Mexico supplies 45% of global sales, but this is Mexico.
By Don Quijones, Spain, UK, & Mexico, editor at WOLF STREET.
Mexico is the world’s largest supplier of avocado. “Green Gold,” as Mexicans call their beloved staple fruit and lucrative cash crop, accounts for around 45% of global sales. Over two-thirds of those avocado are grown in the state of Michoacán. But in widespread industrial action over the weekend, more than two-thirds of the state’s avocado orchards were on lock-down and many of the roads used to transport the produce were blocked as growers accused packing firms of using inferior quality, lower priced produce from other regions to ship to the US market.
Michoacán growers are the only suppliers included in the US Department of Agriculture certified export program, says José Luis Mata, a representative for a Michoacán avocado growers’ association. The escalating practice of shipping “pirate” avocados from other parts of the country into the state to be passed off as locally grown produce is driving down the fruit’s export price, resulting in financial losses for local growers and layoffs of local workers — in addition to violating USDA’s certified export program.
And given Michoacán’s size in the avocado trade, the strike, if it continues, it’s likely to have a big impact on both domestic and international markets.
Some effects are already being felt, according to Robin Wedin, vice president of sales and marketing for Calavo Growers Inc., Santa Paula, California. “Inventories are dropping quickly,” he said on October 31. “We’re going to run out of avocados sometime next week if they don’t get back in and get going again.”
Prices are also on the rise, following months of ample supply and relatively subdued prices. Yet they are still nowhere near the peak registered in October, 2017, when the average retail unit price in the U.S. reached $1.60. In Mexico, the price in shops and markets more than doubled between mid-2016 and mid-2017, as broader inflation reached multi-year highs.
The price of avocado has been pushed higher in recent years by surging demand for the high-fat, zero-cholesterol fruit. Since 1994, the year that NAFTA cranked open the US border to Mexico’s bountiful, year-round supply of green gold, consumption in the US has increased seven fold, from one pound per person per year to over seven pounds per person per year.
Michoacán provides nine out of every 10 imported avocados. Since the turn of this century the total value of Mexico’s global exports of avocado has ballooned from €73 million to $2 billion today. That’s despite the spiraling violence and lawlessness that has plagued Michoacán and other key growing regions. Even last year, Mexico’s most violent on record, more avocados were exported than ever before.
Other important international markets include Japan, Canada, Spain, France and China, which only recently succumbed to green gold fever. In the first six months of 2018, Mexico exported 9,000 tonnes of avocado to China, more than the total for the whole of 2017. As the New York Times pointed out in March, if demand for avocado — or as Chinese consumers like to call it, “butter fruit” — really took off in the world’s most populous nation, only Mexican production would come close to meeting it.
That would benefit not only Mexico’s avocado growers and distributors, but also one of the country’s most bloodthirsty drug gangs, the Michoacán-based Knights Templar, which has been extorting avocado growers with ruthless, methodical efficiency since 2010. According to the Mexican news website Sin Embargo, the gang, either through bribes or threats, harvests data from the local authorities on all avocado producers in the state and then determines how much each one should pay.
Farmers are forced to cough up an annual tribute on each hectare they grow (around $100) as well as a fee of around 10 cents on every kilo of avocado sold. The cartel recently expanded its extortion racket to include all other players in the industry, from distributors and harvesters to fertilizer manufacturers. It has also taken a direct financial stake in many of the plantations, which it uses to launder the proceeds of its main line of business, drug trafficking.
In total, the Michoacán avocado business is estimated to be worth around $150 million dollars a year to the cartel. With so much at stake, the Knights Templar will no doubt be keeping a close eye on negotiations as they unfold over the course of this week. So, too, will many US wholesalers and retailers.
On Sunday, a fragile truce was brokered between local producers, local police, federal agencies and the Avocado Producers and Exporting Packers Association of Michoacan. On Monday, the checkpoints on major roads in and out of the growing region that had prevented picking crews and field trucks from entering the groves were lifted as a gesture of good faith.
Whether they stay that way will depend on whether the government can persuade growers that they will be able to keep unwanted avocados out of the state, so that the price of Michoacan’s golden green produce does not fall any further. But given how little power the State actually wields on the ground in the region, where armed “self-defense” vigilante groups run entire villages and towns and are constantly vying for control of territory with the drug cartels, it’s going to be a tall order. By Don Quijones.
Now everything is up in the air, so to speak. Read… Whiff of Panic After Mexico Voted to Scrap Mega-Airport & Corruption Project
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Alright avocados by the cartel, if we can get some nice quality cocaine or whatever it is they make down there injected in. It won’t be green gold, it’ll be gold gold.
That would devalue both products. Either that, or you’d be able to sell them for ten times as much to American fad chasers.
These days you never know. You’d have to ask marketing.
I heard, avocados are on jail menu, where you would be heading after purchasing the gold gold.
Really hard to get too excited about avocados.
Unlike seaweed. That’s a $4 bn/year market and I don’t even have a piece of it.
