Continuing ban on Mexican avocados has spooked grocers, retailers and restaurants

“We are praying to the avocado gods,” said Rocco Mangel, founder of Rocco’s Tacos & Tequila bar, which has nine locations in New York and Florida and serves 2.5 million avocados a year, largely in the context of theatrical tableside squashing.

Last week the U.S. Agriculture Department suspended imports of avocados from Mexico, just two days before the Super Bowl (the country’s No. 1 avocado-intensive celebration) and a couple of months before Cinco de Mayo (which is No. 2). “Avocados” has been a top trending search on Google this week.

Last week, a plant safety inspector from the USDA’s Animal and Plant Health Inspection Service was inspecting avocados in Michoacán, the only state authorized to export to the United States. The inspector saw some avocados that looked suspiciously like they came from another state, according to USDA and other industry experts; fruits from each region can have different shapes, sizes and skin textures. He raised a red flag and soon after, he received a voice mail threat to his safety. Then, the USDA announced it was shutting down imports until they could be assured their agents were safe.

Michoacán supplies about 80 percent of the avocados eaten in the United States, even more during this time of year, said David Magaña, a senior analyst for RaboResearch Food & Agribusiness. While the import ban could provide an opportunity for other countries to sell more avocados to the United States, supply disruptions ultimately tend to hurt the entire category — retailers and restaurants depend on a stable supply. Disruptions may cause companies to nix menu items or fill in empty produce shelves with more reliably available fruits.

Mangel of Rocco’s Tacos & Tequila bar said he’s hearing there could be a resolution soon, but he’s also trying to come up with a backup plan.

“We’re considering alternatives, other countries. We could scale back portions but we can’t compromise the integrity of our product,” he said. “Our guacamole is two avocados. When do we start scaling it back to one? Some people are using frozen pulp. We just don’t.”

The avocado industry has benefited from consistent year-round supply. But the longer a product is missing from the market, the more likely supermarkets and restaurants adapt to gaps in supply by ditching things that are likely to disappear and reappear without warning.

Grocery stores have already been seeing price increases, with grocers questioning at what price consumers stop buying the fruit.

Stew Leonard, Jr., owner of Stew Leonard’s, which has stores in Connecticut, New York and New Jersey, said prices used to be about $2 per avocado. Before the import ban, he had already raised prices to $2.50 because last month avocados were 100 percent more expensive than they were a year ago. Now, he is expecting prices to hit $3, but he’ll keep selling them no matter the price.

“We have enough to get us through the week right now. We’re playing it day by day,” he said. “It’s the same thing with lobster or crab this year — those prices have skyrocketed. The question is, do you want to not sell it or to sell it at a higher price? We still sell it.”

He said he expects some grocers to move to smaller avocados. A standard case contains 48 pieces of the fruit, but there are cases of smaller avocados that contain 60, which would help buffer the price from skyrocketing. Leonard, who sells 30,000 avocados per week, 50,000 during the week of the Super Bowl, said he hopes his suppliers can find avocados from countries other than Mexico.

So far, major restaurant chains are all over the map about what the ban will mean for them, with some companies saying they are not affected, while others saying they have weeks of supplies.

“We are working closely with our suppliers to navigate through this challenge,” Jack Hartung, Chipotle’s chief financial offer, wrote in a statement. “Our sourcing partners currently have several weeks of inventory available, so we’ll continue to closely monitor the situation and adjust our plans accordingly.”

Taco Bell was even more sanguine, a spokesperson writing in an email: “Taco Bell is not impacted by the U.S. halting avocado imports from Mexico. We import guacamole and not whole avocados, which is not impacted by the current ban.”

Although El Pollo Loco has adequate supplies in the near term, interim chief executive Larry Roberts warned in a statement, “If import restrictions continue, we will need to take actions to address the likely shortage of avocados in the U.S. market.”

A Moe’s Southwest Grill spokesperson declined to comment, as did one from MegaMex Foods, which makes Wholly Guacamole products available at retail.

For restaurants and retailers, the impact depends on how the import ban lasts, said Tom Stenzel, chief executive of the International Fresh Produce Association. Distributors will have to decide which contracts to honor.

“Do I not deliver to Walmart for the next few weeks, so I can supply Chipotle because they are a higher bidder, and risk my relationship with Walmart for the next five years?” Stenzel offered as a hypothetical example of decisions that will have to be made, adding that “a crisis also gives everyone an opportunity.”

As the ban continues, major shippers will try to redirect their supply — Mexican avocados may head to Europe and avocados from Peru may swoop into the United States, changes that may be hard to unsnarl if the ban lasts for months.

Calavo Growers, one of the biggest international distributors of avocados, said they are trying to work to keep avocado distribution as steady as possible.

“We continue to sell avocados from our inventory and have serviced all our customers to date,” said Nelia Alamo, vice president of communications on Thursday. “We are monitoring this situation daily with our team in Mexico and our contacts in Washington, D.C., and we are staying in close communication with our customers to ensure our supply chain is aligned with demand.”

Harvest has stopped in Michoacán, according to Magaña, and all packing facilities are closed. Avocados can safely stay on the trees for several weeks and wait out the problem, but Magaña said many of the 300,000 Mexican workers who depend on the industry for a paycheck are not getting paid right now.

Martha Montoya, chief executive of Agtools, an agricultural market research firm, warned that there will be ripple effects with other Mexican agricultural products, such as mangos, that depend upon the same inspectors to be legally exported to the United States. Still, she said that there are signs progress is being made in negotiations between Mexican and U.S. authorities, in coordination with the Association of Avocado Exporting Producers and Packers of Mexico, to figure out how to reinforce safety protocols.

On Thursday, the Mexican and U.S. agencies involved released a statement saying there had been “positive progress and continued open dialogue,” and the Mexican avocado association said a memorandum of understanding will follow shortly. Then, the U.S. representatives will take the proposal to the U.S. Embassy in Mexico for an official response, according to a statement from the Mexican avocado association. No date has been given for the resumption of the avocado flow.

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