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Hiccup in avocado supply drives up prices in Bay Area

Avocado supply disruption threatens to yield high prices
Avocado supply disruption threatens to yield high prices 02:45

SAN FRANCISCO -- Whether at Tacolicious in downtown Palo Alto or at one of their three other locations in San Francisco or Los Angeles, Fernando Guzman says they go through a lot of avocados every day.

"We go through approximately 1,000 or so avocados," he said. "Ninety percent of the volume of avocados is going into guacamole. That's a lot of guacamole."

So if there's a problem with the global supply, Guzman, director of culinary for the restaurant group, says they feel it.

"The fewer avocados that are out there are going to be more expensive," he said.

Last week, there was a problem in Mexico's main avocado domain, the state of Michoacan. Two USDA employees were assaulted and detained while inspecting avocados there, according to a memo from U.S. Ambassador Ken Salazar. They've since been released  but the U.S. stopped inspections of avocados and mangos for a week.

It wasn't until Friday when Salazar said inspections would gradually begin to resume.

"It'll be a good amount of time before we see the market normalize again," Guzman said. "We don't know how high they're going to go this time around."

Professor Daniel Sumner, an agricultural and resource economics expert at UC Davis, says consumers could potentially see a price difference when they go to the market.

"I wouldn't be surprised if they were a little bit more expensive in some markets and not others," he said. "Sooner is more likely, just because they're rationing this disruption."

However, Prof. Sumner doesn't think the scenario will impact consumers when dining out very much. It will affect the restaurants that have to purchase avocados in large quantities, he says.

"Certainly people in the business have already noticed and already made their plans and are already making their adjustments," he said. "Given that it was a week, there were effects on the supply side."

Guzman says that, at Tacolicious, their adjustments won't include raising prices. "No, we just absorb the cost," he said.

He says they're bracing for thinner margins but, in this scenario, it's just the cost of doing business.

"We have never raised our prices when avocado prices go up," he said. "The demand, I don't think, is going to go down. People will still enjoy their avocado toast and their guacamole."

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