The Avocado Trade

In 1914, the U.S. Department of Agriculture banned the import of Mexican avocados, citing concerns about seed weevils that could devastate California orchards. The ban held for 83 years. It wasn’t lifted until 1997, three years after NAFTA took effect, and even then only for the state of Texas. It took until 2007 — a full 13 years after NAFTA — for Mexican avocados to gain unrestricted access to all 50 states. What happened next was one of the most dramatic agricultural transformations in modern trade history.

American avocado consumption exploded. In 2000, the average American ate 1.5 pounds of avocado per year. By 2024, that figure had risen to over 8 pounds — a fivefold increase driven by Mexican supply that turned a niche California crop into a staple of American cuisine. The state of Michoacán, nestled in Mexico’s western highlands, produces 80% of Mexico’s avocados. Its volcanic soil and elevation create the perfect growing conditions — what one agronomist called “the most valuable 100 miles of farmland on Earth.” By 2024, Mexico exported roughly $3 billion in avocados to the United States alone, and the Super Bowl had become the single largest avocado consumption event in the world, with Americans eating 200 million pounds of guacamole on game day.

The avocado is the poster child, but it’s just the beginning. Mexico remade the American produce aisle. Winter tomatoes that once came from Florida hothouses now come from Sinaloa greenhouses at half the cost and, growers say, twice the flavor. Berries — strawberries, blueberries, raspberries, blackberries — were once seasonal luxuries; Mexican farms in Jalisco and Baja California now supply them year-round. Limes, peppers, cucumbers, squash, mangoes — the fresh produce section of any American supermarket in January is essentially a display case for Mexican agriculture. Without NAFTA, the concept of “year-round fresh produce” at affordable prices would not exist for most American consumers.

Then there are the beverages. In 2023, Modelo Especial surpassed Bud Light to become the bestselling beer in America — a headline that would have been unthinkable in 1994. Constellation Brands, which owns the U.S. distribution rights for Modelo and Corona, built the largest brewery in the Western Hemisphere in Nava, Coahuila, producing 38 million hectoliters per year. Tequila went from a spring-break novelty to America’s fastest-growing premium spirit, with exports to the U.S. exceeding $4 billion in 2023. Celebrity brands — George Clooney’s Casamigos, Dwayne Johnson’s Teremana, Kendall Jenner’s 818 — turned a regional Mexican spirit into a global luxury category. None of this was in the NAFTA playbook. The trade agreement was supposed to be about manufacturing. Agriculture was the afterthought that became the feast.

The food trade flows both directions, and what the United States sends south is as revealing as what it receives. In 2024, the U.S. exported $28.6 billion in food, feeds, and beverages to Mexico. The composition tells a story of comparative advantage operating exactly as the textbooks predict: America sends bulk commodities — corn, soybeans, wheat, rice, pork, chicken — while Mexico sends high-value finished products — avocados, berries, beer, tequila, processed foods.

Corn is the most consequential and controversial of these flows. Before NAFTA, Mexico protected its corn farmers with import tariffs and price supports. Corn wasn’t just a crop in Mexico — it was a civilization. Mesoamerican peoples domesticated maize 9,000 years ago, and the milpa farming system of corn, beans, and squash sustained Mexican communities for millennia. NAFTA phased out corn tariffs over 15 years, and the results were devastating for subsistence farmers. American corn, grown on 1,000-acre Iowa farms with GPS-guided combines and $400,000 worth of equipment, arrived in Mexico at prices that small-plot farmers in Oaxaca and Chiapas could not match. By some estimates, 2 million Mexican farmers were displaced from corn production in NAFTA’s first decade.

The displaced farmers didn’t stay on the land. Many migrated — to Mexico City, to Monterrey, to the maquiladora border towns, and to the United States. The great irony of NAFTA’s agricultural chapter is that it was supposed to reduce illegal immigration by creating Mexican prosperity, but its immediate effect on the countryside did the opposite: it pushed millions off the land and into migration. The longer-term effect was more complex. Mexico’s food imports from the U.S. ($28.6 billion in 2024) actually represent a net benefit to Mexican consumers — cheaper corn means cheaper tortillas, cheaper chicken feed means cheaper pollo, cheaper soybeans mean cheaper cooking oil. The people who gained are the 130 million Mexican consumers. The people who lost are the 2 million farmers who couldn’t compete with industrial agriculture.

This trade-off — cheaper food for consumers, destroyed livelihoods for producers — is the foundational tension of every free trade agreement. In Mexico, it played out in agriculture. In the United States, it played out in manufacturing, as we’ll see in Episode 6. The economics are clear: both countries are better off in aggregate. The politics are equally clear: the people who lose are concentrated, visible, and angry, while the people who gain are diffuse, invisible, and silent.

In 1999, U.S.-Mexico food trade was nearly balanced. The U.S. exported $4.9 billion and imported $5.7 billion — a gap of just $800 million. For one year, in 2008, the U.S. actually ran a food surplus with Mexico ($14.6 billion exported vs. $12.4 billion imported), driven by surging commodity prices that inflated the value of corn and soybean exports. That was the last time the balance sheet favored the U.S. side.

After 2008, Mexico’s food exports accelerated relentlessly. The $12.7 billion of 2009 became $25 billion by 2016, $34 billion by 2020, and $49.3 billion by 2024. American food exports to Mexico grew too — from $4.9 billion to $28.6 billion — but at a slower pace. The result: a food deficit that ballooned from near-zero to $20.7 billion in 25 years. That’s the second-largest category deficit with Mexico after automobiles, which, as we explored in Episode 2, accounts for $139 billion.

