How Trump’s 25% Tariff on Mexico is affecting Kenya avocado farmers

The recent imposition of a 25% tariff on Canadian and Mexican imports by the Trump administration has sent shock waves through the global avocado market, triggering a significant realignment of trade flows and creating new challenges for exporters worldwide.

Mexico, the world’s largest avocado producer, has responded to the higher tariffs on exports to the U.S. by redirecting its entire annual production of approximately 1.3 million tons toward the European market. This move is set to reshape the competitive landscape, particularly for smaller exporters like Kenya, who rely heavily on the European market for their avocado trade.

Mexico’s decision to pivot toward Europe comes at a critical time. During Europe’s peak avocado season, which runs from May to September, Mexico plans to contribute 500,000–600,000 tons of avocados to the region. This volume is substantial, considering Europe’s total annual avocado consumption stands at around 800,000 tons.

The influx of Mexican avocados is expected to create a highly competitive environment, driving down prices and squeezing out smaller exporters.

Kenya, which typically exports 70,000–100,000 tons of avocados to Europe during the same period, now faces an uphill battle. Historically, market oversupply has led to significant price drops. For instance, when Peru’s seasonal shipments flooded the European market, prices plummeted to as low as €0.75–1 per kilogram.

With Mexico’s larger volumes and lower shipping costs, experts predict that prices could fall even further, potentially reaching €0.50–0.75 per kilogram. This would be well below the break-even point for Kenyan producers, who require prices of around €1.50–2 per kilogram to remain profitable.

The implications for Kenyan growers are dire. Many could be forced to sell at a loss, pivot to less lucrative markets with higher logistical challenges, or risk being left with unsold, perishable stock. Unlike Peru’s seasonal exports, which typically exit the European market by October, Mexico’s continuous supply means there will be no respite during Europe’s peak season. This creates a prolonged period of intense competition and price pressure for Kenyan exporters.

Broader Implications for the Global Avocado Industry

This trade realignment underscores the risks and uncertainties faced by agricultural exporters in an increasingly volatile global trade landscape. For Kenya, the situation highlights the need to diversify markets and explore alternative strategies to mitigate the impact of such disruptions. Potential solutions could include:

• Market Diversification: Exploring new markets in Asia, the Middle East, and Africa to reduce reliance on Europe.
• Value Addition: Investing in processing and packaging to create higher-value avocado products that can command better prices.
• Improved Logistics: Streamlining supply chains to reduce costs and improve competitiveness in distant markets.

Long-Term Market Strategies

The shift in Mexico’s export strategy raises critical questions about the long-term competitiveness of the global avocado industry. How will smaller exporters like Kenya adapt to these changes? What role will trade policies and tariffs play in shaping future market dynamics? And how can producers ensure sustainability and profitability in an increasingly competitive environment?

For now, the immediate challenge for Kenyan exporters is to navigate the current oversupply and price pressures in the European market. However, the broader lesson is clear: in a rapidly changing global trade environment, adaptability and innovation are key to survival and success.

Source: farmerstrend