Is there more to this story than we are being told?
The U.S. government’s decision, on February 11, just three days before the Superbowl, to block all imports of avocados from the Mexican state of Michoacan following a threatening phone call to a US Department of Agriculture official has caused serious problems for Mexican growers and traders. More than 25,000 tons of inventory are at risk of being lost if the trade ban continues. Even if the suspension lasts just one week, it would mean the loss of an estimated $70 million in sales.
On the other side of the border avocado prices are expected to rise in the coming days. While avocados that had already been inspected can still be shipped north, there are signs that supplies are beginning to tighten. Wholesalers in the U.S. that import avocados may have to look beyond Mexico, which currently supplies around 80% of U.S. imports of the fruit.
Thousands of Workers Going Hungry
But the real economic pain is being felt in Michoacan, one of Mexico’s poorest states, where thousands of avocado pickers have lost their only source of income. Many have spend the last few days lining a roadside on the outskirts of the city of Uruapan, Michoacan, requesting donations from passing drivers.
“Since last Wednesday we haven’t picked anything,” said one of the workers, who refused to give his name because of the widespread violence in the state. “In the meantime, you die of hunger.”
Although Mexico has expressed optimism that the situation would be resolved promptly, the US responded Thursday that its position has not changed. The Biden administration has said from the beginning that it will not resume imports until the safety of the more than 70 US inspectors who work in Mexican fields is guaranteed. Among the proposals outlined is the creation of an investigation and security unit in Michoacan, which has already received the support of the governor of Michoacán, Alfredo Ramírez Bedolla, the municipal authorities and producers in the region.
For Mexico’s economy, avocados have become so valuable that they are often referred to as “oro verde” (green gold). And Michoacan is ground zero for the industry, employing some 300,000 workers to cultivate, tender, harvest and process the cash crop. Mexico is the world’s largest supplier of avocados. Its avocados account for more than a third of global sales. Over two-thirds of those avocado are grown in the state of Michoacán.
Michoacán growers are the only suppliers included in the US Department of Agriculture certified export program. This has led to clashes in the past between growers from other regions and those in Michoacan. In 2018 two of third’s of Michoacan’s avocado growers shut down their orchards and blocked many of the roads used to transport the produce as the growers accused packing firms of using inferior quality, lower priced produce from other regions to ship to the US market.
Since the turn of this century the total value of Mexico’s global exports of avocado has ballooned from €73 million to over $3 billion today. Between January and November 2021 Mexico exported a total of 1.27 million tons, with a value of 3,049.4 million dollars. The country exports 97% of its production to eight countries: the United States, Canada, Japan, Spain, Honduras, the Netherlands, El Salvador and France.
That industry is now facing a major threat, and all apparently due to one phone call. As Mexico’s Department of Agriculture recounted at the beginning of this week, “U.S. health authorities… made the decision after one of their officials, who was carrying out inspections in Uruapan, Michoacan, received a threatening message on his official cellphone.”
This is apparently not the first time Mexican drug gangs have threatened USDA inspectors. In 2019, members of a criminal organization threatened a USDA team of inspectors in Ziracuaretiro in Michoacan and stole the car they were travelling in. The U.S. agency then wrote a letter warning that if there was another threat to their inspectors in Michoacan, they would suspend the avocado program. Which is exactly what has happened.
However, it is hard to shake the feeling that there may be just be a little more to this story than first meets the eye. For a start, the timing of the ban is suspicious, coming just three days before Superbowl, when millions of Americans sit down for their time-honored bowl of Guacamole and watch the Avocados from Mexico commercial. This is biggest moment in the calendar year for Mexico’s avocado trade, when American minds and bellies are most focused on the succulent green, buttery fruit.
Another curious aspect of the timing is that Michoacan’s avocado industry has been ruled by narcotraficantes for well over a decade yet it’s only now that U.S. authorities are taking action. Michoacan is a vital strategic cog in the narcotics supply chain for two main reasons: the strategically located Pacific-coast port of Lázaro Cárdenas, where much of the cocaine from Colombia as well as arrives ich rival gangs have been vying to control for decades; and the region’s extensive opium fields.
But the gangs have also been diversifying into other sectors. Eight years ago, the LA Times reported that the state’s two biggest cartels, the Knights Telmpar and the Familia Michoacana, were sticking “their hand deep in the [avocado] industry’s pockets.”
