Will avocados be toast? Soaring demand and changing climate threaten global supply chains
The drought that struck California in 2012 was severe and prolonged. Crops withered. Debates about water usage grew urgent and contentious. Entire reservoirs vanished. One of the planet’s most productive agricultural regions was in crisis.
By early 2014, the rest of the nation began to take notice as prices rose and availability shrank for one of California agriculture’s most valuable crops: the ever-popular avocado.
Avocado trees require enormous amounts of water to thrive. Approximately 80 percent of U.S.-grown avocados come from a small coastal region of California south of San Luis Obispo, and in the summer of 2014, tens of thousands of avocado trees in the area were dying of thirst. Weakened by heat, many survivors later succumbed to heavy winds and freak snowfalls during the next winter.
Meanwhile, avocado consumption was surging worldwide. Avocado toast, avocado smoothies, avocado…fill in the blank. According to the Hass Avocado Board, sales of Hass avocados (which make up more than 95 percent of all avocados consumed in the U.S.) more than doubled from 2005 to 2015 — and more than quadrupled from 2000 to 2015. But at a time when fast food chains with global reach, like McDonald’s and Starbucks, were putting avocados on their menus and all-avocado restaurants were popping up places like Brooklyn and Amsterdam, global supply chains started coming up short.
The consequences of California’s arid conditions resonated globally. Avocado prices rose 35 to 77 seven percent. Production fell to roughly 80 percent of pre-drought volume. Enterprising growers in Mexico, Peru, and Chile scrambled to plant new groves and boost crop yields. But slow production cycles in agriculture and climate change-related extreme weather events meant that, even with more avocados in the pipeline, demand was expected to outpace supply for the foreseeable future.
And the gap between consumer demand and global supply amounts to an enormous lost opportunity in a sector that saw $1.8 billion in sales in 2015 and expects consumption to grow around 15 percent annually through 2025. For many businesses, the central issue may be real losses in revenue or efficiency, rather than theoretical profits. In either case, more information and better analysis could be indispensable for managing success.
That’s where AI can make a difference — by providing supply chain managers with sophisticated tools that blend proprietary company data with relevant time-sensitive information from other public and private sources. Anticipating a supply disruption in one location — such as Southern California — but armed with detailed knowledge about alternate sources, supply chain professionals can nimbly and efficiently control operating costs.
It’s now possible to gather and analyze disparate flows of information about everything from the weather in key avocado-growing regions to who’s producing the best quality fruit to markets where avocado toast is trending. Rising prices and periodic shortages that force businesses to temporarily take guacamole off their menus continue today. Disappointing crop yields linked to eratic weather in the U.S., Mexico and Chile, and the spread of grove-killing invasive fungi continue to disrupt supply, even as demand grows and spreads globally.
In addition to improving supply chain resiliency, cutting-edge technology can also improve supply chain transparency. Today, growers, processors, wholesalers, distributors, manufacturers, retailers and others are banding together to enhance visibility and accountability in each step of the food supply. Powered by the IBM Blockchain Platform, the IBM Food Trust directly connects participants through a permissioned, permanent and shared record of food origin details, processing data, shipping details and more. Networks like that one ensure that the produce consumers ultimately find on store shelves is fresh and safe.
Advanced information technology can provide greater end-to-end visibility — from field to foodie — providing actionable insights that impact the bottom line. Because, at the end of the day, nothing — even guacamole — tastes better than success.