A smaller crop size and high demand last season saw avocado prices reach a record high of up to $5 each, sparking a thriving blackmarket [sic] for the fruit.
A number of thefts from orchards across New Zealand were also reported as demand outstripped supply, with several being hit multiple times.I have a couple of points to make on this. First, if demand is 'outstripping' supply, then to me that implies excess demand (a shortage) - that is, there aren't enough avocados to satisfy everyone who wants to buy them. In that case then prices should rise (which they did - as noted above to a record high of $5 each). However, as the price rises the quantity of avocados demanded will reduce (fewer consumers are willing and able to buy avocados at higher prices). If given long enough to adjust the price of avocados will reach a new equilibrium, where quantity demanded is equal to quantity supplied. That is, there is no longer any 'demand outstripping supply' if the price has fully adjusted.
You might suggest that perhaps the price has not fully adjusted. But in that case, then what are the retailers doing? They're just giving away profits. They could have sold those avocados for an even higher price. Their shareholders/owners should be on the warpath. We should expect that 'demand outstripping supply' will always be a very short-lived phenomenon. Particularly if there was a black market (where low priced fruit purchased from a retailer are re-sold at a price much closer to, if not at, the equilibrium price).
Second, the last sentence also shows the role of incentives. This relates back to an post of mine from last year (on rational onion thefts; just substitute 'onion' for 'avocado' in this explanation):
...when the price of onions increases, we might expect to see more onion thefts. Why? The benefits of onion theft have increased, while the costs (in terms of the risk of punishment) probably haven't much changed. We can describe two mechanisms for why this would increase onion thefts. First, career vegetable burglars (or maybe just the generally criminally-inclined) recognise that there are larger profits to be had by stealing onions for resale. So, they steal more onions (or maybe they start stealing onions). Second, ordinary people now face higher costs of purchasing onions. So, perhaps stealing onions becomes a lower cost alternative for them, so they steal rather than purchase.Note that the first explanation has little to do with 'demand outstripping supply', and is purely a result of higher avocado prices. 'Demand outstripping supply' would only be a direct cause for avocado thefts if it was avocado consumers committing the thefts, which seems unlikely.