Look at the growth rates and the asymmetry is clear. Mexican food exports to the U.S. grew at 9% per year compound, one of the fastest rates of any trade category in the BEA dataset. U.S. food exports to Mexico grew at a respectable 7.2% per year — but that 1.8 percentage point gap, compounded over 25 years, produced the $21 billion deficit. The gap reflects a structural reality: Mexico’s comparative advantage in fresh produce and beverages is expanding faster than America’s advantage in bulk commodities. Every year, Americans eat more avocados, drink more Mexican beer, buy more berries. The demand curve for these products is steep and shows no sign of flattening.

Put Mexico in context and the scale of the agricultural transformation becomes clear. In 2024, the United States imported $217 billion in food, feeds, and beverages from the world. Mexico was the number one source at $49.3 billion — 23% of all food imports — followed by Canada at $41.2 billion and the European Union at $34.4 billion. Together, the two NAFTA partners account for $90.5 billion, or 42% of everything America eats that comes from abroad.

Canada’s food trade with the U.S. followed a different arc. In 1999, the numbers were $8.0 billion in U.S. exports and $9.7 billion in Canadian food imports — a $1.7 billion deficit. By 2024, both had roughly quadrupled: $32.4 billion in exports, $41.2 billion in imports, and a deficit of $8.8 billion. The composition is different from Mexico’s: Canada sends seafood (Atlantic lobster and salmon), canola oil, snack foods, confectionery, and processed meats. The U.S. sends fresh produce, processed foods, and breakfast cereals north. The trade is balanced enough and diversified enough that it generates almost no political controversy — a sharp contrast to the U.S.-Mexico food relationship, which has become a flashpoint in immigration and trade debates.

The rest of the world fills in the gaps. Brazil sends $6.8 billion — mostly coffee, orange juice, and sugar. Chile sends $6.2 billion, dominated by wine, table grapes, and salmon. China sends $5.1 billion but receives $22.7 billion from the U.S. — one of the few countries where the food trade balance runs heavily in America’s favor, driven by massive soybean and pork exports. Japan imports $11.9 billion in American food (primarily beef, pork, and corn) and sends back just $1.5 billion (mostly seafood). In food, America is a net importer with Mexico but a net exporter to most of Asia — the mirror image of the goods trade, where Asia runs enormous surpluses.

The most sophisticated way to understand NAFTA’s food trade is not as a one-way flow but as a two-way pantry — each country stocking the other’s shelves with what it grows best. The United States has an absolute advantage in grain-based agriculture: corn, soybeans, wheat, and rice grown on the vast flatlands of the Midwest with unmatched mechanization and scale. Iowa alone produces more corn than all of Mexico. Mexico has an absolute advantage in labor-intensive agriculture: hand-picked fruits and vegetables that thrive in its diverse microclimates, from the tropical coasts of Sinaloa to the temperate highlands of Puebla.

The trade reflects these advantages with remarkable precision. In the top U.S. exports to Mexico, you find corn (roughly $5 billion), soybeans ($2 billion), pork ($2 billion), chicken ($1.5 billion), wheat ($1 billion), and dairy ($1 billion) — all products where mechanized, large-scale farming gives the U.S. an unbeatable cost advantage. In the top Mexican exports to the U.S., you find beer ($7+ billion), fresh vegetables ($8+ billion), fresh fruits ($6+ billion), tequila and spirits ($4+ billion), and processed foods ($4+ billion) — products where climate, labor, and tradition give Mexico the edge.

There is an uncomfortable asymmetry, though. America’s food exports to Mexico are bulk inputs that feed animals and mills. Mexico’s food exports to America are branded, packaged, high-margin products that line supermarket shelves. The value-add on a bottle of Modelo or a crate of organic berries is vastly higher than the value-add on a ton of feed corn. This is why the food deficit keeps growing: Mexico is climbing the agricultural value chain, moving from raw commodities toward finished consumer products, while America’s strongest exports remain the same commodities it has been selling for a century. The dynamic is the opposite of what NAFTA critics predicted. Mexico was supposed to send cheap labor products north. Instead, it sends premium food and beverage brands that command higher prices than their American competitors.

The agricultural trade relationship that NAFTA built faces two emerging challenges. The first is climate. Mexico’s avocado-growing regions depend on predictable rainfall patterns that climate change is disrupting. Michoacán experienced its worst drought in 30 years in 2023, reducing avocado yields by an estimated 15%. The berry-growing regions in Jalisco are competing for water with the city of Guadalajara, which has 5 million residents and growing. At the same time, higher temperatures are extending growing seasons in the American South, potentially allowing domestic production to compete with Mexican imports in categories like tomatoes and peppers. The geography of agricultural advantage is not fixed.

The second challenge is security. In avocado-rich Michoacán, drug cartels have moved into the lucrative agricultural export business, extorting farmers and controlling distribution. The U.S. briefly suspended avocado imports from Mexico in February 2022 after a USDA inspector was threatened. The suspension lasted only a week — the economic consequences were too severe for both sides — but it exposed the fragility of a supply chain that depends on a single region of a single country for a product that has become a dietary staple for 330 million Americans. Diversification is happening: Colombia, Peru, and the Dominican Republic are all expanding avocado production. But Mexico’s head start — in scale, infrastructure, proximity, and institutional knowledge — will be difficult to overcome within a decade.

For now, the food trade continues to grow. The $49 billion that Mexico shipped north in 2024 will likely exceed $55 billion by 2026, driven by the same forces that have powered growth for 25 years: American demand for fresh, affordable produce; Mexico’s competitive labor costs and ideal growing climates; and a tariff-free corridor that makes a tomato from Sinaloa cheaper at a Chicago grocery store than one from a Florida greenhouse. NAFTA’s architects thought they were writing a manufacturing agreement. What they actually wrote was the recipe for America’s dinner.