The last few days have been intense and unique for the Mexican avocado industry. In week thirteen, Mexico exported 1,460 shipments to the United States market, plus an additional 200 shipments loaded on Monday, March 31, for a total of 1,660 shipments in an eight-day period. This volume, which is very high for a relatively normal week, can be attributed primarily to two factors: first, that market inventories were indeed low and there was strong demand for the fruit from the beginning of the week; and second, the proximity to April 2, the date on which the United States government was expected to announce potential tariffs on products from Mexico and around the world.

Demand at the start of the week remained strong for sizes 60s and smaller, prompting most exporters to intensify their harvests. Subsequently, and given the uncertainty surrounding the implementation of tariffs, both importers and exporters continued with substantial harvests, attempting to build inventories before April 2nd. This situation was so pronounced that harvests starting Monday, March 31st, were only about 45% of what was harvested during week thirteen.

Much speculation exists regarding companies' decisions on how to address the tariff situation. Some stockpiled inventory in their warehouses so that, in the event of tariffs being implemented, they would have lower-cost fruit available, potentially generating good margins since the cost of newer fruit on the market would automatically be higher. Another approach was simply to anticipate a reduced harvest in Mexico and maintain sufficient inventory for several days, thus avoiding generating additional demand that would cause further price increases at the source. It seems that the second strategy, after the news broke, made the most sense.

Finally, today, Wednesday, April 2nd, it was announced that Mexican products exported to the United States under the rules of the free trade agreement, such as avocados, will continue to be exempt from tariffs. This is undoubtedly a relief for the industry and the country in general, and contrary to speculation, it appears that avocados from other origins, such as Colombia and Peru, may be subject to a 10% tariff, although this is not yet fully confirmed.

Farmgate prices in Mexico will start at lower levels than at the beginning of the week. The market should return to its normal pace, and export volume will have to keep pace with demand, with the added factor of the Easter holiday in Mexico in the coming days. This is what's interesting about this industry: there will always be some factor that presents a challenge for everyone involved in the supply chain.

Sergio Paz Vega, Mexico, sergio.paz@coliman.com