Mexico is facing an avocado shortage due to war, the pandemic, inflation, and the climate crisis

• Avocados are a $3 billion industry in Mexico, the top avocado producer in the world.
• This year, several challenges have led to high inflation and rising avocado prices.
• Insider spoke to restaurant owners on how their businesses are responding.

MEXICO CITY, Mexico – Mexico is the world's top producer of avocados, a $3 billion-a-year industry that has earned the fruit the nickname oro verde, or "green gold."

But that moniker has taken on a new irony for everyday Mexicans, who have watched prices increase sharply amid the converging crises of war, the pandemic, and extreme weather.

"The prices of avocado are so high that it's now a luxury for a customer to ask for one avocado in a daily meal," the chef Lazaro González told Insider.

A spike in prices

González is the owner of Puro Gusto, a traditional Mexican restaurant in Toluca, which is about 40 miles southwest of Mexico City.

Over the past six months, González said he's been buying fewer avocados for his dishes, even though they're still "so popular."

A kilo of avocados cost 50 pesos at the local market in March 2020, according to González. He said the same amount, or about three avocados, now costs 125 pesos — a 250% rise in just over two years.

Data from Grupo Consultor de Mercados Agrícolas, an agricultural-consulting firm, shows a 165% increase in domestic consumer avocado prices in the past year. In the US, which receives 80% of Mexico's avocado exports, prices of conventionally grown avocados spiked 31% in June over the previous year, according to US Department of Agriculture data.

The cost squeeze prompted González to add an extra charge for avocado in his restaurant. But with inflation at a 23-year high in Mexico, his customers can't always afford to pay it.

Environmental factors

Meanwhile, avocado producers have struggled with expensive or scarce fuel and fertilizer. Mexico buys 27% of its fertilizer from Russia, which is waging war in Ukraine, squeezing the supply side.

In June, a hailstorm — unusual weather for the season — hit the western state of Michoacán, the top avocado-producing region in the country, leading to a $95 million loss for the industry, according to the Ministry of Agriculture.

Avocado crops are harvested every two years, which means farmers and producers will have to wait until 2024 to recoup their losses.

Producers told Insider that extortion by Mexican drug cartels adds to operating costs. The producers declined to make their names public, citing fears of possible cartel attacks.

In February, a US Department of Agriculture employee received threats while working in Mexico, prompting an eight-day US ban on avocado imports from Michoacán, according to the Boston Globe.

Difficulty for restaurants

Mexico's National Association of Restaurants said that its members are facing struggles with both shortages and high prices.

In today's environment, a small restaurant could pay an average of 18,000 pesos, or about $880, for its avocado supply every month, which raises operating costs, the association said.

"Avocado is an ingredient that can't be substituted by another ingredient. It's unique," González said.

And it has a short shelf life.

"Once an avocado has been cut, it needs to be eaten the same day. Otherwise it begins to oxidize quickly, change its color, and doesn't taste good," González said.

Some restaurant owners say that the affordability problem doesn't begin and end with avocados, either.

"In the last month and a half, we have been facing price increases of everything, not just avocado," Ceci Mondragon, the owner of Chilaquilito restaurant in Mexico City, told Insider.

The average Mexican consumer eats about 8 kilos of avocado — roughly 24 avocados — a year. (The average American consumes about 12 avocados a year, per Rabobank data.) But since the price jump, Mexican consumers have been changing their habits.

"I enjoy eating slices of avocado on salads, sandwiches, or even in tortas. But now my family and I must reduce our consumption," María Silvia, the owner of a hamburger restaurant in Mexico City, told Insider.

"We miss eating it every day," Silvia said.