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FOOD WEEK | A Closer Look at Mexico’s “Green Gold”

While I will never understand 90% of the logic behind the store layout of Ithaca’s Wegmans (e.g. why the dried noodles must appear in seven separate aisles), I will admit that the Wegmanites got one thing right: the strategic placement of the avocado bags. Their perpetual position in a giant wooden crate by the entrance has permitted me to develop somewhat of an avocado dependency in recent years. When life gets too hectic to prepare actual complete meals, avocados are an easy fallback: they go well with the Holy Trinity of college-kid staples (eggs, easy mac, and bread), and they are green, bestowing any meal with the appearance of health and nutritional balance!

#fitlife #rawvegan #goals

#fitlife #rawvegan #goals

My symbiotic relationship with the avocado encountered its first major roadblock a couple of weeks ago when I strolled into Wegmans and saw three horrifying numbers: $5.79 for just four little avocados. Whereas this was old news for most Cornellians, I had spent a semester abroad and hadn’t been tracking the ascent of the cost of my favorite green fruit. The hefty price tag should have deterred most reasonable college-budget shoppers, but I guiltily slung the green mesh sack into my cart and bemoaned the shameful price inelasticity of my demand for avocados.

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In spite of my self-professed avocado habit, I knew I was not the only one recklessly shelling out the cash for these green delicacies. Between the Superbowl guac, millennials’ oft-ridiculed affinity for avocado toast, and $1 avocado add-ons at Subway, we are a nation of avocado lovers. What is the deal with the ever-ubiquitous avocado? A little economic data and research into the global demand for and supply of this elliptical berry unearthed a fascinating market with some seedy implications.

Originally dubbed “ahuacate,” the Aztec word for “testicle,” the wrinkly fruit somehow did not have mass-market appeal in America when its first trees were planted stateside in 1833. It took a rebranding effort by Californian avocado growers throughout the 1900s to push the fruit towards a mainstream consumer base. A 1997 lifting of a ban on Mexican avocado imports was a turning point in the accessibility and popularity of the berry; since then, demand has accelerated rapidly, spurred by both a growing influence of Hispanic cuisine in America and the avocado’s heavily marketed image as both health food and creamy indulgence.

According to the USDA, per capita consumption of avocados has skyrocketed from 2 to 7 pounds between 2000 and 2015, meaning the US consumes well over 4 billion avocados annually. Prices have followed suit. While prices for avocados are highly supply-dependent, Bloomberg data indicates that the wholesale price of a box of avocados more than doubled between 2016 and 2017, pointing to strong demand support for the fruit.

graph

https://www.bloomberg.com/news/articles/2017-04-28/guacamole-costs-to-jump-as-avocado-shortage-sparks-record-prices

Mexico dominates the US market: in 2017, the US is expected to source approximately 80% of its avocado supply, or 2.14 billion pounds of avocados, from Mexico. While efforts to increase production in the States have ramped up, dependence on foreign avocado farmers is still essentially unavoidable. While California accounted for $328 million of the United States’ $351.1 million avocado industry in 2014, Tom Bellamore, president of the California Avocado Commission, asserts that “it’s all but impossible for California to get anywhere close to meeting [US] demand.”

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https://www.ers.usda.gov/data-products/chart-gallery/gallery/chart-detail/?chartId=83396

Globally, Mexico produces around 30% of the world’s avocados, nearly four times more than the second highest producer (Indonesia, as of 2014). Avocados have even been dubbed “green gold” for the amount of money they rake in for Mexico, which exported $17.3 billion in avocados in 2016. A closer examination of Mexico’s role in the global surge of avocado consumption, however, reveals fundamental problems that often accompany sudden explosions in popularity of a particular region’s agricultural products.

Rising global demand and prices of avocados have made the berry much more profitable to farm than most other crops, and this profitability has not gone unnoticed by cartels. One violent criminal gang, the Knights Templar, has made millions of dollars extorting avocado farmers and packinghouse operators and seizing avocado groves from landowners. In 2014, residents of Tancítaro in the Michoacán state (which produces most of Mexico’s avocados) were pushed to form vigilante forces to fend off the gang, which was allegedly involved in kidnapping, rape, and homicide throughout the region.

Moreover, as available farmland for avocados diminishes rapidly in Mexico, farmers have taken to deforestation of pine forests in order to meet demand. Farmers plant avocado trees under dense forest canopies to avoid regulation by authorities. As the avocado trees grow, the farmers cut down the pine trees to make space—a study by Mexico’s National Institute for Forestry, Farming, and Fisheries Research reported a loss of about 1,700 acres of forest land per year between 2000 and 2010.

