2012 Season Kick-Off

1. 2012 Season Kick-Off Pala Mesa Resort January 12, 2012

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

3. 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

4. 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

5. Good Agricultural Practices • What are my options? Work under CAC guidelines • CAC rebate • CDFA auditor under USDA contract • www.CaliforniaAvocadoGrowers.com/gap Work with a third party auditor • Primus • NSF Agriculture

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

7. Country Trends - Mexico • Season = July to June • 2012 crop up 20% • 2011 = 585 m lbs. • 2012 = 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

8. Country Trends – Chile • Season = July to June • 2012 crop up 25% • 2011 = 120 m lbs. • 2012 = 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

9. 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

10. Avocado Volume in US by CountryMillions of pounds CountryAcres20112012 % Change California 60 k 287 385 34% Mexico 146 k 585 700 20% Chile 74 k 120 150 25% Peru 20 k 18 80 444% Others 10 10 - (D.R. & N.Z.) Total 300 k 1,020 1,325 30% Weekly Ave. 19.6 25.5

11. 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, 4th of July can take up to 30 million pounds per week

12. 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

13. 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

14. 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

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

16. 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

17. 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

18. 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

19. Price Expectations YearTotalCalif. Calif. Ave. Calif. MarketCropShareReturn (000 lbs.) (000lbs.) 2008 1,030 329 32% $1.00/lb. 2009 1,085 175 16% $1.14/lb. 2010 1,250 535 42% $0.75/lb. 2011 1,141 303 27% $1.52/lb. 2012 1,325 385 19% $1.00-1.10/lb.

20. 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

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

22. 2012 Season Kick-Off • Thank you! • Questions?