The Rise and Fall of the Avocado Co-op: From Calavo to NAFTA

California’s avocado industry was built on a grower-owned cooperative: the California Avocado Growers’ Exchange, organized in 1923 and renamed Calavo Growers of California in 1927, packed and sold its members’ fruit so the margin came back to the people who grew it. That model faded when Calavo became a corporation and when trade rules opened the US market to year-round imports from Mexico, Chile and Peru.

Going through old paperwork from the grove, we came across a set of co-op cards. They are a small thing, but they point at a version of the California avocado business that does not exist anymore, and understanding what changed explains most of the pressure growers are under today.

When Growers Owned the Middle

The California avocado industry was built on grower cooperatives, and Calavo was the model. The important detail is the ownership structure: Calavo was owned by the local growers themselves.

The co-op handled picking, packing, and marketing. Because the growers owned that entity, the margin from those steps came back to the people growing the fruit. A farmer could concentrate on growing well and trust that the value captured after harvest was still theirs.

That arrangement is what made a modest family operation viable. You were not just selling raw fruit into somebody else’s supply chain. You owned a share of the chain.

How Did Calavo Start?

The co-op grew out of a crisis. Early on, prices were high enough (50 cents to a dollar for a single large Guatemalan fruit) that growers sold their own fruit. Then a very heavy set in 1922 pushed the California Avocado Association to try pooled marketing through a Los Angeles packinghouse on commission. It fell apart because some members sold their best fruit to their old customers and sent only the lower grades to the pool.

The growers’ answer was a proper cooperative set up under California law, modeled on Sunkist and the walnut growers’ exchange. The California Avocado Growers’ Exchange was organized in August 1923 with George B. Hodgkin as its part-time manager, and incorporated in January 1924. Hodgkin went on to run it until 1956.

The first year was rough. By May 1924 the Exchange was described as being on the brink of disaster, with new fruit arriving on top of a backlog of softening, decaying fruit. It survived by moving closer to its buyers, dealing with them directly and spending $200 on advertising, store displays and recipe booklets. In 1927 it took the name Calavo Growers of California. Around the same time the co-op era produced other firsts: California’s 8% oil maturity standard in 1925, the first full carload of California avocados to Chicago in December 1926 and to New York in January 1927.

The Shift to a Corporation

At some point Calavo transitioned from a grower-owned cooperative into a corporation. The packing and marketing functions stayed, but the ownership that sent those margins back to growers did not.

Alongside that change, the industry’s promotion moved to two statutory bodies: the California Avocado Commission, created by state law in 1977 and operating since 1978, and the federal Hass Avocado Board, seated in 2003, which collects from importers as well as domestic producers. These fund marketing and research, and growers pay into them by the pound: the Hass Avocado Board assessment is currently 2.5 cents a pound on all avocados, domestic and imported, and the California Avocado Commission charges 1 cent a pound to growers whose average production over the past three years is 10,000 pounds or more. They promote avocados. They do not restore a grower’s ownership of the packing and marketing margin.

NAFTA and Year-Round Fruit

Then trade policy changed the market itself. Under NAFTA and the agreements that followed, avocados from Mexico, Peru, and Chile moved into the United States at volume.

When Did Mexican Avocados Start Coming Into the US?

For most of the industry’s history, they did not come in at all. On February 27, 1914, the USDA quarantined avocados from Mexico and Central America to keep out seed weevils, stem borers and other pests. The UC growers’ handbook on avocado production notes that, as a side benefit, the quarantine let the young California industry grow without heavy competition.

That complete ban lasted until 1997. A USDA rule that year, written to meet NAFTA’s requirements, let Hass from certified pest-free zones in Mexico into 19 northeastern states and Washington, D.C., from November through February, well away from the California and Florida growing areas. The first shipments that winter came to 13 million pounds. In November 2001 the rule was widened to 31 states with a season running to April 15, and the California Avocado Commission sued over the pest risk. Mexico was already the world’s largest avocado producer.

Chile came earlier and by a different route. Chilean growers began shipping Hass in 1985, and by the winter of 2002–03 they sent 157 million pounds, more than a third of California’s annual Hass crop. That fruit took over the winter months that California’s green-skinned varieties used to fill. Peru followed in 2011 with late-summer fruit.

For shoppers this was a genuine improvement: avocados became available year-round instead of seasonally. For California growers it meant competing directly against production systems with dramatically lower labor and water costs, a risk the industry’s own handbook spelled out: fruit from countries with low labor costs and low, sometimes no, water costs would compete with unfavorable results for California fruit. Imported fruit now sets the market price, and that price frequently does not cover what it costs to grow the same fruit in San Diego County.

Where That Leaves Local Growers

The co-op structure that once protected growers is gone, and nothing replaced its actual function. What remains is a grower selling into a market priced by operations with fundamentally different cost structures, while paying California water rates and California labor rates.

That is the honest reason so many local groves have come out of production. It is not that people stopped wanting to farm.

Our response is to rebuild the missing piece on a smaller scale by selling direct. When fruit goes from our grove to your kitchen, the margin that used to belong to the co-op stays with the family that grew it. It is not the old system, but it is the same principle.

This is part of our complete guide to what it really costs to run a California avocado farm — the grower statement, farm gate pricing and the numbers behind a family grove.