Each year’s Super Bowl, the biggest day in the much-loved sport of American football, is also the biggest day for the much-loved avocado, with U.S. consumption peaking annually for the big game. But in 2022, that critical avocado moment was almost disrupted by a market factor many may not be aware of: the influence of Mexican gangs on the Mexico-U.S. avocado markets.
On February 11, 2022, the U.S. issued a halt on the safety inspections of avocados following a verbal threat to a USDAAnimal and Plant Health Inspection Service (APHIS) employee in the Mexican state of Michoacan. These safety inspections are required for import of avocados into the U.S. from Mexico. The inspection suspension ultimately lasted about one week before inspections resumed on February 18 after USDA collaboration with agencies in Mexico to implement additional safety measures for inspectors.
The price effect was distinct, with prices for the 4 weeks following the halt up 19% from prices for the 4 weeks prior. Although inspections resumed within about a week, prices took 6 weeks to return to prior levels. [1]
While crisis was averted in 2022 for Americans’ guacamole-fuelled Super Bowl celebrations, the fragility of this point in the avocado supply system and the influence of crime cartels in the Mexican avocado sector remain.
Avocados are sometimes called “green gold”in Mexico, pointing to the lucrative nature of the industry. Mexico leads the world in avocado production, and in 2023, exports to the U.S. made up 81% ofMexico’s exports and were valued at $2.7 billion.[2] As the popularity and trade of the avocado in the U.S. surged, so too did the interest of Mexican cartels in siphoning of funds from the avocado sector, not to mention the increase in regional violence that has plagued Michoacan for many years.[3]
Despite the U.S.’s documentation of threats to its inspectors, Mexico’s President Andres Manuel Lopez Obrador pointed to an alternative cause of the inspection halt as rooted in political or economic conspiracy.[4]
The situation begs the question, why is theU.S. so reliant on avocados from Mexico, when avocados are grown in and exported from other countries such as Colombia and Peru? The answer primarily lies in quality and preference, with a specific preference in U.S. markets for Hass avocados with high oil content that helps with the creamy consistency thatAmerican consumers love. Transportation time and costs likely also play a role, with Mexico’s closer proximity to U.S. markets relative to export competitors.
At time of writing in June 2024, there is anew ban on inspections of avocados in Michoacan, pointing out how critical the ability to carry out these inspections is for the U.S. avocado supply, and how the safety and stability of key production regions in Mexico plays a critical role in avocado markets.
These instances ultimately point to certain key underlying risks in the markets for avocados that can generate unexpected disruptions in supply availability in the U.S. and in U.S. avocado prices.
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[1] Chicago Hass 2 layer cartons 70’s from Mexico; data from USDA AMS and analysis by Vibranteco.
[2] https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Avocado%20Annual_Mexico%20City_Mexico_MX2024-0018.pdf
[3] https://www.npr.org/2022/02/19/1081948884/mexican-drug-cartels-are-getting-into-the-avocado-and-lime-business
[4] https://apnews.com/article/business-mexico-environment-global-trade-conspiracy-a2144a7df3f5aa9ebe91b5e12caff4d9#:~:text=MEXICO%20CITY%20(AP)%20%E2%80%94%20Mexico's,by%20political%20or%20economic%20interests.