I don’t believe I know what an avocado looks like, but I’m prepared to respect the fact that the good people of Mexico find it important. Frida would have wanted it that way.
Avocados are life
Unamused,
Obviously you don’t live in the US — “I don’t believe I know what an avocado looks like,” that’s my clue. Or maybe you just haven’t been to a grocery store. Avocados are a staple in every grocery store here. California avocados are delicious (but they’re not in season at the moment, so we eat Mexican avocados at the moment). Guacamole, which is made from avocado, is a classic American food. Homemade guac is the best there is. If you don’t like chips to dip it, just use the leaves of Belgian endives. If you have never eaten a ripe avocado, you’ve been missing out!
I don’t live in CA, but I’ll take your word for it. If Bourdain has taught me anything, it’s that people will eat anything. He did. Probably explains a few things.
I think I’m siding with Javert Chip on this one, at least until an avocado crosses my path.
Avacado consumption is thought to be a new leading economic indicator.
Household budgets tightening? Substitute lower-cost spread for higher-cost (and a little bit fancy) avocado on toast.
I am in northern Maine presently, and I assure you that none of my immediate neighbors know what an avocado, kiwi fruit, mango, pomegranate, or other such fruit are despite the two big markets in town generally having at least a few of each.
If they are big in Asia, they should grow their own.
My wife has an avocado tree growing in our yard in Thailand.
If this trouble in Mexico persists, maybe I will suggest that we improve irrigation and replace our aged mango trees with avocados.
Hell, I just like the English translation of the name
So Avocadoes to the South and Maple Syrup to the North…
I got some really horrible avocados twice in a row this Summer at Costco – I stopped buying from there and got refunds, but maybe there were avocados piratas.
I purchased about a dozen avocados in the last 3 weeks from 2 different sources, they were the worst ever. While they indicated ripeness, dark color and proper softness, they were hard on the inside. I had to dig out the pit with a spoon with great effort.
I’ll be on an avocado hiatus for a while.
Well then, let them eat cake.
Hate to say it but classic Mexico managing to take one of their staples and still try to undercut themselves. Not much of an avocado man myself (they taste like grass to me), but I can see the health appeal. Perhaps in due time they’ll fix these inefficiencies and learn to only skim off the top like in the good old US of A, but I wouldn’t hold my breath.
Seems like a strike could creatre demand for black market product. Anyway, watching LMNR….
Interesting, I have been eating avocados for decades (grew up in Miami FL). This last year I have noticed a substantial decline in quality.
“Michoacán growers are the only suppliers included in the US Department of Agriculture certified export program,”
Really,,,, you have to be USDA certified!!!!!
Obviously we have too much government. ..
Don Q is referring to the USDA organic regulations, which allow products to be sold on the US market to be labelled as “organic products” (technically USDA Organic Seal) and hence to fetch a considerably higher price.
As per USDA there are presently over 1,500 “certified organic operators” in Mexico and Michoacán avocado farmers make a large part of them (over 800, but it’s a growing industry so more producers are added monthly): the disproportionately large number is due to the fact avocado growing is largely carried out by small and medium size operations, not mega-farms.
Non-organic avocados can be exported in the US alright, but as they are seen as less desirable they generally fetch a lower price, hence they are generally used to make industrial guacamole, consumed locally or shipped to discount stores in the US and especially Europe.
The ironic thing is that the widespread Haas cultivar (the one in highest demand and hence the most planted cash crop) is also one of the tallest, with mature trees easily reaching 40ft and more, hence phytosanitary control of pests and diseases is difficult and expensive, making organic growing methods very attractive. ;-)
Trump should ban avacadoes
In Canada we get really bad ones like most other fruit and there 8 dollars each…I sm sure cartels use emnforvcocsine transport time to shut em down let’s replace em with artificial avacado paste
I am in small town Canada and buy avocados all the time. I’ve never had a quality problem ( you have to inspect them) and I’ve never paid more than 3 dollars each.
About two years ago PEMEX lifted their gasoline subsidies. That’s when all of Mexico’s problems really started to escalate. I love avocados, but at COSTCO they go for $1 each. At my neighborhood supermarket they go for 1.50 -$2.00 each. I usually walk by rotting avacodo bins. IMO prices ares too high. So what I’m wondering is if avocados are more valuable or has the Dollar become less Valuable ?
Moral of the Mexican story. The world needs cheap energy and when energy gets expensive people desperately scramble for a piece of the remaining pie. Civilization be damned.
I haven’t been to Chipotle in a few months, but the last time I was there a portion of guacamole was $2, for about 2 tablespoons. Green gold for sure.
” So what I’m wondering is if avocados are more valuable or has the Dollar become less Valuable ?”
Yes
That’s all good, but how do we investing in Mexico avocado industry? Wolf, always wish you would include how to make these bets.
Doesn’t Mexico have a secret service or security service?
Find out these shake- down guys are and take them off the board.
Don’t bother with cops they are probably in on it.
you asking for an El Salvadorean solution? Mexico has a lot of problems already without death squads roaming round
All summer the avocados we received locally were odd, huge in size and not very tasty. (FWIW)