“We hear a lot now about the current administration wanting to put America first and how free trade is a threat to American jobs and these kinds of sentiments,” but “in many ways, avocados from Mexico is an iconic example of the benefits of free trade” for both Mexican and US consumers, workers and businesses, said Ramon Paz, strategic advisor for the Avocado Producers and Exporting Packers Association of Mexico.
Pointing to recent research conducted by agricultural economists at Texas A&M, Paz explained that the impact of avocados from Mexico on the US economy has added $2.2 billion, created almost 19,000 American jobs – which represents a $1.2 billion increase in labor income – and also resulted in almost $600 million in taxes paid by Mexican avocado distributors to the US government.
“Also, regarding the American economy, I can tell you that close to 40% of the exports of avocados from Mexico are boxed and shipped by US-based companies. Those companies have the facilities here [in Mexico] but they have added in volume to the regular business. They have not closed any US operation. This is incremental business for American companies and investors,” he said.
And by providing stable jobs for Mexicans in Mexico, Paz said, roughly 100,000 families have found a way to make a living in Mexico without emigrating to the US – which is another benefit given American fears of immigrants taking jobs from citizens in need.
Free trade is also creating jobs for Americans in the avocado industry by expanding demand so that US companies also must hire more employees to provide sufficient supply, he said.
For support, he pointed to data from Hass Avocado Board that the per capita consumption of avocados in the US increased more than 650% since 1997 when free trade began – lifting it up from 1.5 pounds per capita in 1996 to more than 7 pounds in 2015.
This demand also has lifted prices for American and Mexican avocado providers alike, Paz said.
“In 1996, right before we had access to the US market, California avocado suppliers received on average a price of 69 cents per pound for their food. Since Mexican avocados were introduced, this number has never been below $1 and it was at $1.10 per pound in 2016. So, the California growers have received a lot of benefits,” Paz said.
He explained that this increase in demand and price would not have been as easily attained with our avocados from Mexico because the country can supply a sufficient quantities of avocados year around so that food service feels comfortable including avocados in menus, which raised consumer awareness. Likewise, a steady supply means avocados are always front of mind for consumers who then expect to purchase them whenever they need.
For all these reasons, Paz said the avocado industry, like many agricultural industries, wants to see NAFTA succeed and its first goal is to “do no harm” during the renegotiations – a goal which Paz fears is becoming harder to reach.
The show must go on
Even if NAFTA renegotiations fail and free trade is canceled, Paz is confident that Mexico’s avocado trade with the US will continue because there is no other country that can satiate American’s growing demand for avocados.
“80% of the avocados in the US come from Mexico, and there is no substitute. So, that is why we believe we will continue this trade even in the undesirable case of NAFTA cancellation,” he said.
But there might be some consequences in the form of higher prices. He explained that before free trade there was a 6 cents per pound terrify on avocados, which given demand and consumer value of the food is “not too much.”
Another risk would be a 6-8% tithe that would be passed on to American consumers in the form of price increases.
But again, he stressed this is worst case scenario stuff, and not what the industry wants. Rather a best case scenario would be continued free trade but with improved phytosanitary measures, which is something other agriculture players also have voiced.