2012 Season Kick-Off Pala Mesa Resort January 12, 2012

Agenda Good Agricultural Practices Country trends Volume summary US market trends Index marketing Harvest recommendations & success factors Price expectations Long term outlook Questions

Good Agricultural Practices Why do growers need to implement? Food safety illnesses and deaths – cantaloupes, spinach, jalapeno, processed guacamole, etc… New FDA guidelines Customer concerns – Costco, Wal-Mart, Chipotle… All links in the distribution chain are exposed; growers, shippers, third party auditors, retailers and food service customers GAP audits across the industry mitigate the risk that individual growers and the avocado industry will suffer a fatal blow from a food safety incident

Good Agricultural Practices What is GAP? Grower Field sanitation Worker hygiene Agricultural inputs – water, fertilizer, mulch, etc… Employee training Record keeping Harvest Crews Worker hygiene Field sanitation Equipment sanitation Training Record keeping

Good Agricultural Practices What are my options? Work under CAC guidelines CAC rebate CDFA auditor under USDA contract Work with a third party auditor Primus NSF Agriculture

Country Trends - California Season = November to October 2012 crop up 34% 2011 = 287 m lbs. (carryout removed) 2012 = 385 m lbs heavy to south vs heavy to north Fruit size = normal On tree quality = good – limited trips damage Acreage stable (increasing in North/decreasing in South, nurseries sold out)

Country Trends - Mexico Season = July to June 2012 crop up 20% 2011 = 585 m lbs = 700 m lbs. Acreage increasing in Michoacán and Jalisco Mexican and Asian markets consume Mexican avocados Majority destined for US market Currently shipping at high rates

Country Trends – Chile Season = July to June 2012 crop up 25% 2011 = 120 m lbs = 150 m lbs. Acreage stable to slightly increasing (3%/year) Chilean, European, Argentinian markets expanding Smaller % of production coming to US Inconsistent supply in 2011

Country Trends - Peru Season = May (?) to September 2012 volume up 450% 2011= 18 m lbs. (partial season) 2012 = 80 m lbs. (full season) Europe will receive 80 m lbs. of Peruvian fruit Acreage increasing 5%-10% per year

Avocado Volume in US by Country Millions of pounds Country Acres % Change California 60 k % Mexico 146 k % Chile 74 k % Peru 20 k % Others (D.R. & N.Z.) Total 300 k 1,020 1,325 30% Weekly Ave

US Market Trends US market consumption is growing at an estimated 10% per year Current “sweet spot” is 20 to 24 million pounds per week Avocado holidays, Super-bowl, Cinco de Mayo, 4 th of July can take up to 30 million pounds per week

US Avocado Market Trends Market will continue to grow due to: Large number of households that can begin or expand their avocado usage Quality product Health benefits Increased usage and cache (indulgence) Money maker for retailers and food service

US Avocado Market Trends California has invested in the market since the 1960’s Today $30-$40 million are spent each year marketing avocados California Avocado Commission Hass Avocado Board Mexican Hass Avocado Importers Association Chilean Avocado Importers Association Peruvian Avocado Board APEAM

Index Marketing Concentrate on Avocados in the US market 10% of overall avocado market Packinghouse/storage/ripening in California Storage /ripening in Denver, Texas & Pennsylvania

Index Marketing Retail Customers = 65% Food service = 15% Wholesale = 25% Nationwide sales Concentrate on program business with major avocado users

Index Marketing Major Customers Costco, Safeway, Kroger, Sam’s, Supervalu, Albertson’s, Stater Brothers, Harmon’s, Sprouts, Sunflower, Wakefern, Fiesta Marts, QFC, Chipotle, Rubio’s, Baja Fresh, Fresh Point, Markon, Restaurant Depot Continually prospecting and improving the base Index sales staff incentive based upon superior returns

Key Success Factors Volume will be up 30% In most periods there will be three countries in the market Monitor market Shipment rates & inventories Communicate with Index field staff Understand shifting import seasons Timing of Peru’s start Timing of Chilean finish and start Develop a plan and communicate the plan to your fieldman

Harvest Recommendations Size pick 48’s and larger Harvest throughout the season Avoid putting your eggs all in one basket (market) Develop and communicate a plan (but be flexible based upon opportunity or lack of) Do not put off securing labor until the last minute Communicate with your Index fieldman

Price Expectations Year Total Calif. Calif. Ave. Calif. Market Crop Share Return (000 lbs.) (000lbs.) , % $1.00/lb , % $1.14/lb , % $0.75/lb , % $1.52/lb , % $ /lb.

Long Term Avocado Outlook Demand for Hass will continue to grow Supply will increase, but demand should outpace supply Prices will remain attractive Index is positive about the future of the California avocado industry

Index Seminar Series February – Pruning June - ? Suggestion for topics? Ideas to improve?

2012 Season Kick-Off Thank you! Questions?