Avocado Prices Reach 24-year High in Aftermath of Mexico Import Ban

Avocado prices have reached their highest in more than two decades due to tighter supply in Mexico, the world's largest exporter of the fruit, signaling pricier guacamole.

A 9-kilogram box of avocados from the Mexican state of Michoacán, home to 49,000 avocado orchards and by far the biggest source in the United States, cost 760 pesos (about $38) as of March 29, per New York Post.

According to government tracking data reviewed by Bloomberg, the price was the highest on record, dating back to 1998.

David Magana, an analyst at Rabobank International, said the main suspects for the price hike are lower availability and supply-side inflationary pressures.

As of 2022, Mexico harvests more than 80% of avocados imported into the U.S., with California accounting for 12% of the fruit's cargo and Peru for 6%. Two percent of the fruit imported into the U.S. comes from Chile, Colombia, Florida, Hawaii, and the Dominican Republic, according to Bloomberg.

Mexico exports roughly 1.5 million tons of avocados each year.

U.S. Temporarily Bans Exports Due to Threats

The COVID-19 pandemic triggered supply chain disruptions and other inflationary pressures, resulting in a record spike increase ahead of the Super Bowl, the strongest day of demand for avocados as Americans gobble up guacamole at parties.

But the problem got worse last month when the United States Department of Agriculture (USDA) suspended imports from Michoacán after a threatening phone call was received by an American plant safety inspector.

While the source of the threat was not identified, Michoacán has been plagued with violence involving drug cartels in recent years.

Just this week, at least 20 people have been killed and several others injured in a mass shooting in the town of Las Tinajas in Michoacán, in one of the deadliest attacks in recent years.

USDA lifted the ban about a week after it was issued - explaining that it had implemented new safety measures for inspectors with Mexican officials.

The safety of employees simply doing their jobs is of "paramount importance," stated USDA.

Avocado output in Mexico would decline by 8% in the 2021-22 crop year from a record high the previous season, as per U.S. Agriculture Department.

Businesses Affected

Companies already are feeling the pinch from higher prices.

The award-winning Daytime Dining restaurant, First Watch said its costs are approaching the high end of its projections.

Mission Produce Inc., the largest U.S. avocado distributor, raised prices by 50%.

An 18% decrease in avocado volume sold, mostly due to lower supply, partially offset price gains, Chief Executive Officer Steve Barnard said in a statement.

However, Barnard added that price sensitivity in selected overseas markets that competed for lower-cost fruit sources compounded the problem.

Fast foods, such as Chipotle, Taco Bell, Subway, and Moe's Southwest Grill will also feel the impact of the new economic repercussions but have not released any new statements on the new price.

Avocado consumption per capita in the U.S. has more than doubled since 2010 to almost nine pounds, according to Rabobank's research.

This article is owned by Latin Post.

Written by: Jess Smith

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