Participation of small farmers in export markets: the case of Mexican avocados

The last two decades have witnessed many tropical countries diversify exports into non traditional fresh produce, especially fresh fruit and vegetables, traditionally grown by smallholder farmers. At the same time, fresh markets in developed countries have seen important changes, more than half of the fresh fruit and almost a third of the fresh vegetables bought by North Americans and Europeans now come from other countries.

Fresh exports are expected to keep growing due to globalization and improvements in roads, containerized shipping, and new storage technology. As well as the rise of income levels and thus an increase in the middle-class demands for fresh produce year-round, there is also increased trade between the global north and south due to new trade agreements, the growing number of immigrants in developed countries; and competitive advantages of foreign growers such as lower labor costs.

While fresh produce exports represent great opportunities for farmers and agribusinesses, the participation of smallholder farmers is still low. According to FAO, high costs of transportation and storage, inadequate infrastructure, and increasing demands for high standards of quality (requiring investment in assets and technical capacity) are the main bottlenecks. Often farmers are unlikely to take risks if they think that their products could be lost, and so there is a preference to remain in local markets.

The avocado is a good example of fast growth in export markets with the participation of small farmers, with its success attributed to the rising Latin American population in the USA and Europe, the international popularity of foods such as guacamole and the avocado promoted globally as a “super food”.

The performance of the avocado market has grown 104% from 2000 to 2016, with a total production of 5.5 million tonnes in 2016, and a 69% increase in harvested areas. It is expected that the market will reach 7.6M tonnes by 2025. Top avocado producers (Mexico, Dominican Republic, and Peru) have a large concentration of small farmers, each with less than five hectares of harvested avocado.

In the case of Mexico, The National University of Mexico estimated that 40% of Mexican exporting farmers have less than 10 hectares of land each, 30% have between 10 and 15 and the remaining 30% have more than 25 hectares, which means the majority (60%) of Mexican avocado exporting farmers are still classified as medium and large producers.

The low participation of small avocado farmers in export markets is attributed to the lack of knowledge regarding quality, safety and traceability requirements. The majority of small producers supply local markets and their participation in exports is mostly through large packing companies. Most avocado exporters have their own harvest in order to be sure of obtaining the quality required, or they have their own cutting companies who pick the product from external harvesting. The majority of Mexican avocado exports come from one state – Michoacán – the first that had the certification to export to the USA.

But it is expected that the participation of Mexican small avocado producers will increase. As Michoacán production is reaching maximum capacity, other states, such as Jalisco, are starting to become important competitors, with important investments in food safety certification, with the direct involvement of small farmers. Through APEAM the government leads efforts to educate on quality, safety, and traceability for avocado exports and supports coordination among exporters, packing companies and producers. Compliance with those export certifications requires farmers to invest in training and pay for traceability services, which initially is often costly for small farmers but rewarded through export prices.

The Mexican avocado production, which reached 997.629 tonnes in 2017 and 45% of world export market, is expected to increase 15% annually and will require increased participation from small farmers in order to maintain Mexican competitiveness in terms of volume and to reach higher participation in other large markets such the EU and China.