Mexico faces its paradox: how to balance record exports with their impact on prices

The avocado industry in Mexico faces a paradox: it has never produced so much, yet it has also never faced such intense pressure on prices and profitability for producers. With a production base exceeding 2.5 million tons and exports to the United States projected to reach 1.2 million tons this year, the country is consolidating its global leadership, but also opening a structural debate about economic sustainability.

“We can call this season one of sacrifice for us producers and exporters in Mexico with the intention of generating new consumers,” says Raúl Ernesto Martínez Pulido, president of the Board of Directors of the Association of Producers, Packers and Exporters of Avocados of Mexico (APEAM).

Indeed, this has been a year in which the constant in retail has been promotions, which have sacrificed price, but also allow more people to consume and join those who have included avocado in their permanent diet.

This growth is no accident. APEAM brings together more than 35,000 producers and nearly 97 of the 100 packing plants, making it highly representative of the industry. This organization has consolidated a structure that has allowed it to maintain supply throughout the year, with a primary focus on the U.S. market.

“Since we participate directly in the sanitary system that allows exports to the United States (USDA-APHIS, responsible for safeguarding US agricultural health, and SENASICA, which certifies orchards and processes at origin), we have concentrated our efforts on that market,” says Martínez.

However, fruit is also shipped to Canada, Japan, Central America, Europe and the Middle East.

Tonnage and historical prices

This season has been historic not only in terms of volume but also in terms of low prices. The president of APEAM commented, “This has been the season with the highest volume of fruit exported to the United States. A record was broken for the Super Bowl. We'll surely learn that another record has been broken by May 5th. So, this season is historic in terms of production records. And for the same reason, it's also historic in terms of the lowest prices we've ever had in the export program.”

The impact is felt directly at the first link in the chain: the producer. According to the president of APEAM, production costs can range from 8 to 20 or 25 Mexican pesos per kilo, but average selling prices have hovered around 18 pesos. This has left minimal profit margins and, in some cases, barely enough to cover costs.

“This season is just about recouping our investment. We’re basically on the verge of losing money. Some will have lost money, some will have barely broken even, and very few, those with excellent land and high-quality crops, I think barely made enough to keep going,” Martínez warns.

In the short term, the industry assumes this season has been a turning point. The president of APEAM explains it this way: “We can call this season a sacrifice for us, the producers and exporters of Mexico, with the intention of expanding the market in the United States. People who don't usually buy avocados are giving them a try because they see them as affordable and convenient; they're giving themselves the opportunity to consume them, and new consumers are being created.”

The paradox experienced this season allows us to ask ourselves how long the business could remain stable, if the same characteristics are maintained, without discouraging the participation of some actors in the business.

“This season I'm talking about has been critical. If we had two or three seasons like this, most people would very likely stop producing avocados. That would be the natural thing to do. But I think that this one, despite how badly we suffered, we can get through it and face the next one in the best possible way,” he says.

The global reality is also complex, as the costs of fertilizers and fuels have increased and new regulations will soon require investments in food safety, social responsibility, and environmental protection.

Organize the growth

Despite this scenario, the industry continues to focus on growth, albeit with a more cautious approach. New states like Mexico and Nayarit are hoping to join the export program to the United States.

“It will only be a few hectares of production, but with significant potential. However, I believe the growth will be slow, not drastic,” he adds. For this to materialize, approval has already been obtained from Mexican authorities, and they are awaiting a response from their North American counterparts.

Faced with supply pressure, Canada appears as a key option, along with Central America and the recently opened market in Brazil. However, in the latter case, logistical challenges remain unresolved. The strategy also involves strengthening domestic consumption, which already reaches approximately 10 kilos per capita per year.

“The domestic market in Mexico is the strongest in the world in terms of consumption, but it could be much better. We could go from 10 to 12 or 13 kilos,” he argues.

Thus, the guideline of the guild is to organize growth, sustain efforts to consolidate the volume of consumption, to level the price and ensure that the benefit of high production allows the entire chain to take advantage of it.