Article Courtesy of Equal Exchange
The avocado has become a staple on the menus of restaurants, a favorite first food for new babies, and a must-have for foodies everywhere. We know we love it, but what else do we know about the Mexican avocado?
Avocado lovers in the U.S. may have noticed that there have been several shortages of avocados in the past six months. There are many reasons for gaps in the supply of Mexican avocados and the story behind avocados is actually very complex.
The many regulations on Mexican avocados entering the U.S are largely in place to protect domestic agriculture (the California avocado!). The United States Department of Agriculture (USDA) requires fruit sampling of every load of products, only harvesters approved by the USDA can harvest those avocados, and the fruit needs to be packed in a packhouse approved by, you guessed it, the USDA. As a result of regulations, growers do not generally harvest or pack their own product. These are just a few ways U.S. regulations have an impact on the Mexican avocado we know and love.
What does all this mean?
These regulations are one of the many forces influencing the structure and power dynamics of the Mexican avocado industry. The conventional model for exporting avocados is that farmers sell the fruit to a consolidator, who usually owns a USDA approved packhouse. The consolidator then exports the avocados to the U.S. In Michoacán (which until recently was the only Mexcian state permitted by the USDA to sell avocados to the U.S.), there are 20,000 avocado growers and only 38 USDA approved packhouses. This is largely due to the big price tag on becoming a USDA approved packhouse. Currently, the cost to obtain a new license is $250,000.
Inarguably, this disparity between the number of growers and the number of packhouses creates a bottleneck, where the power and control is consolidated at the packhouse level.
In May of 2016, some growers occupied the offices of APEAM (Association of Producers and Exporter of Avocados from Michoacán) to protest some of the issues facing the industry. Their concerns included internal differences between growers and packers and the considerable difference between low field prices vs. high export prices. Field prices are set each week in pesos and exporters do business in dollars. Growers were asking for field prices to be paid in dollars and for more transparency around the market vs. field prices. Because of the current structure, growers are often selling fruit at the set field price without any information about the current market price.
The growers eventually reached an agreement with APEAM, but in the interim, no field prices could be set, no harvest crews could be organized, and all negotiations between growers and packers were frozen.
That peace didn’t last long. Only a few months later, at the end of September, growers decided to strike again feeling that their agreement with packers was not being respected. The strike in September resulted in a total shut down of Mexican avocado supply to the U.S. market during the first two weeks of October. This got the attention of the Mexican Government and SAGARPA (Mexico’s USDA) who helped resolve the strike.
While this shut down was a loss for the reliability of avocados from Mexico, it was a win for growers who were able to shine a light on the actual power dynamics and inequalities of the internal Mexican avocado market.
What about Fair Trade?
Fair Trade is a way for growers and importers to connect directly under mutually understood and agreed upon guidelines. Equal Exchange started importing Fair Trade, small farmer avocados to the U.S. in 2013. Compared to the conventional model, the Equal Exchange Fair Trade Model has many advantages:
1. Growers have access to information about the U.S. market including pricing and distribution.
2. Importers gain a greater understanding of costs associated with avocado growing, harvesting, packing, and the Mexican market.
3. Prices are negotiated together each week. Growers and importers understand each other and work towards pricing based on true costs, as opposed to the fickle variances of the market.
4. Better pricing due to elimination of middlemen. More money stays with the farmers.
The current situation sheds light on how important direct relationships are to transparency, mutual understanding, and the ability for farmers and importers to negotiate as equals. Equal Exchange’s mission has always been to give farmers and consumers a seat at the table together with all the other actors in the agricultural supply chain.