How to Measure the Price of Avocados – and How Trump's Threats Change It

(Bloomberg) -- There’s little doubt that Donald Trump’s border threats have helped push up Mexican avocado prices as buyers look to lock in supply. Measuring those gains can be trickier.

After all, avocados are a commodity only in the broad sense -- they don’t trade on exchanges like soybean futures in Chicago or copper in New York.

Relatively opaque fruit and vegetable markets such as avocado start with producers. One gauge of the Hass variety from Michoacan, the heartland of Mexican production, jumped 34 percent last week and was up another 2.6 percent Monday to 400 pesos ($21.09) a box, the highest since May. Per kilogram (2.2 pounds), the price jumped to 44.44 pesos from 32.22 pesos a week ago.

Still, that’s just an average supplied by the government based on daily surveys in Mexico City’s Central de Abastos, the capital’s bustling wholesale-produce market. Prices vary depending on the product’s final destination and are subject to lags.

There are dozens of other prices on the Economy Ministry website based on quality, size and destination. The Hass variety -- known for its rich, creamy flesh -- makes up 95 percent of all avocados eaten in the U.S., according to marketing group Avocados From Mexico.

Another benchmark is the domestic market garden reference tracked on the InfoHass website. That’s the price at which Michoacan growers sell to packers or exporters, expressed as the size of avocados that fit in one box. For example, the so-called Calibre 36’s sold for 55 pesos a kilo last week.

Then there are average export prices in Texas, California, New York and Chicago. Last week’s price jump can be seen across the board for domestic and export prices to varying degrees.

Prices for avocados going into Texas rose more than 40 percent last week, with a 25-pound carton of conventional fruit reaching about $60, according to the U.S. Department of Agriculture. In the U.S., avocados are commonly priced in 25-pound cartons with as many as 84 units and as few as 32, depending on the size.

With little to suggest Trump’s border rhetoric will subside anytime soon, producers and consumers alike may have to get used to even wilder swings in what was already a volatile market for the super-food.

While ultimatums to close the border are pushing up prices, Michoacan producers are worried the U.S. will deliver on those threats.

“It would be incredibly difficult to relocate that gigantic amount of avocado, causing prices to drop and collapsing Michoacan’s most important agro industry," said Salvador Ortiz, founder of the InfoHass website and radio show.

--With assistance from Michael Hirtzer and Juliano Candido.

To contact the reporter on this story: Andrea Navarro in Mexico City at anavarro30@bloomberg.net

To contact the editors responsible for this story: James Attwood at jattwood3@bloomberg.net, Millie Munshi

©2019 Bloomberg L.P.