For each hectare of land used by growers, according to El Economista, they demand a quota of 2,000 pesos (about $152). Then they extort the fruit sellers – between 1 and 3 pesos (8-23 cents) for each kilo. If they don’t pay, there’s retribution: last April, two avocado packing plants were burned after the owners refused.
Before the Knight Templars hit the scene, Los Zetas were in control, as the Mexican daily Excelsior reported in 2016 (translation my own):
The narcos have controlled much of this market since 2007, when Los Zetas intimidated, extorted and robbed producers. After violently displacing Los Zetas, the Familia Michoacana and the Knights Templar took over the extortion of growers, who had found in avocado cultivation sufficient reason to stay in Mexico and not emigrate as undocumented immigrants to the northern neighbor of Mexico, as thousands of Michoacanos do. There have been numerous reports corroborating this situation. The Knights have stolen land with entire plantations and killed families who didn’t want to pay the fee—or for other related reasons. The narcos have intervened to raise the prices —in dollars— of avocados. In addition to charging the producer a fee for the land they work, they are said to keep a dollar for each avocado sold.
In other words, Mexican drug gangs have been heavily involved in Mexico’s avocado trade for around 15 years, but it’s only now that the U.S. government has decided to take action against it. So, what gives?
According to some reports, one of the reasons for the abrupt change of policy is that the Knights Templar are growing increasingly sophisticated in their use of violence, using trenches, pillboxes, homemade armored cars, rocket-propelled grenades and drones modified to drop small bombs. In the last month an army vehicle was disabled by an IED planted on a road, injuring a number of soldiers. It was the first known successful use of IEDs against a military target in Mexico.
But there could be another reason why this is happening right now (though I have no evidence to prove this): to counter Mexico’s President Andres Manuel Lopez Obrador’s proposed energy reforms, including his plan to nationalize Mexico’s reserves of lithium, a vital mineral for the green energy transition the world is supposed to be moving through in the coming years. As I reported on XXXX, Mexico is one of an increasing number of governments in Latin America, including Chile, Brazil and Peru, that are considering taking greater control of their natural resources as commodity values surge.
Just a month ago, the US Senate’s Committee on Foreign Relations called on the Biden Administration to “act with force” against AMLO’s plans to favor State energy companies while excluding from the country’s energy sector private companies that are committed to renewable sources. Shutting down one of Mexico’s most important and fastest growing export sectors is certainly a forceful act that sends a very clear message. And as readers of this site well know, Washington has a long, storied history of using trade as a diplomatic weapon, with both its adversaries and allies.
AMLO himself has blamed USDA’s decision to ban imports of Michoacan avocado on local U.S. growers wanting to compete with Mexican products, as well as political factors though he hasn’t actually divulged what those factors are.
“In all of this there are also a lot of political interests and… there is competition; they don’t want Mexican avocados to get into the United States, right, because it would dominate in the United States because of its quality,” López Obrador said. “There are other countries that are interested in selling avocados, as in the case of other farm products, so they lobby, they look for senators, professional public (relations) people and agencies, to put up obstacles.”
Washington’s ban on avocado imports from Mexico also coincides with the eruption of a scandal involving AMLO’s two sons and their alleged ties to the U.S. oil field service company Baker Hughes, which has juicy contracts with Mexico’s state-owned oil giant Pemex. It is the biggest corruption scandal AMLO has faced and it was first broken by the organization Mexicans Against Corruption and Impunity, which as I previously reported receives funding from the US Agency for International Development (USAID), which has a long history of financing opposition groups in Latin America.
It’s impossible to know to what extent, if any, Washington’s import ban on Mexican avocados is being driven by other commercial interests. For the moment, it is all just one big fat coincidence.
But as I have previously pointed out, the biggest obstacle AMLO faces in trying to rebalance Mexico’s economic model, by, say, nationalizing lithium, promoting domestic, non-GMO production of staples such as corn or prioritizing Mexico’s crude oil for the domestic market, is that it threatens the commercial interests of its number one trading partner. And Mexico’s economy is totally dependent on the deeply unbalanced trading relationship it has with the US, which buys up more than 80% of all its exports while also providing Mexico with a large share of its food staples, thanks of course to NAFTA.