Border threat sparks avocado price surge

Avocado prices surged on fears of a US-Mexico border closure.
Avocado prices surged on fears of a US-Mexico border closure.

US President Donald Trump's threats to shut the border with Mexico are now affecting what some might argue is the softest spot in bilateral relations : avocados.

Processors and wholesalers have started stockpiling the prized fruit, fearing that a border lockdown would prevent Mexico from shipping the 80 per cent of avocados that the United States consumes.

Avocado prices have jumped nearly 50 per cent over the last week alone as a consequence.

Gro Intelligence research analyst Stefan Oliva said buyers, wholesalers and processors are clamouring for avocados in case the border is shut ahead of the Cinco de Mayo celebration on May 5.

Cinco de Mayo commemorates the 1862 Battle of Puebla in which Mexican troops defeated invading French forces and is celebrated all over the United States, but in Mexico the day is mainly celebrated in Puebla.

The United States imported nearly $US2.1 billion worth in avocados from Mexico in 2018, or more than 900,000 tonnes, he said.

That is some 10 times the value of avocados it buys from the rest of the world and more than 10 times what the United States currently produces, Gro Intelligence data shows.

"Even those very, very vague threats are enough to scare wholesalers and processors that are relying on consumers," Oliva said.

"If there is a border shutdown, they will have to circumvent the border and pay an extreme premium."

Trump has taken a step back from his threat to close the border to fight illegal immigration, as pressure mounted from companies worried that a shutdown would cause chaos to supply chains. It could disrupt millions of legal crossings and billions of dollars in trade.

David Magana, a senior analyst specialising in food and agribusiness at Rabobank, said he had observed a 44 per cent jump in the price of avocados over the past week.

Australian Associated Press