Hitting Guac Bottom: Agricultural Consequences if Climate Change gets Avocontrol

Avocados are the newest trendy food – but will climate change eventually make them extinct?

Expansion plans for Avocaderia[1], a new Avocado bar in in Brooklyn, may need to be put on hold. Supply of avocado, the trendy “superfood,” has tightened in 2017 due to a late harvest and natural disasters in Mexico, Peru, and California, three large suppliers of the world’s avocado harvest[2]. Mexico supplies 75-80% of all avocados consumed in the United States[3]. Given recent trends in climate change, suppliers of avocados must adapt to changing growing conditions or consumers will continue to see a limited supply of their favorite food.

As drought and flooding continues to threaten the warm weather climates where avocados are grown, supply will be erratic, leading to higher prices and even the potential for discontinuation of avocado-based products for periods of time[4]. If climate change is severe enough that growing becomes resource-intensive, some growers may choose to discontinue growing avocados and switch to a product less sensitive to climate change[5]. This would lower avocado supply and disrupt the agricultural economic situation across Mexico.

In the United States, the face of Mexican avocados is “Avocados from Mexico,” a not-for-profit that coordinates the marketing activities of Mexican Hass Avocados Importers Association and the Association of Growers and Packers of Avocados from Mexico[6]. They have a YouTube page and air commercials during sporting events like the Super Bowl. Avocado growers and packers, represented by this group, are increasingly aware of the need to respond to climate change to keep their ability to export avocados strong.

Avocados have a shelf life of about six weeks once harvested, which means that they must be transported from a variety of small growers, to packers, to wholesalers and/or retailers quickly and predictably[7]. In order to mitigate the impact of climate change in the short term, growers must tighten up their supply chain communication with packers and distributors to provide early notice of potential shortages – given the fragmentation of sellers, this is a challenge[8]. This then allows retailers to look for other sources to supply avocados. Groups like Avocados from Mexico help to tie together different groups in the avocado supply chain to improve communication. Additionally, some innovative growers are looking to find ways to use less water when growing avocados through creative land use and re-working their irrigation systems[9]. This lessens the impact of drought on crops, but requires upfront infrastructure investment and will take longer to come to fruition.

While these changes are a promising start, they are not enough. As a centralized group of growers and packers, Avocados from Mexico should work to collectively educate all growers across the region about best practices so that others begin to think about how to grow despite potential drought going forward. Given the importance of avocados and the high export value, Avocados from Mexico could also consider lobbying for additional funding for irrigation infrastructure that small farmers might not otherwise be able to afford.

While avocados may not always be the trendy food of the moment, the implications of climate change on the avocado supply chain are real and could have a serious economic impact on people involved with the avocado industry across the world.

Although the demand for avocados is high, I am curious as to how a trade group can have an impact beyond just avocados. Is there room for organizations like Avocados from Mexico to work together with other fruit and vegetable industry groups in Mexico to lobby for the government to take a stronger stance on climate change? And, given the love for avocados in the United States, how might this group be able to influence perception here?

 

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[1] Florence Fabricant, “With Arrival of Avocado Bar, Brooklyn Has It All,” New York Times, April 3, 2017, [https://www.nytimes.com/2017/04/03/dining/avocado-bar-avocaderia-brooklyn.html], Accessed November 2017

[2] Sarah Butler and Sam Jones, “Holy guacamole! Avocado fans in the UK face further price rises,” Guardian, May 12, 2017, [https://www.theguardian.com/lifeandstyle/2017/may/12/avocado-uk-further-price-rises-demand-china-harvest-mexico-peru-us], accessed November 2017

[3] Deena Shanker, “Avocados could get a lot more expensive under NAFTA,” Bloomberg, September 8, 2017, [https://www.bloomberg.com/news/articles/2017-09-08/avocados-could-get-a-lot-more-expensive-under-a-new-nafta], Accessed November 2017

[4] Chris Woolston, “These 5 Foods will be harder to grow in a warmer world,” National Geographic, April 7, 2014, [https://news.nationalgeographic.com/news/2014/04/140406-climate-change-ipcc-report-foods-chipotle-guacamole/], Accessed November 2017.

[5] Niggol Seo, “Adapting Natural Resource Enterprises under Global Warming in South America: A Mixed Logit Analysis [with Comment]”, Economia, Vol 12 No 2, pp 111-142, (2012), Brookings Institute Press via JSTOR, accessed November 2017

[6] Avocados from Mexico, “About Us,” https://avocadosfrommexico.com/about/, accessed November 2017

[7] Jaime Arana Coronado, “A case study of the Mexican avocado industry based on transaction costs and supply chain practices,” (paper, accessed November 2017), http://scielo.unam.mx/pdf/etp/n42/n42a6.pdf

[8] Ibid.

[9] Joan Cristian González-Estudillo, “Optimal Planning for Sustainable Production of Avocados in Mexico,” Process Integration and Optimization, 1 (2017):109-120, CrossMark via Google Scholar, June 10 2017, Accessed November 2017

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7 thoughts on “Hitting Guac Bottom: Agricultural Consequences if Climate Change gets Avocontrol

  1. Very interesting article (and great puns). I saw an article (below) that talks about how researchers have been trying to develop an avocado tree that can grow in California’s Central Valley, the state’s agricultural powerhouse. Currently only the southern part of California has the year-round weather to grow avocados. 95% of avocados eaten by Americans are of the Hass variety, which can only grow in milder climates like southern California. New types of avocado that can grow in Central Valley would increase the supply of domestic avocados in the US and is one example of educating farmers on newer ways of growing avocado in the face of climate change.

