Research Category: Economic impact

 

 

Triple Pundit Presents Avocados’ Farm-To-Table Journey

Triple Pundit has partnered with the Avocado Institute of Mexico to explore the farm-to-table journey of Mexican avocados in a series of five articles. From the groves of Mexico, to produce aisles in U.S. grocery stores, this series explores how farmers, field workers, packers and importers supply 80% of America’s avocados, benefiting both countries environmentally and economically. Two of the latest articles in the series are highlighted below.

Sustainable Practices Are A Family Tradition For Avocado Farmers

Farming has been in Enrique Audiffred’s family for three generations and growing organic avocados has been there for two. His story highlights how technology is being used to meet U.S. avocado demand in a way that is both economically beneficial and environmentally sustainable.

“Without a healthy planet, there cannot be a thriving avocado industry. That is why the Mexican avocado industry is committed to a sustainability strategy that conserves local forests and protects natural resources and habitats.”

– Ana Ambrosi, Avocado Institute of Mexico

 

Fair Trade Avocados Are Benefiting Rural Mexico

Carlos Genel, an economist and second-generation Michoacán avocado grower, recognizes the value of achieving Fair Trade certification in his groves. Fair Trade practices have been economically and environmentally beneficial for his farm and his community.

Imports of Mexican Hass avocados continue to make substantial contributions to the U.S. and Mexican economies according to the latest economic contribution analysis conducted by Texas A&M University¹ during the 2021-2022 growing season. Since 1997,the avocado supply from Mexico in the U.S. has jumped to more than 2 billion pounds annually², and more than 4 billion pounds in the last two years alone³–fueled by consumers’ love of the healthful fruit while also positively benefiting U.S. national and state economies.

¹ 2022 Update: The Economic Benefits of U.S. Avocado Imports from Mexico This analysis utilizes the Impact Analysis and Planning Model (IMPLAN) to measure the jobs, revenues, wages and taxes generated by the imports along the value chain on the national and state economies. IMPLAN is an input-output model of the entire U.S. economy that captures the relationships between industries and estimates the economic effects (direct, indirect, and induced). The IMPLAN model reports on four specific types of economic effects: employment contribution, labor income, value-added, and output or gross sales contribution.
² The Economic Benefits of U.S. Avocado Imports from Mexico
³ Hass Avocado Board Volume Data

The growth in the market for fresh avocados in the United States has been remarkable. In the 1990s, consumption was relatively flat, averaging 1.6 lbs. per capita. Following a series of immigration, legal, cultural, and even supermarket changes, consumption has increased 350% to an average of more than 7 lbs. per capita as of 2020.

Between 1998 and 2017, per capita avocado consumption in the U.S. skyrocketed from 1.5 pounds all the way to 7.5 pounds, an unseen rate of growth for any other fresh produce item. This growing demand for avocados is not being met by U.S. producers. In fact, domestic production of avocados has actually dropped by more than 45% over the past few decades.

Rather, the cause for this growing demand among U.S. consumers is due to imported avocados. Between 2015 and 2017, annual deliveries of both domestic and imported avocados totaled 1.1 million metric tons, with annual imports from the Mexican state of Michoacan averaging 781,000 during that time frame.

Put another way, Michoacan growers supplied more than 70% of all avocados consumed in the U.S. during that three-year window.

Mexico continues to thrive as an avocado growing and exporting powerhouse. According to the USDA annual report, by 2018, Mexican avocados had captured 87% of the U.S. market share. And since Michoacan is currently the only Mexican state with phytosanitary clearance to export avocados to the U.S., growers in that state deserve the credit for supplying those avocados.

Phytosanitary certificates are issued by governmental authorities to show that shipments are free from harmful pests and plant disease. Per the USDA, only plants and unprocessed or unmanufactured plant products are eligible to receive phytosanitary certificates.

By June 2020, the USDA predicts that Mexican avocado exports to the United States will increase by more than 12% to 1 million metric tons.

While most Mexican avocado exports currently go to the U.S., the USDA data indicates that Canada and Japan also represent significant export markets, with imports of nearly 89,000 metric tons and almost 70,000 metric tons, respectively, from July 2018 to June 2019.  Furthermore, the USDA says Mexican avocado producers are working to develop new Middle Eastern markets like Turkey, Kuwait, and Dubai. There has even been interest expressed in expanding the market as far east as Hong Kong.

Given the apparently insatiable consumer demand for avocados, the Mexican avocado industry faces the dual challenge of increasing production and obtaining better yields, while exercising responsible stewardship of their environmental resources. The USDA notes that Mexican producers are working with the Association of Avocado Producers, Packers, and Exporters of Mexico (APEAM) to improve environmental conditions and cultivate healthier soils.

