As everybody considers the US election results, we will discuss a surprising and little known reality: the impact on global geopolitics that something as innocent as an avocado can have. It's something for you to talk about with your friends or relatives while eating nachos with guacamole.
In the last 12 months the market has had different supply and demand dynamics that have triggered an increase in this fruit's price.
It is a fashionable fruit that has outsold oranges in Britain (be careful Levante!), and pears in the United States, where consumption has doubled in the last decade. This boom has run into recent production problems as Mexico, one of the major exporters in the world and source of 40% of the world's total avocado, has been affected by strikes and droughts that resulted in supply problems that led to a 73% price increase in 12 months, to $63.75 dollars, well above the previous $45 high achieved in January 2014.
The worst is yet to come, coinciding with the Christmas campaign.
The macro and micro consequences have been immediate. Many countries with climates suitable for cultivating avocados are launching initiation projects or expanding the area they devote to avocado production. This is the case in Peru, Chile and South Africa. However, that decision is opposed by conservationists that question the environmental impact in terms of water consumption, operating methods, and impact on aquifers that this production would have. The medium-term consequences of such decisions can't be overlooked.
Meanwhile, the current producers' lack of fruit can have a substantial impact on the external balance of their country. In the case of Mexico, avocado exports, which in 2003 only amounted to 60 million dollars, now represent revenues of $1.5 billion dollars. It's a thriving business that is increasingly permeated by the drug cartels, which control many of the sector's transactions, as The Economist recently stated.
Things are no better in the antipodes. Extreme weather events have decimated crops in New Zealand and Australia, boosting prices to levels that had not been seen in the last 50 years. As a result of this shortage, robberies in plantations and businesses have increased , as well as black market sales. More and more shops have signs stating that "This business does not keep cash or avocados stored overnight." That's how far things have gone.
Furthermore, a major player has just entered the scene. China, which has quadrupled avocado imports in five years, is making direct agreements with producers to ensure its supply. And we all know what happens when the Asian giant sneezes.
Clearly, this price increase has implications for Mexican and Japanese food chains, where avocado plays a main role, and for ordinary citizens, who see the price increase to much more than they're willing to pay for the fruit's theoretical dietary benefits.
What's happening around the avocado is unbelievable.
There's organized crime, social unrest, changes in the agrarian structure and in restaurant menus; distortions in the external balance of importers and exporters, among other things. That, however, is the result of living in a connected and globalized world; where the movement of any piece on the board, as trivial as it may seem, has an impact on all the other pieces.
So now you know: every time you dip a nacho in guacamole, the Mexican, Chinese, Australians, Peruvians, Americans, British, and even the Spaniards will be affected one way or another.