Investing in avocados: lessons beyond the numbers

September 30, 2026

The expansion of international trade continues to sustain interest in investing in avocados. According to preliminary estimates from the OECD and the FAO, global exports grew by 13% in 2025, reaching nearly 3.3 million tons. But market growth, by itself, does not ensure the return of a crop, packing facility or processing plant.

In conversations with Avobook, Jorge Andrés Osorio, CEO of RFT Holding–Reforesta, maintains that the evaluation must connect three dimensions: financial, technical and commercial. The holding company brings together seven certified Hass avocado farms in Urrao, Antioquia, with 861 total hectares (374 productive) and an operational track record of 15 years, according to company information.

For Osorio, the projected internal rate of return must be compared with the cost and term of financing, the time required to enter production and exposure to the exchange rate. At the same time, it must be supported by proven soil, climate, water and planting material conditions, and by a viable route toward buyers and markets.

The review must also include the rules under which the project will operate. Factors such as water-use rights, the legal status of the land, requirements for producing and exporting, tax policy and available incentives must be taken into account.

Osorio warns that a location favorable for cultivation is not enough if the operation faces legal obstacles or if transporting the fruit to market proves too costly. As these requirements vary by country, they must be verified for each investment.

The Productivity Behind the Projection

In a growing operation, Osorio recommends reviewing tons per hectare, size distribution, exportable percentage and cost per kilogram against the effective selling price. Comparing cost per hectare and cost per kilogram makes it possible to distinguish a spending problem from a yield problem. If the harvest declines, the unit cost can increase even if maintenance expenses change little.

“A competitive cost per hectare accompanied by a high cost per kilogram indicates that the problem is productivity and not spending,” he explains.

Water requires both a physical and legal review. Its availability, together with soil and genetic material, conditions future productivity. The legal status of the property, the security of the area and the distance to packing facilities, plants and ports also matter. The FAO and OECD identify climate events, infrastructure deficiencies and disruptions to trade routes among the uncertainties for tropical fruits.

The mistake, Osorio warns, is to project a permanent and growing fruit supply. Based on his experience in Colombia, the actual yields of some projects did not reach the curves projected at the beginning. For this reason, he proposes working with field records and testing scenarios of lower productivity, lower prices and higher costs before committing capital.

Continuous Supply and Commercial Diversification

For a packing facility or processing plant, the central question that must exist when considering an investment is whether there will be enough fruit during the weeks required to utilize the installed capacity. “A packing facility or processing plant can be built in months; fruit cannot be obtained overnight,” Osorio warns.

The executive calls for examining the supplier base, committed volumes, weeks without supply and competition from other buyers for that same raw material. “Without fruit, there is no industry,” he summarizes.

In the case of processing, it must also be estimated at what price the fruit will be available for purchase when exports and the domestic market are also demanding it.

He also considers it important to have more than one commercial outlet. Export fresh, domestic market, frozen products and oil can offer destinations for different fruit qualities. This requires verifying which customers and plants exist, how much they can purchase and at what price. Osorio points out that incorporating formats into the business plan does not amount to having guaranteed sales.

Concentration presents two different risks. On the one hand, depending on a single commercial window exposes revenues to prices during just a few weeks. In addition, operating small and dispersed farms can increase supervision and logistics costs. Osorio highlights long-term commercial relationships and a fixed-cost structure that can be sustained when income declines.

A Return That Can Withstand Difficult Years

The final test is cash flow. Osorio proposes monitoring EBITDA margin, unit costs, productivity and results by market and customer, in addition to reviewing the level of debt and its terms. In particular, he warns that a payment schedule based on optimistic yields can put pressure on the project if production or prices fall below expectations.

To test that return, Osorio proposes not relying on a single internal rate of return scenario. The investor should recalculate the cash flow if tons per hectare or the exportable percentage decline, if costs increase and if the selling price falls during the expected commercial window.

It is also advisable to check whether grace periods and debt maturities align with the biological timelines of the crop. This exercise makes it possible to see how much margin the project has before needing new capital or defaulting on its payments.

For the executive, one of the most frequent mistakes is “Treating avocado as if it were fixed income,” projecting the return without incorporating variations in harvest, prices and costs.

His experience in Colombia shows why the recovery period must be built using local data and reviewed as the crop generates information. There is no single horizon that works for all countries or for all links in the chain. Before investing, the decisive question is whether the project can cover its costs and obligations even when the fruit, the price or both fall short of the original plan.

Summary: key tips for investing in avocados

• Evaluate three dimensions at the same time. Projected profitability must be compared with the cost and term of financing, the time required to enter production and exposure to the exchange rate, in addition to technical conditions and the commercial route.

• Verify the rules of each country. Water rights, the legal status of the land, requirements for producing and exporting, taxes and incentives vary depending on the destination of the investment.

• Compare cost per hectare and cost per kilogram. If the former is competitive and the latter is high, the problem is productivity and not spending.

• Do not project an ever-growing harvest. Work with field records and test scenarios of lower productivity, lower prices and higher costs.

• Secure the fruit before the plant. For packing and processing facilities, it is necessary to review suppliers, committed volumes, weeks without supply and competition for the same fruit.

• Have more than one commercial outlet, with real buyers. Adding formats such as frozen products or oil to the business plan does not amount to having guaranteed sales.

• Adjust debt to the crop’s pace. Grace periods and maturities should align with biological timelines, not optimistic yields.

• Do not treat avocado as fixed income. The return must withstand years in which the harvest, the price or both fall below the plan.