Lee Cole – BIOGRAPHY Chairman of the Board, President and CEO

I am pleased to report that Calavo Growers, Inc. completed its most successful year ever in fiscal 2009-a fitting tribute to cap the company's 85th anniversary. Our operating performance marks the third consecutive year of record results, eclipsing the prior all-time highs for net income and earnings per share by more than 75 percent.

Enormously gratifying, our accomplishments reflect the disciplined, focused execution of Calavo's three-pronged strategic business agenda that places precedence upon diversified fruit sourcing, product diversification and leveraging of a formidable infrastructure. The attendant achievements are, in every respect, The Fruits of Our Labor-the theme of this year's annual report. These include:

• Registering record gross profit margin owing to the aforementioned diversified sourcing of fresh avocados that propelled our unit-driven operating model, as well as efficient cost and production management in Processed Product operations;

• Building additional retail distribution for our best-in- category, ultra-high-pressure guacamole, which continues to account for an increasingly larger portion of total Processed Product business unit sales;

• Laying the foundation for exciting expansion and diversification of Processed Product offerings coming in fiscal 2010, which I discuss in more detail below;

• Setting the stage for the anticipated sharp upturn in available United States avocado supply this year-an occurrence that we believe foreshadows an upward trend line for the future and offers potential positive implications for Calavo; and,

• Placing this into context, accomplishing all of the above while navigating the most challenging economic environment since the Great Depression.

For the fiscal year ended October 31, 2009, Calavo posted net income of $13.6 million, a 76 percent increase from $7.7 million in fiscal 2008. Diluted per share results rose 77

percent to $0.94 from $0.53 in the preceding fiscal year. Revenues for the most recent year dipped five percent to $344.8 million from the record $361.5 million one year earlier. The decline principally reflected market conditions related to commodity-produce pricing, as well as lower sales to restaurant and food-service customers due to the economic downturn.

Our net profit was fueled by strong improvement in total gross margin, which climbed 34 percent to $44.5 million, equal to 12.9 percent of revenues, from $33.2 million, or 9.2 percent of revenues, in fiscal 2008. The 370 basis point increase in total gross margin is directly attributable to our unit-driven business model supported by a multi-source global procurement strategy. In the most recent year, Calavo capitalized on favorable pricing and an abundant crop of Mexico-grown avocados that positively impacted our Fresh and Processed Product segment margins. Additionally, continued growth in value-added avocado programs for which our customers pay additional fees for premium services-discussed in detail in the feature sections that follow-are proving incremental contributors to gross margin improvements.

With respect to our financial condition, Calavo's balance sheet is strong and flexible with considerable capacity for leverage. Our outstanding financial results last year enabled the company to pare long-term debt by nearly half, decreasing borrowings to $13.9 million at fiscal-year end from $25.4 million 12 months earlier. The rock-solid balance sheet affords our company many unique opportunities, including opportunistic acquisitions which we pursue on a highly selective basis. Our criteria are judicious and rigorous-most notably, any potential transactions must fit the strategic blueprint we have drawn for Calavo. We have set our course and intend not to deviate from it.

In recognition of our exceptional performance and a steadfast commitment to shareholder returns, Calavo's board of directors increased the annual cash dividend on the company's common stock by a formidable 43 percent, boosting the payout to $0.50 per share from $0.35 per share the preceding year. As a point of note-and of considerable pride to me personally-since becoming publicly traded on the Nasdaq Market seven years ago, Calavo has increased its annual dividend 150 percent, up from $0.20 in 2002.

GO TO THE SOURCE

The single-most important factor driving our record-setting performance last year was, without question, our diversified avocado sourcing. It favorably influenced virtually all facets of our business and serves as compelling validation of Calavo strategy. Not only did the robust Mexican fruit harvest enable us to capitalize on an abundant crop for fresh and processed uses, it offset substantially smaller California volume that saw us pack approximately 42 percent fewer domestic pounds due to crop cycles in fiscal 2009.

Along with anticipated volume growth in avocados sourced from Chile, Peru and New Zealand to complement mainstay California and Mexico fruit supplies, the U.S. market will continue to expand-and we intend to keep pace if not increase our leadership share. The growing all-source supply, estimated to climb to 1.5 billion pounds in 2010 or 50 percent larger than in recent years, is a function of increased demand, new plantings and previously untapped reserves. This rising green tide offers vast potential benefits to us in the form of greater overhead utilization and further leveraging of our considerable resources across the board.

