An Avocado Update

If you’ve recently eaten a spectacular avocado at a New York restaurant, it might have come from a man who wears avocado socks.

A September 2018 article from Eater tells us that Miguel Gonzalez delivers directly to 120 New York restaurants. As an avocado supplier, he works with farms in Mexico’s Michoacán state. To maintain consistency and minimize bruising, he monitors truck temperatures and how the boxes are stacked during their 2600 (or so) mile journey.

When the avocados arrive, they ripen in his warehouse to a half or fully ripe texture, depending on what a chef requests. Their last stop is a restaurant kitchen, perhaps destined to perch atop a piece of toast. (From 2014 to 2017, Americans’ monthly avocado toast spending popped from $14,000 to $900,000.)

I wonder what Mr. Gonzales is saying about the new tariffs that could saddle Mexican imports.

Avocado Prices

This is a tough time for avocados.

In California, production is down while Mexico has coped with fuel thievery and labor problems. The result? Less supply plus high demand equals rising avocado prices:

Now with President Trump’s threat of a 5% tariff hike each month, growers probably won’t cut back since they know they have the demand. The one sure thing (in a world of unintended consequences from tariffs) is a new round of price hikes.

Then to all of this we can add border delays that boost transport costs. With the Trump administration transferring border personnel to immigration surveillance, understaffed truck crossing inspection sites are creating extra two to four hour waits. Those delays could add to driver pay and the number of people in the cab if the federal driver rest time mandate kicks in.

This is a delay at Ciudad Juarez, Mexico during April 2018:

Our Bottom Line: Supply Chain Disruption

Tariffs and transport delays create supply chain disruptions. Just like a necklace, a supply chain takes a product from one link to another. Those links could be separate businesses that, as legendary economist Milton Friedman once explained, connect because of price incentives. In addition to efficient production, Dr. Friedman cites the peaceful relations that free trade can encourage.

Do watch his two minute talk. It is classic Friedman:

For Miguel Gonzalez, his chain was from the farm to the truck to his warehouse to the restaurant to your table.

My sources and more: Bloomberg is always a good place for up-to-date facts about avocado markets. Although heavily quantitative, papers from Princeton’s Alonso de Gortari have the perfect overview. Then, for the restaurant side, eater.com had the story of one avocado man and, The Washington Post explained the border delays.