{"id":21460,"date":"2017-11-14T00:19:20","date_gmt":"2017-11-14T05:19:20","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/holy-guacamole-your-super-bowl-snack-is-about-to-get-pricey\/"},"modified":"2017-11-14T00:19:20","modified_gmt":"2017-11-14T05:19:20","slug":"holy-guacamole-your-super-bowl-snack-is-about-to-get-pricey","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/holy-guacamole-your-super-bowl-snack-is-about-to-get-pricey\/","title":{"rendered":"Holy Guacamole! Your Super-Bowl snack is about to get pricey."},"content":{"rendered":"

More than 85% of the avocados consumed in the US today come from other countries, especially Mexico, the world’s largest producer and exporter of this fruit. [1] With NAFTA in place since 1994, avocado\u2019s price fluctuations were mainly dependent of demand, weather and labor. Today, with Trump’s isolationism measures and initiative to re-negotiate NAFTA, a new threat arises that can really affect avocado’s prices: import tariffs.<\/p>\n

Aware of these threats is the APEAM, the Avocado Producers and Exporting Packers Association of Mexico. Founded in 1997, APEAM is a private non-profit association, consisting of more than 20,000 producers and 49 packers, mainly from the state of Michoac\u00e1n, Mexico. It is a cooperating partner recognized by the USDA and oversees promoting and fostering exports of Mexican avocado in the U.S. and other foreign markets. The APEAM implements quality measures to its members to ensure product quality. They also work bilaterally with the USDA and its Mexican counterpart SAGARPA, to ensure fulfillment of safety and certification measures required in the supply chain. Recently, APEAM decided to engage in a marketing campaign that would focus on communicating the superior quality, characteristics and benefits of the Mexican avocado under a brand called \u201cAvocados from Mexico\u201d. [2]\u00a0 (https:\/\/www.youtube.com\/watch?v=Aa78KOPz-fA)<\/a><\/p>\n

Although its campaign has paid-off in the short-term, the threat of tariffs being imposed in the border concerns producers and exporters alike in the long-term. Currently, fluctuations in price have been mainly absorbed by the end consumer, and apparently it has not affected the upward trend in demand. Consumption of avocado in the US has soared since the trade deal was signed. In 1990, the average person consumed 1.4lbs, jumping to almost 7lbs in 2015. [3] Apart from increasing availability, healthier lifestyle trends in the U.S. and consumption of avocado in big chain restaurants such as Chipotle, have also increased demand. [4]. In addition, reduced availability of land due to climate change, seasonal restrictions and temperature requirements, have also played an important role in the shortage of supply and therefore, increasing prices. At the beginning of 2017, an avocado was 89 cents, rising to $1.56 in October 2017, according to the Haas Avocado Board, an agriculture promotion group based in the United States. [5].<\/p>\n

\"\"\u00a0\u00a0 \"\"\u00a0\u00a0 \"\"<\/p>\n

Recommendations<\/strong><\/p>\n

Find new markets –<\/strong> \u201cIf Michoac\u00e1n decided to stop exporting, there is nowhere else in the world that could provide the quantity of avocados that U.S. markets are consuming,\u201d said Adri\u00e1n Iturbide, a Mexican avocado grower. [6] Even though some producers might feel sheltered, the combining threat of all the aforementioned factors should be taken into serious consideration. That is why, producers are also looking into new markets, such as China. According to the Financial Times, exports from Mexico and Chile to China have been growing at a rate of 250% from 154 tons in 2012 to 25,000 tons in 2016. [7] Other top avocado importers such as the Netherlands, France and the UK might also benefit from more and better supply from countries such as Mexico. [8] In response to the tariff threat, APEAM should continue developing its relationships with such countries in order to decrease dependence from the US.<\/p>\n

Build Alliances –<\/strong> Currently, the only region of Mexico that can export to the United States is Michoac\u00e1n. Regions like Jalisco, for example, are restricted \u2013 due supposedly to sanitary reasons. Over the last years, several attempts have been made to release this ban. In January 2017, after what seemed like a successful negotiation, Jalisco\u2019s avocados where lifted from the ban, just to be halted at the border a few hours later. [9] Especially now, APEAM should begin working with the government and its counterpart in Jalisco (APEAJAL) to increase its negotiating power with the US. Rather than fighting for an uncertain US market, as suggested above, Mexican producers could join strengths and start looking at new interesting markets in Europe and Asia. Moreover, by increasing supply these alliances could help maintain price at reasonable levels and prevent a future decrease in demand.<\/p>\n