Last year, Calavo packed more than 210 million pounds of fresh avocados, or about 21 percent all fruit sold into the U.S. market. An available supply that rises again by half translates to an additional 100 million pounds, if not more, of fresh fruit coursing through our distribution system. We have in place considerable capabilities-packing, ripening, logistics, a top-flight sales force, not to mention financial strength-to build upon this market position and ably handle this additional volume. Reciprocally, Calavo expertise in establishing cross-border grower alliances to ensure an ample supply is widely admired in the industry. Our longstanding track record of avocado sourcing from Mexico and parts of Latin America provides the company with a distinct competitive advantage. The company devotes considerable resources to creating and maintaining solid bonds with sources capable of providing fruit that meets our exacting standards.

DIVERSIFY...AND DIVERSIFY SOME MORE

When Calavo began its drive more than two years ago into additional fresh commodity-produce classifications, we did so recognizing that our formidable avocado distribution platform-not to mention our customers-would gain from this complementary fold-in strategy. Tomatoes proved to be a good fit with our core fresh avocado business. Pineapples from Maui-and now Costa Rica, as well-expanded our footprint in the tropical fruit category where we have long held a leadership position in papaya marketing. It is not by accident that we are the largest distributor in North America of fresh fruit sourced from Hawaii. Our rationale, which I have written about previously, is well documented.

The strategy has been a game-changer in many respects. It provides our sales team with more products in the port- folio; our customers, in turn, can rely on a single supplier for more offerings. We leverage the platform and, not insignificantly, the respected Calavo brand, as well. The collective management eye is trained on other prospective fresh produce fold-in opportunities. We are resolute, however, that any additional expansion must offer substantial revenue and profit potential, allowing us to compete in any new categories in meaningful ways.

Given the promise that diversification holds, we are turning these same energies toward our Processed Product business unit, where we already have another tent-pole offering in our ultra-high-pressure guacamole. I never tire of referring to it as a best-in-category product-it truly is outstanding and another fruit resulting from laborious efforts.

Our guacamole has accounted for an increasing percentage of total Processed Product sales each year since its introduction. While the Processed segment contributed about 13 percent of total Calavo revenues last year, it supplied approximately 35 percent of the company's overall gross margin-indicative of the profit potential in this business unit versus fresh produce.

With that sort of profit potential, along with the considerable experience and vast financial resources we bring to bear, expansion into additional processed product categories is a natural extension. In fiscal 2010, Calavo will be entering the refrigerated fresh salsa category. By the time you read this letter, word about a new, majority-owned company subsidiary, Calavo Salsa Lisa, already may have reached you. Through the subsidiary's acquisition of Lisa's Salsa Company, an established, high-quality artisanal manufacturer based in St. Paul, Minnesota, where the new business will continue to operate, we have plans to create a national platform for what is currently a great regional product with a popular following.

Consider that salsa is the most popular condiment sold in the United States-outselling ketchup by nearly two to one, according to a grocery market-research firm. Owing to changing demographics, most notably a growing Hispanic population, that figure is sure to increase further. The refrigerated fresh category that we enter is currently a smaller portion of the overall salsa market, yet one that offers great growth potential and is notable for few large, national suppliers with Calavo's capabilities and reach.

Along with guacamole and the introduction of Calavo brand tortilla chips, salsa will round out a great lineup of processed offerings. Salsa is not the only new product coming along this year. We are at work perfecting another, distinctly Calavo offering: avocado hummus. This fresh, natural and healthy product brings together two popular foods and promises to be as delicious as it is unique. Salsa and hummus are going to be significant stories in fiscal 2010-and beyond-and I will undoubtedly be sharing more down the road, but did want to give an early glimpse into the future.

IT'S GREAT BEING GREEN-THE ROAD AHEAD

Calavo's future, simply put, has never looked brighter. There's the prospect of the burgeoning avocado crop-and expanding U.S. market-to drive our core business. An exciting portfolio of diversified product offerings will be even larger revenue and profit engines down the road. The diversified fresh-product category will see a snap back in market conditions that suppressed pricing last year-and we expect volume increases of tomatoes, papayas and pineapples, as well. With so much to build upon, I am inspired about leading Calavo to the next level of its development. At 85 years young, we are just beginning to unlock our full potential. Coming off three consecutive years of record profit, I am willing to venture a prediction: fiscal 2010 will surpass even the outstanding accomplishments of the recently concluded year. I have considerable confidence and optimism about our company and its prospects looking forward.

Our success is no accident. It is not a function of stars aligning or mere good fortune. There's an old adage that is apt here: luck favors those who plan for it. In Calavo's case, we have planned and worked tirelessly, with tremendous perseverance, to set the company on the current trajectory. I have immense gratitude for our dedicated workforce. Our senior management team is leadership personified. We are fortunate to have an engaged, enthusiastic board of directors. Their valued counsel and support make much of this success possible. To you, our valued stockholders, I extend sincere thanks for your commitment and confidence in Calavo.

