Summary
Over the past decade Tanzania has developed a sea freighted avocado export industry initially focussed on the EU market. With global avocado production for export surging, while there is still considerable growth potential on the EU market, competition is intensifying, with EU consumption likely to stabilise in 5 to 8 years. This will require a greater focus on quality and identifying stable and remunerative routes to market, which can mitigate price instability, as well as efforts to diversify markets served. In the short-term, challenges are faced along intra-regional routes to ports in Kenya arising from Covid-19 related movement restrictions. Operationally effective intra-regional ‘green lane’ protocols will be needed to keep the main export routes open and mitigate escalating reefer costs. Unless effectively addressed the Covid-19 pandemic could leave the Tanzanian avocado industry poorly placed to meet longer term challenges.
Over the last decade Tanzania has developed an entirely new avocado export industry, with the Tanzania Horticulture Association (TaHa) reporting an increase in total exports from 1,877 tonnes to 9,000 tonnes between 2014 and 2019. Avocado sector is making an increasingly important contribution to smallholder incomes, with TaHa’s 2020 Avocado catalogue report claiming over 10,000 smallholder growers are involved in the industry. According to TaHa not only have export volumes increased but the farm gate price paid for avocadoes has also increased more than 3-fold (1).
The EU market has been the focal point for the development of Tanzanian avocado export production, with export volumes to the EU increasing 583% between 2013 and 2019. This has been accompanied by a general increase in the unit price received for Tanzanian avocado exports. Average prices earned on Tanzanian avocado exports increased steadily from 2014-2018 (+73%), although the average unit price fell precipitously in 2018 (-37%), in the face of a dramatic 25% increase in total EU imports (+120,928 tonne). This occurred on the basis of a 45% increase in Peruvian avocado exports to the EU (+71,707 tonnes), a 100% increase in South African (+41,873 tonnes), a 46% increases in Kenyan (+16,306) and a 35% increase in Moroccan (+4,874 tonnes) exports to the EU (2).
Table 1: Main Avocado Exporters to the EU28 (tonnes)
| (080440) | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | % + |
| EU28 | 251,598 | 305,324 | 343,519 | 446,981 | 486,144 | 607,072 | 606,438 | +141% |
| Peru | 86,261 | 102,994 | 114,320 | 144,789 | 157,803 | 229,510 | 184,110 | +114% |
| Chile | 50,681 | 53,665 | 62,586 | 91,558 | 97,717 | 78,159 | 100,308 | +98% |
| Mexico | 8,755 | 10,460 | 25,430 | 51,885 | 46,716 | 51,509 | 82,634 | +844% |
| Israel | 37,095 | 44,928 | 43,982 | 39,078 | 54,208 | 46,854 | 54,171 | +46% |
| South Africa | 44,069 | 56,850 | 49,565 | 52,437 | 41,607 | 83,480 | 50,751 | +15% |
| Kenya | 13,308 | 15,862 | 20,726 | 23,741 | 25,390 | 41,696 | 35,536 | +167% |
| Colombia | 560 | 2,436 | 7,014 | 19,471 | 27,843 | 30,401 | 45,874 | +8,092% |
| Morocco | 1,398 | 6,618 | 7,063 | 6,324 | 13,872 | 18,746 | 17,179 | +1,129% |
| Brazil | 3,927 | 5,265 | 3,533 | 4,472 | 7,178 | 7,065 | 8,160 | +108% |
| Tanzania | 967 | 1,641 | 3,278 | 3,036 | 3,042 | 6,269 | 6,609 | +583% |
Source: EC Market Access Data Base , https://madb.europa.eu/madb/statistical_form.htm
This needs to be seen in a context where although Tanzania is now the 3rd largest African avocado exporter to the EU it is only the 10th largest overall supplier to the EU market, with Peru (30%), Chile (17%), Mexico (14%) and Israel (9%) dominating EU imports of avocadoes (see table 1). The volume of Peruvian avocado exports has a particularly strong bearing on EU price trends (3). In 2019 it was the 20% slump in Peruvian export volumes (accompanied by a 39% slump in both Kenyan and South African exports) which supported a strong recovery in Tanzanian unit prices for avocadoes exported to the EU28 market (+48%). However, with expanding production in Mexico and Chile also finding its’ way onto the EU market in growing volumes in 2019 (+60% and +28% respectively) there is growing concern over growing competition on the EU market (4).