The question facing APEAM now is, at which price point could consumers stop consuming avocado and\/or trade it to a substitute, more accessible fruit? \u00a0Is this positive trend going to continue, or is a potential 20% tariff imposed by the US government really threatening the future demand of avocado? Should APEAM remain focused on the US, or shift their focus towards China? Going forward, these answers will define the future of thousands of Mexicans involved in the avocado supply chain as well as availability of one of the most demanded fruits in US actuality.<\/p>\n

(Word Count 791)<\/p>\n

References<\/h1>\n

[1] Ferdman, R. A. (2015, January 22). The rise of the avocado, America\u2019s new favorite fruit<\/em>. Retrieved from The Washington Post: https:\/\/www.washingtonpost.com\/news\/wonk\/wp\/2015\/01\/22\/the-sudden-rise-of-the-avocado-americas-new-favorite-fruit\/?tid=a_inl&utm_term=.78ac158cad4d<\/a><\/p>\n

[2] APEAM. (2017, November 12). What is APEAM?<\/em> Retrieved from APEAM: http:\/\/www.apeamac.com\/que-es-apeam\/#1498534220395-e488fa21-b865<\/a><\/p>\n

[3] Webber, J., & Terazono, E. (2017, January 19). Super Bowl weekend: The Trump effect and the guacamole dip<\/em>. Retrieved from Financial Times: https:\/\/www.ft.com\/content\/fb1caaf8-dd92-11e6-9d7c-be108f1c1dce<\/a><\/p>\n

[4] Gillespie, P. (2017, September 11). Avocado prices have soared 125% this year<\/em>. Retrieved from CNN Money: http:\/\/money.cnn.com\/2017\/09\/09\/news\/economy\/avocado-prices-soar\/index.html<\/a><\/p>\n

[5] HAAS Avocado Board. (2017, November 12). Retail Volume & Avocado Price for 2017<\/em>. Retrieved from HAAS Avocado Board: http:\/\/www.hassavocadoboard.com\/retail\/volume-and-price-data<\/a><\/p>\n

[6] Barrera, A. (2017, February 2). In avocado country, Mexicans not afraid of Trump tariff threats<\/em>. Retrieved from Reuters: https:\/\/www.reuters.com\/article\/us-usa-trade-nafta-avocados\/in-avocado-country-mexicans-not-afraid-of-trump-tariff-threats-idUSKBN15H2KC<\/a><\/p>\n

[7] Hancock, T. (2017, April 2017). haasAvocado imports soar as China develops taste for \u2018butter fruit\u2019<\/em>. Retrieved from Financial Times: https:\/\/www.ft.com\/content\/97340c8a-2652-11e7-8691-d5f7e0cd0a16<\/a><\/p>\n

[8] Terazono, E. (2017, May 3). Avocado prices hit record after bad weather dents supply<\/em>. Retrieved from Financial Times: https:\/\/www.ft.com\/content\/d99e786c-3011-11e7-9555-23ef563ecf9a<\/a><\/p>\n

[9] Mortimer, C. (2017, January 27). The US is turning away Mexican avocados at the border<\/em>. Retrieved from Independent: http:\/\/www.independent.co.uk\/news\/world\/americas\/mexico-trade-avocado-us-border-wall-donald-trump-imports-exports-a7550131.html<\/a><\/p>\n

Shanker, D. (2017, September 8). Avocados Could Get a Lot More Expensive Under a New NAFTA<\/em>. Retrieved from Bloomberg: https:\/\/www.bloomberg.com\/news\/articles\/2017-09-08\/avocados-could-get-a-lot-more-expensive-under-a-new-nafta<\/p>\n

The New York Times. (2017, April 27). Revisiting Nafta: The Stakes for Key Industries<\/em>. Retrieved November 12, 2017, from https:\/\/www.nytimes.com\/2017\/04\/27\/business\/economy\/nafta-impact-industries-cars-agriculture-apparel-pharmaceuticals.html<\/p>\n

Wattles, J. (2017, January 27). Guess where all those avocados come from<\/em>. Retrieved November 12, 2017, from CNN Money: http:\/\/money.cnn.com\/2017\/01\/27\/news\/economy\/avocados-trump-mexico\/index.html<\/p>\n","protected":false},"excerpt":{"rendered":"

The U.S. demand for avocado cannot be met by domestically-grown product. With an extremely high dependance of imports from Mexico, who would be mostly affected by Trump walking away from NAFTA, Mexican producers and exporters or U.S. consumers?<\/p>\n","protected":false},"author":9810,"featured_media":21482,"comment_status":"open","ping_status":"closed","template":"","categories":[1243,28,3443,1218,3239],"class_list":["post-21460","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-agribusiness","category-agriculture","category-avocado","category-climate-change","category-isolationism","hck-taxonomy-organization-apeam","hck-taxonomy-industry-agriculture-and-agribusiness","hck-taxonomy-country-mexico"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2017\/","yoast_head":"\nHoly Guacamole! 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