Sincerely,
Lee E. Cole
Chairman, President and Chief Executive Officer
March 4, 2010

Lee Cole has been called a maverick, a risk-taker, a visionary and a savvy entrepreneur, and indeed, he is all these things. But first and foremost, he is a grower—whether he is tending his 400-acre avocado farm in Santa Paula, California or transforming a local, grower-owned cooperative into a publicly traded, diversified, world-class agribusiness.

Deep Roots in “Calavo Country”
Born to Oklahoma cattle ranchers, Lecil Edward Cole decided early in life that he would follow his father’s footsteps into ranching. At age 13, he moved with his parents to Santa Paula, and set his sights on owning his own ranch. After a stint in the U.S. Army, he went home to Santa Paula to put his plan into action.

Cole took a job with Safeway Stores to support himself, and quickly rose through the ranks. At age 21, he became the youngest store manager in Company history. Soon he was promoted to District Manager, overseeing all aspects of operations in 18 stores. All the while, Cole was purchasing land and water rights in Santa Paula. At age 33, with 80 acres of producing avocado trees and 100 head of cattle, Cole left his Safeway career to become a full-time rancher, avocado grower and entrepreneur. Before long, the avocado trees had taken over his ranch, eventually displacing the cattle.

Then, as now, Santa Paula was “Calavo Country,” and Cole was quickly recruited to join the growers’ cooperative. Seeing a need for improved customer service, he campaigned for the director’s seat and won. Next, he leveraged his 15 years of retailing experience to win election to the directorship in 1982. He has remained on Calavo's board ever since, becoming Chairman and CEO in 1998, and assuming the added role of president in 1999.

A Grower’s Perspective
Implementing an aggressive strategic agenda while also maintaining strong profitability is key to Cole’s leadership style. From the beginning, he applied his grower’s perspective to retool the Company to compete as an efficient, global enterprise in the 21st century. As a grower as well as a shareholder, he strives to maximize both corporate profit and returns to the farm. As a result, Calavo’s grower returns rank among the industry’s best.

Unlocking Value
To unlock the Company’s value and pave the way for future growth, Cole spearheaded the co-op’s conversion to a for-profit corporation in 2001 and its listing on the NASDAQ in 2002. This forward-thinking transaction created a currency to use for all-stock acquisitions without needing to leverage Calavo’s strong balance sheet.

In 2003, Cole led Calavo in its first strategic acquisition, Maui Fresh International, Inc., a multi-product distributor of specialty produce. The transaction extended Calavo’s brand equity and market stature into new perishable product categories and broadened Calavo’s product offerings to 20-plus items, ranging from tropical fruits to chilies.

Nurturing Grower Relationships
Understanding that packinghouses thrive on volume, Cole made grower recruitment and retention Calavo’s number one priority. Accordingly, he instituted a strategic grower recruitment plan that resulted in a record 38 to 40 percent of the domestic market share. In 2005, he piloted the Company through an equity cross-investment with Limoneira Company. Calavo now packs and distributes the crops of the number one and number two domestic producers of avocados—Irvine Company and Limoneira, respectively—and has forged alliances with growers in Mexico, Chile, New Zealand and the Dominican Republic.

To bring new operating efficiencies to its processed-products unit, Cole instituted a comprehensive restructuring of Calavo’s processed products unit, with a 90,000-square- foot production facility in Uruapan, Michaocan, Mexico, ending an inefficient two-step process of pulping and converting to finished product in separate plants.

A Family Business
More than 80 years after its founding as a grower-owned cooperative—and seven years after Cole assumed leadership of the Company—Calavo is growing and profitable. As he continues to move the Company ahead, Cole’s family business continues to blossom as well.

In addition to his Santa Paula avocado ranch, where he resides with his wife, Jeannette, Cole owns a papaya farm and papaya processing plant on Hawaii’s Big Island. Cole’s papayas are sold domestically under the label, "Calavo Gold", his own "Cole" label, and internationally under the "Jeanette" label. Cole’s son, Guy, manages the avocado farm and his daughter, Suzanne, manages the papaya processing plant, which sells papaya purée worldwide.

As he looks back over 80-plus years of history, Cole is characteristically humble about his stewardship. “I never forget that I am charged with the oversight of a formidable legacy, and I am proud, humbled and even awed to be at its reins,” he says. “I do not feel that I inherited this company from those who preceded me; instead, I am borrowing it from those who will follow me.”

Thanks to Cole’s leadership, those who follow will enjoy the fruits of a bigger, more broadly based Calavo, solidly positioned to lead the industry for the next 80 years and beyond.