Illegal deforestation has severe repercussions on the delicate forest ecosystem: avocado orchards use almost twice as much water as pine forests, sapping up the source of hydration for the forest’s flora and fauna. Meanwhile, local residents have been reporting higher incidence of breathing problems and stomach illnesses as agricultural chemicals increasingly make their way into water supplies and threaten the well-being of rural populations.

Finally, while rising global avocado prices benefit producers and exporters, they have also pushed up the domestic price for the fruit, rendering a staple of Mexican cuisine unaffordable for many. Avocados regularly sell for over 80 pesos per kilogram, which is equivalent to Mexico’s current daily minimum wage; in fact, Mexico is considering importing avocados from abroad to keep them affordable for Mexican citizens. Unfortunately, whereas temporary supply-side pressures allow prices to eventually mean-revert, if international demand for avocados continues to grow, prices will remain high for a long time.

One particularly unpredictable factor is Chinese demand. According to the Financial Times, avocado imports from Latin America to China have been growing by about 250% a year, and Mexico has just signed a series of agreements with China lowering tariffs and increasing imports of avocados. If demand from the US market had such a visceral impact on Mexico, an influx of demand from China should not be underestimated.

graph3

https://www.ft.com/content/97340c8a-2652-11e7-8691-d5f7e0cd0a16?mhq5j=e6

Evidently, there’s more behind that Wegmans four-pack of avocados than meets the eye. Should we be imbued with a sense of guilt and self-loathing every time we sink our teeth into a California Sunrise at CTB? Are we propping up an ever-expanding system of gang violence, unsustainable environmental destruction, and eradication of a nation’s culinary culture? The answer is not as clear-cut as one might expect.

Avocado3

Maybe an overpriced bagel sandwich, maybe the devil incarnate

In 2012, quinoa was widely criticized for becoming too expensive for Bolivians and Peruvians who produced it. More recently, however, economists studying 22,000 Peruvian households have noted that total value of goods consumed by households, regardless of whether they ate or grew quinoa, all rose along with the price of quinoa–the more trade, the more farmers make. Boycotting quinoa would not necessarily increase the welfare of quinoa farmers or the Bolivian/Peruvian economies. Certainly, growing global demand for commodities with inherently high price volatility is risky for producing nations, but declaring the quinoa trade as a whole wrong would be an oversimplification.

The story of the avocado plays into the larger narratives of globalization, environmental destruction, and mass production. The answers for the heavier questions that the delicious green fruit belie are very much still unclear, and any evaluation of the avocado market should be considered in its broader context. At the end of the day, even the most harmless-seeming, testicle-shaped sandwich spreads can wield economic impact on a global scale–it can’t hurt to stop and consider the guac every once in a while.

 

Sources:

http://www.agmrc.org/commodities-products/fruits/avocados/
https://www.ers.usda.gov/data-products/chart-gallery/gallery/chart-detail/?chartId=83396
http://wits.worldbank.org/CountryProfile/en/Country/MEX/Year/2015/Summarytext
http://www.pbs.org/newshour/making-sense/column-avocado-boom/
https://apnews.com/9176bc7479e048508203f10a68da6fa7/mexico-high-avocado-prices-fueling-deforestation
https://www.economist.com/blogs/economist-explains/2016/10/economist-explains-9
https://www.wsj.com/articles/holy-guacamole-avocado-prices-rise-to-record-highs-1504695604
https://www.wsj.com/articles/bloody-struggle-erupts-over-avocado-trade-1391223373
https://www.bloomberg.com/news/articles/2017-04-28/guacamole-costs-to-jump-as-avocado-shortage-sparks-record-prices
https://www.reuters.com/article/us-usa-trade-nafta-avocados/in-avocado-country-mexicans-not-afraid-of-trump-tariff-threats-idUSKBN15H2KC
https://www.nytimes.com/2017/01/27/business/economy/importers-tax-mexico.html?mcubz=1&_r=0
https://www.marketplace.org/2016/08/19/economy/avocado-q
http://time.com/money/4761367/avocado-prices-increase-mexico-import-tax-california/
http://money.cnn.com/2017/01/27/news/economy/avocados-trump-mexico/index.html
https://www.washingtonpost.com/news/wonk/wp/2015/01/22/the-sudden-rise-of-the-avocado-americas-new-favorite-fruit/?utm_term=.219aee265f47
https://elpais.com/elpais/2017/03/27/inenglish/1490612533_740839.html
https://www.theguardian.com/lifeandstyle/2017/aug/06/mexico-considers-importing-avocados-as-global-demand-drives-up-prices
http://content.time.com/time/world/article/0,8599,2110890,00.html
http://www.smithsonianmag.com/smart-news/dont-worry-eating-quinoa-helps-peruvian-farmers-180958639/
http://www.npr.org/sections/thesalt/2016/03/31/472453674/your-quinoa-habit-really-did-help-perus-poor-but-theres-trouble-ahead

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