    Source:
    https://www.npr.org/sections/thesalt/2017/04/27/525737123/california-is-on-its-way-to-having-an-avocado-crop-year-round

  2. This was a great read. I agree that in the long term climate change may cause farmers to exit the avocado industry as consumers, no longer in the midst of an avocado craze, shift their preferences to lower cost produce. But short term, it seems that the high prices that avocados are commanding have led to a surge in production and crime in some areas (1). This article states that some Mexican farmers have turned to illegally destroying forests in order to plant avocados. The destruction of forests disrupts many local species and avocado orchards use twice as much water as the typical forest that’s being cut down, further exacerbating the water shortages in these areas. There’s also increasing gang violence in areas where avocados are grown as players seek control of these high-demand, low-supply fruits. I think these trends heighten the need for quick action by Avocados from Mexico and other advocacy groups. Less water-intensive growing methods and experimentation with different varieties like Ryan suggests are a good start, but I’m not sure how long it will take to increase supply and decrease prices enough to de-incentivize illegal growing and violence in Mexico.

    1) https://www.pbs.org/newshour/economy/column-avocado-boom

  3. Grace, you win the “best title” award! Thanks for the interesting read. I think Ryan and PC’s comments make a lot of sense, but I think the conversation needs to be had on a global scale as the issues related to avocado production are not solely endemic to North America. There are a number of instances – the below link being one of them – in other countries, such as Australia, of climate-related avocado crop failures.

    http://www.abc.net.au/news/rural/2016-10-14/avocado-crop-lost-to-heat-stress/7932036

    To PC’s point, I’m concerned that the level of corruption present in the avocado industry in Mexico may not give the “movement” strong enough legs on a global scale. I would argue that Avocados from Mexico should partner with similar food and vegetable groups in other regions to demonstrate the widespread nature of the problem and create transferable and applicable best practices for the industry. The next step would be to try to engage with the government to tackle the aforementioned systemic issues plaguing in the Mexican market – but that may be too uphill of a battle for the organization at this juncture.

  4. Great article! I believe there are a couple of additional levers that avocado growers in Mexico could do in order to have a more environmental friendly production:

    Automation: Avocado production in Mexico still relies in manual procedures and labor is the major production cost. For processes such as irrigation, a manual procedure can lead to water wastage and lower yields in production. Increased investment in order to automate key processes could be a solution and also a lever for cost efficiency.

    Coordination between growers: If the rise of avocado prices is a fact, growers will need to further coordinate in order to share best practices and achieve scale to reduce costs. A key cost that could be reduced if more coordination is achieved is the transportation cost (by increasing scale and coordination of routes between suppliers).

    Finally, I think it is also very interesting to look at the avocado supply problem with the NAFTA treaty at risk. If NAFTA agreements are modified, probably Mexican exports to the US will have an incremental tariff making avocados even more expensive! There is a great article from another classmate that discusses this topic in further detail: https://digital.hbs.edu/platform-rctom/submission/holy-guacamole-your-super-bowl-snack-is-about-to-get-pricey/#comment-14400 .With these two pressures at the same time the avocado industry is really under threat!

  5. I enjoyed reading your article and wanted to build on Mo’s comments a little bit further on the global nature of the avocado shortage issue. From a supply perspective, Europe is paying the price for Mexico’s drought, albeit in an indirect way. In fact, Europe’s main supplier of avocado’s is not Mexico but Peru. In light of the shortage for avocados in the US due to the drought in Mexico and even California, supply from Peru has diverted to the US. This presents a clear issue for restaurants and grocery stores, particularly in the UK where demand has been growing ~30% over the last few years (https://www.ft.com/content/d99e786c-3011-11e7-9555-23ef563ecf9a). It will be interesting to see how the supply/demand dynamics play out on the global stage over the next several months.

  6. It is interesting that this is a topic where the climate has an impact on the supply chain versus the supply chain having an impact on the climate. The article (https://www.pbs.org/newshour/economy/column-avocado-boom) that PC referenced also talks about “great guac crisis of 2016” for other countries besides Mexico, such as New Zeland and Australia where supply went down 30% and prices increased 100%. The climate is having a global effect and I am not sure the innovations will be able out grow climate change and sustain the current 7lbs per person of consumption.

  7. Thank you for a great read!

    In line with some points in the article and Juan A’s comment, I believe a key lever Avocados from Mexico should keep pushing forward is drawing together the smaller crop producers in Mexico. These parties will be the worst hit by climate change, declining yields and more need for crop-enhancing agrochemicals. In addition, given their small scale, costly transportation costs and inefficient infrastructure and communication add to their challenges. This clearly calls for a more organised solution that brings scale to the now scattered Mexican avocado production. In addition, efforts on marketing and consumer education already being undertaken by Avocados from Mexico should continue so that end-consumers are increasingly aware of the very real climate change challenges facing the food industry and our world.

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