While analysis suggests there is still considerable room for growth in EU avocado consumption, given EU per capita consumption only 1/3 of that in the USA in the longer term (5 to 8 years) it is maintained EU demand growth will be unable to keep up with the growth in global supplies (5). This maturation of EU consumption in the face of a continued growth in global export volumes, is likely to see EU prices gradually decline.
This will then require a far greater focus on the quality of exports (Class 1 ‘ready-to eat’) and the nature and security of the trading and marketing relationships established. In Northern Europe is avocado retailing is increasingly concentrated on supermarket (+65% of total sales). Here supply arrangements are largely governed by programmed supply contracts either agreed directly with the supermarket or via established multi-sourcing trading and ripening companies (5).
Table 2: Tanzanian Avocado Export Value/Volumes d Unit Prices EU27 and UK 2013-2019
| EU28 | 2013 | 2014 | 2015 | 2016 | 2017 | 2018 | 2019 | Change 13-19 |
| Value (€) | 1,744,939 | 2,425,234 | 7,261,045 | 7,460,841 | 7,763,024 | 10,147,453 | 15,872,690 | |
| Volume (T) | 967 | 1,641 | 3,278 | 3,036 | 3,042 | 6,269 | 6,609 | |
| €/T | 1,804.49 | 1,477.90 | 2,215.08 | 2,457.46 | 2,551.95 | 1,618.67 | 2,401.68 | +33.1% |
| UK | ||||||||
| Value (€) | 437,114 | 485,917 | 1,255,533 | 795,407 | 1,168,607 | 1,137,296 | 2,330,786 | |
| Volume (T) | 231 | 320 | 566 | 354 | 466 | 718 | 781 | |
| €/T | 1,892.27 | 1,518.49 | 2,218.26 | 2,246.91 | 2,507.74 | 1,583.98 | 2,984.36 | +57.7% |
| EU27 | ||||||||
| Value (€) | 1,307,825 | 1,939,317 | 6,005,512 | 6,665,434 | 6,594,417 | 9,010,157 | 13,541,904 | |
| Volume (T) | 736 | 1,321 | 2,712 | 2,682 | 2,576 | 5,551 | 5,828 | |
| €/T | 1,776.94 | 1,468.07 | 2,214.42 | 2,485.25 | 2,559.94 | 1,623.16 | 2,323.59 | +30.8% |
Source: EC Market Access Data Base , https://madb.europa.eu/madb/statistical_form.htm
These longer-term demand and supply projections for the EU market will also necessitate a need for market diversification.
There is an acute awareness of these longer-term trends in the Tanzanian avocado sector, with Tanzanian exporters already seeking to make marketing adjustments. As early as April 2019 George Akida, Africado’s export manager was warning of ‘a possibility that the EU market will be oversupplied, and the price might go down because larger producers like Peru and Mexico have increased production’ (4). This was indeed the case in 2019, despite the slump in Peruvian exports
Market diversification initiatives are already underway. Thus, while in 2014 fully 87% of Tanzania’s total avocado exports were recorded as being landed in EU28 member states, by 2019 this had fallen to 73%, with Africado developing exports to the Middle East. In addition, Africado‘s George Akido, has called on the Government of Tanzania to review bilateral trade agreements with China to secure SPS access to the Chinese market (4). As was acknowledged in April 2019 this will require compliance with stringent phytosanitary requirements and inspections by the Chinese phytosanitary inspection services (6), something which is now simply impractical in an era of Covid-19.
