Why we'll probably see avocado prices rise soon in the U.S.

After a temporary ban was placed on avocados from Mexico, experts are warning that prices will likely rise and supply may be limited in the coming weeks.

After a U.S. Department of Agriculture inspector received a threat, the department suspended investigations of avocado crops coming into the country from Mexico. According to data from the Hass Avocado Board, about 80% of the U.S. supply in 2021 came from Mexico.

"The longer this suspension is in force, you will probably see some disruption," said Tom Stenzel, co-CEO of the International Fresh Produce Association. "If this goes on for several weeks, you will start to see gaps."

Stenzel said there's no way to predict how long the suspension will last, but if it's longer than a few weeks, it's likely that avocados will come in from other countries such as Peru, so there won't be an immense shortage.

"You're not going to see bare shelves," he said. "People are going to have some amount of avocados, it just may be shorter supply."

In terms of pricing, Phil Lempert, editor of the website SupermarketGuru.com, says there's "no question" that the cost of buying avocados at the supermarket will increase.

"They're not going to have product, and the product that they do have, there'll be some opportunistic pricing," Lempert said.

How the ban came about

On the eve of Super Bowl Sunday, the USDA announced that it all avocado sales from the western region of Michoacan in Mexico were suspended, after an inspector for the department received a verbal threat on his cell phone. Michoacan is the only state in Mexico that is authorized to export avocados to the U.S.

Inspections of the fruit are required to ensure that the avocados coming into the U.S. are free of pests, which helps protect avocado crops in states such as California.

Specifics about the threat remain unclear. The U.S. Embassy in Mexico determined on Friday that the threat was credible and "the inspections required for exports of avocado from that region were halted upon that advice," according to the USDA.

"We must have assurances that our employees' lives are not at risk as they work to ensure agricultural products from Mexico are complying with certification and export requirements that protect U.S. producers from pests and disease," the USDA said in a statement to NPR.

USDA said their Animal and Plant Health Inspection Service office has been working with the embassy in Mexico, Mexico's national plant protection organization and the Association of Avocado Producers and Packers Exporters of Mexico to address security issues.

"It is USDA's hope that this situation can be resolved in a way that ensures avocado exports can resume, while the lives of the people who work to put avocados on American tables are not at risk from simply doing their safeguarding jobs," the department said.

There's ongoing gang violence in Michoacan state

Security in the Michoacan region has been deteriorating for years due to violence from cartels, which are taking advantage of how economically beneficial the avocado trade is.

Exports of avocados, which are referred to as green gold, were worth almost $3 billion last year, NPR's Carrie Kahn reported. Avocado growers, packers and truckers have to pay a "war tax" to cartels in order to keep producing the crop.

And the USDA points out that it's not just avocado growers who face these dangers.

In 2020, USDA said one of their employees in the citrus pest and disease program in northern Mexico was murdered. More recently, a different inspector received a threat over the phone toward him and his family, after he refused to certify a shipment.

Mexico's president has not commented on the recent security concerns in Michoacan, and instead has said that U.S. groups are working together to try and put their own interests first and keep competition out.

The restaurant industry will likely be hit harder than retailers

It's not clear when the temporary suspension will be lifted, but some U.S. restaurant chains are already bracing for how this might impact their stores and sales.

Stenzel said restaurants that heavily rely on avocados on their menu may have a harder time compared to retail.

"They simply cannot afford to be out of avocados for guacamole and other parts of their main dishes. In retail, worst case scenario, there are fewer avocados, they cost more. But it's not the end of the day that it might be for a restaurant chain," Stenzel said.

Chipotle's Chief Financial Officer Jack Hartung told NPR that as of now, they have several weeks of inventory available, but are working with suppliers.

"We'll continue to closely monitor the situation and adjust our plans accordingly," Hartung said.

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