The Hass Horn: Mexico's internal issues a greater threat to avocados than Trump

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The Hass Horn: Mexico's internal issues a greater threat to avocados than Trump

By avocado industry veteran Avi Crane

aviYour author participated in the last seven years of the negotiation process, including testifying before Congress, that led to the approval of the North American Free Trade Agreement (NAFTA) which was signed in 1992 by then President George H. W. Bush.  

NAFTA became effective on Jan. 1, 1994, during the Clinton presidency, and currently includes a population of 478.4 million people with a market GDP of more than US$20 trillion. 

Avocados from Mexico have always had access to the Canadian market, but the importation of avocados from Mexico into the U.S. was actually made a federal crime in 1914. NAFTA provided an opening to crash through the embargo.

The first crack was in 1996 when the United States Department of Agriculture (USDA) gave approval that allowed access of Mexican avocados for just four months of the year, limited to northeastern states. At that time, your author oversaw avocado sales for Chiquita and has been involved in the importation and sales of Avocados from Mexico ever since.

Finally, in 2007, full year-round access to every state, including California and Texas, was granted by the USDA.

Avocados originated in the lush mountains of Michoacán, Mexico, and with the world's lowest per kilo production cost and the largest avocado production in the world, Mexico triggered a surge in per capita avocado consumption in the USA and Canada.  For several years, they have maintained an 80% year-round market share, and currently have more than a 95% market share.  

With the inauguration of Donald Trump on Jan. 20, 2017, we can expect the new President to act on his campaign vow to affect NAFTA, which he called “the worst trade deal in the world- ever". This author does not assume that the U.S. Government will exit the NAFTA agreement however.

More likely, as with many other Trump campaign policy declarations, enough changes will be made to NAFTA so that the new Administration can claim it made good on this campaign promise. With Trump taking office, the U.S., with its threat to nullify NAFTA, will have huge leverage over Canada and Mexico in negotiations to make changes in the trilateral Agreement in order to save the agreement.

However, if NAFTA is “torn up” by the new Administration early next year, I believe that the impact on Avocados from Mexico will be limited. Firstly, it is not the NAFTA Agreement that approved market access to the USA. Access was approved by the USDA, independent of any trade Agreements. In 2016, access was expanded to the state of Jalisco. Secondly, Hass avocado consumption in Canada and the USA is currently close to three billion pounds (in 1992 consumption was 400 million pounds) - less than 20% comes from domestic production.

The law of supply and demand will continue to regulate the market. The current 10% annual growth in avocado consumption will continue, regardless of the fate of NAFTA. Thirdly, all avocados sold in the USA have been subject to a promotion levy of US$1,000 per truck load since 2002. When this levy began, there was no identifiable impact on avocado consumption. Like all marketing outlays, it is a cost of doing business; unlike a potential return of the tariff on avocados, the levy is used to promote avocados.

In addition, unlike other avocado producers who pay the levy directly, it’s the importers of Mexican avocados who pay the fee, not the avocado producers in Mexico. Any increase in tariff on Mexican avocados will also be paid by the importers. The USA avocado consumer will indirectly pay the tariff as they are now indirectly paying the promotion levy. The per kilo return to the avocado producer in Mexico will only be slightly impacted. Fourthly, there are numerous legal tactics to limit the impact of a tariff on importers.*

It's the flow of supply, not NAFTA issues, that threatens the Mexican avocado industry

As mentioned before in this column, the real threat to Mexican avocados remains internal. The recent “strike” has severely impacted the support from the retail and food service trade for the avocado industry. They experienced a huge negative PR period with their customers. Some restaurants have already taken avocados of their menus and most retailers have not increased the shelf space for avocados that was severely reduced during the strike.

In addition, many small importers of Mexican avocados paid US$80,000 plus for loads that arrived during the surge in Week 43 and lost more than $20 per load. Finally, the instigators of the “strike” saw that with a limited effort, they achieved monumental success. They are now aware that at the turn of a dime, they can repeat that success anytime and every time they desire to increase prices for their crop. Sadly, this tactic, this author believes, can and will be used again and again. I hope to be proved wrong.

Click here for a list of pros and cons from NAFTA. 

*Contact the Author at the email below

Avi Crane is a former executive of Calavo Growers, Inc. (CVGW). Mr. Crane served as Vice-President at the California Avocado Commission, established and managed the Chiquita Avocado Program and began his career in the avocado industry as a Producer. Currently, Avi Crane, along with his partner in Mexico, is working directly with producers to help maximize their return from export markets. Mr. Crane can be reached at

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