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Profile of the Tanzanian Avocado Sector Tanzania’s avocado sector is based on smallholder production with two large firms (Rungwe Avocado Company and Africado) providing technical and commercial assistance. It is making an important contribution to rural development in the Mount Rungwe and Mount Kilimanjaro regions. Rungwe Avocado Company maintains it sources from some 20,000 smallholder producers while Africado sources from some 2,000 smallholder farmers, although in recent years this production base has been expanding, including via the production of the new ‘Gem’ variety. Avocadoes are shipped via refrigerated containers via Mombasa for the Mount Kilomanjaro region while producers in the Mount Rungwe region also have the option of shipping via Dar es Salaam, although vessel sailing times to Europe from Dar es Salaam are longer (up to 45 days), compared to between 18-25 days to Southern European ports and 28-36 days to Northern European ports from Mombasa. Africado has a strong commercial relationship with UK supermarkets (Tesco, Sainsbury’s, Waitrose, Ocado). |
In terms of current market developments, while there were initial reports that the ‘market for avocados in Europe is down’ in the face of the Covid-19 pandemic (with onward shipment of avocadoes landed in Rotterdam to EU member states in the east having been disrupted) (7), more recent reports suggest retail demand is growing, with this in part compensating for the loss of the catering trade (8).
Overall, there appears to be an increase in global demand for avocadoes, with strong growth in demand in the USA in response to heightened health concerns. Strong US demand is proving increasingly attractive to Peruvian avocado exporters (9), with this potentially supporting higher prices on the EU market given the importance of Peruvian export flows to the EU avocado market situation.
However, for the Tanzanian avocado trade there are growing logistical problems faced in East Africa. Reports from neighbouring Kenya suggest there is less independent trader interest in non-contracted purchases from avocado producers, given Covid-19 travel restrictions, the logistical challenges faced and the reduction in sea freight services to East African ports which the Covid-19 pandemic has given rise to.
Fairtrade Enterprises Operations Director Antony Nderitu said the situation in the avocado sector was ‘tricky’, since ‘few ships are coming to the port’, making traditional exports to markets in Germany, Holland, and France difficult (10). This being noted the structure of the Tanzanian avocado export sector may make it less vulnerable to the practices of independent traders in an era of logistical uncertainties
| Comment and Analysis While Tanzanian avocado exports to the EU are sea freighted in refrigerated containers and have been less severely affected by the Covid-19 pandemic than East African air freighted fruit and vegetable exports, problems are faced by exporters using the port of Mombasa. Given Tanzania’s export season runs from December-January and then from mid-June until September (11), the second and most important part of the export season could be adversely impacted by the Covid-19 pandemic, resulting in a set-back to recent strong growth in the Tanzanian avocado sector. Since the first part of the season, Kenya’s border with Tanzania has been closed to passenger traffic, although cargo vehicles are exempt. However, truck drivers are required to undergo mandatory health screening for COVID-19 (12). According to a Voice of America news report, in mid-May the Kenyan authorities introduced ‘mandatory COVID-19 testing for truckers, ordering that they undergo tests 48 hours before leaving the Port of Mombasa … or before entering Kenya from elsewhere in East Africa’ (13). In addition to these cross-border movement controls, Maersk reported Kenya also had ‘a curfew in place 7pm to 5am’, with this ‘impacting night truck drivers’ and resulting in slower turn-around times for vehicles. In addition, a ‘cessation of movement in and out of 5 counties (including Nairobi & Mombasa)’, has been introduced (14). With the Kenyan authorities closing ‘entry points with Tanzania and Somalia, except for cargo trucks whose drivers have tested negative’, Tanzanian government has introduced retaliatory movement restrictions closing a number of border crossing points. While Presidents Yoweri Museveni of Uganda, Paul Kagame of Rwanda, Uhuru Kenyatta of Kenya and Salva Kiir of South Sudan have now all agreed to ‘double testing of truckers’, which would allow truckers to ‘drive through the EAC upon testing negative in their country of origin and at the border’ (13), President John Magufuli of Tanzania was not a party to this agreement. This reflects the wide divergence in approach to controlling the pandemic in Kenya and Tanzania. The Tanzanian President has recently faced accusation of covering up the extent of the Covid-19 pandemic in Tanzania. According to the Guardian, President Magufuli ‘has rejected advice from the WHO on social distancing to restrict transmission’, with Tanzanian opposition politicians highlighting the President’s refusal ‘to impose a strict lockdown as many other leaders on the continent have’. According to the US Embassy in Dar es Salaam ‘all available evidence pointed to exponential growth” of Covid-19 cases in Dar es Salaam and other locations in Tanzania’, and warned that ‘many hospitals … have been overwhelmed in recent weeks’, an assertion which the Tanzanian Foreign Ministry firmly rejected . This is fuelling concerns in neighbouring Kenya that the pandemic is getting out of control in Tanzania (15). The divergent approaches to the containment and control of the pandemic in Kenyan and Tanzania are likely to profoundly complicate the process of reaching a regional consensus on the necessary safe transportation protocols which will need to be set in place to ensure intra-regional freight movements are not disrupted by the Covid-19 pandemic.
