As NAFTA negotiations continue, the outcome could have a big impact on the tiny avocado
The 1994 trade deal helped the avocado become a household name in America. But if the U.S. withdraws from the measure, consumers of the popular fruit could be hit hard by higher prices.
In the U.S., few produce items have attained the cult status of the avocado. A millennial favorite and a growing staple in smoothies, salads, brunch fare and even desserts, demand for the creamy fruit is at an all-time high.
But this week, as senior officials from the U.S., Mexico and Canada meet in Montreal to negotiate potential changes or a withdrawal by the U.S. from the North American Free Trade Agreement, the avocado's future in America could be irrevocably altered depending on the outcome.
Though ubiquitous now, the oval-shaped fruit wasn't always so popular. More than twenty years ago, the avocado was a little-known fruit that could be enjoyed mainly in Florida and California, where the crop is grown domestically. It wasn’t until Mexican Hass avocados were allowed to be imported under NAFTA in 1997 that avocado fever took off.
Ramon-Paz Vega, chairman of the Avocados from Mexico Board and a strategic advisor to the Avocado Producers and Exporting Packers Association of Mexico (APEAM), told Food Dive in November the trade deal transformed the American diet because it allowed the fruit to be imported at a lower cost, making it a more appealing option for consumers.
President Trump has threatened to terminate NAFTA, a move that Mexico strongly opposes, because he said it would be “the best deal” for U.S. interests. If that occurs and avocado trade returns to pre-NAFTA conditions — where a 6-cent tax per pound of avocados was imposed — Paz-Vega said U.S. wallets will be hit the hardest.
“That tariff would, of course, impact all of the supply chain … and raise costs for everyone, but mainly for the American consumer because there is no alternative source,” Paz-Vega said.
When Mexican avocados first crossed the border, the average U.S. consumer ate 1.5 pounds of avocados annually, he said. Today, the average is 7 pounds — with more than 50% of American households enjoying the fruit. Mexican avocado imports have also had a major impact on U.S. employment, creating nearly 19,000 American jobs that produce $1.2 billion in labor income, according to a 2015 study from Texas A&M.
“That tariff would, of course, impact all of the supply chain … and raise costs for everyone, but mainly for the American consumer because there is no alternative source.”
Chairman of the Avocados from Mexico Board
Mexico is the lifeblood of the avocado industry. It is responsible for an estimated 80% of America’s supply, shipping an estimated 1.6 billion avocados in 2017, according to Paz-Vega. It’s also the only region in the world that can supply the fruit year round.
During NAFTA negotiations last fall, the Office of the U.S. Trade Representative proposed anti-dumping policies for seasonal goods such as avocados. Mexico strongly opposed the measure, which could make it easier for American growers to claim its neighbor is selling avocados for less than it costs to produce them when they are in season domestically.
The proposal is still on the table, and Pas-Vega claimed it could undermine the lucrative empire that avocados have built in the U.S.
“If the market knows that [it] can count on good amounts of [avocados] at consistent quality and affordable, reasonable prices throughout the year, then the market develops — foodservice operators put avocados on the menu, [and] the retailers give shelf space and promotions," he said.
In October, Bosco de la Vega, president of Consejo Nacional Agropecuario (CNA), the largest Mexican agricultural organization, told Washington reporters that if the U.S. instituted a seasonality provision, grain producers and other agriculture industries in Mexico may retaliate by imposing duties of their own — a blow to U.S farmers.
In 1996, when Mexico had partial access to the American market, the average price of avocados was 69 cents per pound, Pas-Vega said. He explained that today’s prices are significantly higher thanks to the expansion of the market. Currently, a Hass avocado costs $1.25 on Amazonfresh — $2.99 if you buy organic.
“We are cautiously optimistic about the outcome, with or without NAFTA. There is no other country on which the U.S. could rely on for its avocado supply — we would still be shipping here.”
Chairman of the Avocados from Mexico Board
Agriculture Secretary Sonny Perdue is developing a contingency plan to protect U.S. farmers and ranchers should NAFTA negotiations fall apart — an outcome he said could have “some tragic consequences” for U.S. producers, Politico reported.
Even if the trade agreement is repealed or amended, Paz-Vega is hopeful that Mexico’s avocado market will continue to thrive. Though higher prices could quell demand, he predicts that because the fruit has become so entrenched in American culture, consumers will continue to be willing to pay for it.
“We are cautiously optimistic about the outcome, with or without NAFTA,”Paz-Vega said. “There is no other country on which the U.S. could rely on for its avocado supply — we would still be shipping here.”
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