the importance of elasticities of demand and supply. But in this video we will look at some of the factors that might bring about changes in market price.