This is an important issue for Tanzania’s avocado exports, since the peak of the Covid-19 pandemic in Africa is projected for July and August 2020, right in the middle of the avocado export season. If regional transportation issues are not addressed, then shipments of Tanzanian avocadoes via Mombasa could be disrupted during the second and most important part of the Tanzanian avocado season. While the option exists of exporting via Dar es Salaam rather than Mombasa, the shipping time on currently scheduled sailings can be twice as long as the normal shipping time via Mombasa. This is likely to compound challenges faced globally in procuring, on a cost-effective basis, increasingly scarce refrigerated container capacity. What impact this could have in the longer term given the growing competitive challenges faced on the EU market is unclear What is clear is that it will not help Tanzanian avocado exporters in addressing the known challenges they will face on the EU market, a market which to date has been the foundation of the growth of Tanzania’s avocado sector. |
Sources:
(1) FreshFruitPortal.com ‘Tanzania’s avocado industry hits the ground running’, May 12, 2020,
https://www.freshfruitportal.com/news/2020/05/12/tanzanias-avocado-industry-hits-the-ground-running/
(2) EC, Market Access Data Base
https://madb.europa.eu/madb/statistical_form.htm
(3) CBI ‘Entering the European market for avocados
https://www.cbi.eu/market-information/fresh-fruit-vegetables/avocados/market-entry/
(4) Freshplaza.com, ‘Tanzania: Avocado exporters want government help to access China market’, 2 April 2019
https://www.freshplaza.com/article/9089402/tanzania-avocado-exporters-want-government-help-to-access-china-market/
(5) CBI, ‘The European market potential for avocados’, 4 March 2020
https://www.cbi.eu/market-information/fresh-fruit-vegetables/avocados/market-potential/
(6) foodbusinessafrica.com, ‘Tanzania eyes China’s US$105m avocado market as production increases’, 23 April
https://www.foodbusinessafrica.com/2019/04/23/tanzania-eyes-chinas-us105m-avocado-market-as-production-increases/
(7) Freshplaza.com, ‘South Africa reduces estimate for avocado export’, 11 May 2020
https://www.freshplaza.com/article/9215576/south-africa-reduces-estimate-for-avocado-export/
(8) Freshplaza.com, ‘OVERVIEW GLOBAL AVOCADO MARKET’, 17 April 2020
https://www.freshplaza.com/article/9208990/overview-global-avocado-market/
(9) Freshplaza.com, ‘Avocados are hot in the Age of COVID-19’, 28 April 2020
https://www.freshplaza.com/article/9211956/avocados-are-hot-in-the-age-of-covid-19/
(10) farmers.co.ke, ‘Covid-19 Shuts Export Market for Meru Avocado Farmers’
https://www.farmers.co.ke/article/2001370710/covid-19-shuts-export-market-for-meru-avocado-farmers
(11) CIRAD, ‘Tanzanian avocado’, 17 May 2016
https://www.fruitrop.com/en/Articles-by-subject/Full-country-profile/2016/Tanzanian-avocado
(12) COLEACP, ‘Logistics: Road Freight’
https://eservices.coleacp.org/en/actu/logistics
(13) VOA, ‘Fear of COVID-19 Slows Trucking in East Africa’, 21 May 2020
https://www.voanews.com/covid-19-pandemic/fear-covid-19-slows-trucking-east-africa
(14) Maersk, ‘Shipping to and from Kenya: COVID-19 Operational status (27-05-2020)’
https://www.maersk.com/local-information/africa/kenya
(15) Guardian, ‘Tanzanian president accused of covering up Covid-19 outbreak’, 27 May 2020
https://www.theguardian.com/world/2020/may/27/tanzanian-president-accused-of-covering-up-covid-19-outbreak