November 2, 2019 – To many in Michoacán, Mexico it was a day like any other, but for those working in the avocado industry it was monumental. The cause for excitement was owed to the U.S. ambassador, Christopher Landau, and his family who journeyed November 2, 2019 to one of Michoacán’s 54,000 avocado orchards.

Not only was this the first time Landau — who was sworn in as the U.S. Ambassador to Mexico in August 2019 — has visited the avocado groves in Michoacán, but the outing marked the first occasion any U.S. ambassador has toured the area west of Mexico City that some refer to as Avocadoland.

Landau and his family had the opportunity to observe and celebrate the everyday qualities and features of Michoacán that have made it the avocado capital of Mexico and the largest source of the fruit for American consumers. The ambassador’s visit emphasized the importance of the ongoing support for the Mexican avocado-export initiatives.

Michoacán, Mexico: A Region Like No Other

It’s no coincidence that there are more than 54,000 avocado orchards in Michoacán. The area is blessed with rich volcanic soil, the perfect mixture of sunlight and rainfall, and land ripe for cultivation at a range of altitudes. This unique combination of geographical features in Michoacán creates a distinct habitat that allows high-quality avocados to be grown year-round.

Besides witnessing the beautiful and exceptionally productive terrain of Michoacán firsthand, Ambassador Landau also received a personal lesson on the type of infrastructure and skills needed to translate agricultural potential into robust avocado production. In the orchard, the ambassador and his family were shown how to pick avocados using a long pole and basket that makes plucking the fruit from high branches efficient.

The Landaus didn’t have to wait long to enjoy the rewards of their labor. After a little instruction, they learned to use a traditional granite molcajete to mash the avocados they picked themselves, producing handmade guacamole, avocado toast, and even a blended avocado drink — all with fresh, ripe fruit right off the tree.

The Significance of Avocado Exports

While the ambassador and his family enjoyed a memorable time in Mexico’s leading avocado region, they aren’t the only ones who have benefited from the special relationship between the U.S. and Mexico in the past years and the avocados it has produced. In a Twitter post from the day of his visit, Landau praised the operations of the avocado industry in Michoacán, calling it “a great example of the benefits of free trade.”

In 2016, the U.S. Department of Agriculture (USDA) published a final rule allowing for the export of Mexican avocados to the U.S. from all of Mexico, not just Michoacán. The decision was made after a pest-risk analysis, which concluded that avocado imports from other Mexican states would not jeopardize the health of American flora, fauna, and consumers. These cooperative efforts have facilitated a steady and reliable supply of high-quality Mexican avocados to the U.S. in previous years.

The upside for American consumers eager for avocados is obvious. But the collaboration has also yielded significant economic benefits, including 75,000 direct and permanent jobs in Mexico. Many of these jobs are in Michoacán itself, a state that was once the largest source of illegal migrant workers to the U.S.

A recent study by Texas A&M highlighted the tangible benefits that Mexican avocado imports have made on the U.S. economy. In 2017 alone, the import of avocados from Mexico contributed $3.4 billion to the U.S. gross domestic product (GDP), $932 million in taxes, and helped create more than 29,000 well-paying jobs. The impact was largest in California and Texas, where avocado imports added $514 million and $294.6 million to the GDP, respectively.

All of which is to say that Ambassador Landau and his family had many good reasons to celebrate and promote ongoing support for avocado exports to the U.S. from both Michoacán and from across Mexico. An inside look into the production chain of Mexican avocados — and a taste of their very own fresh guacamole — undoubtedly made the visit an unforgettable one for the Landaus.

Imports of food products are often seen primarily as a threat to domestic producers while the broader economic impacts are ignored. As avocado consumption in the U.S. grows, research has found that imports of avocados from Mexico have had a positive effect on the U.S. economy. In fact, in 2015 every dollar of avocado imports from Mexico generated $2.31 in U.S. output, $1.41 in U.S. GDP, and $0.79 in U.S. labor income. Additionally, 12.3 jobs were generated per $1 million of Mexican avocado imports.

“The National Economic Benefits of Food Imports: The Case of U.S. Imports of Hass Avocados”  Gary W. Williams & Oral Capps, Jr. & Daniel Hanselka, 2017. “The National Economic Benefits of Food Imports: The Case of U.S. Imports of Hass Avocados,” Reports 285241, Texas A&M University, Agribusiness, Food, and Consumer Economics Research Center.

Avocados are one of the most important agricultural products in Mexico. They only grow year-round in one state – Michoacán – and most production occurs in small orchards. Mexico is the largest avocado exporter in the world and sends most of its supply to the U.S. where it owns more than 80% of the market share. As demand continues to grow, Mexican producers are looking to increase yields to meet that demand. To do this, producers are coordinating with the Association of Avocado Exporting Producers and Packers of Mexico (APEAM), to improve environmental conditions like healthier soils and access to water.

USDA Avocado Annual Report 19/20  USDA Foreign Agricultural Service