Political Economy Forum

August 5, 2020

Is Avocado Demand Driving Cartel Violence? By Megan Erickson and Lucas Owen

Has the growth of the avocado industry caused a surge in violence among Mexican Drug cartels? While the conventional wisdom in the media is that it has, a shibboleth avocado farmers themselves tend to concur with, our research suggests differently.

 

In the last ten years, the demand for avocados has grown rapidly. Conscious of the versatility and health benefits of the fruit, consumers, particularly among younger generations, have made the avocado a regular part of their diet. In 2018, global consumption of avocados was valued at 9.29 billion USD and was growing at an annual rate of 5%. In Mexico, exports of avocados experienced a compound annual growth rate of 18.5% between 2000 and 2020. Mexico is now the largest exporter of avocados, exporting nearly three times as much as the next five biggest exporters combined.

 

But the boon to the avocado industry has not come without costs. Mexican locals familiar with the industry share stories of cartels fighting over land, extorting producers, and even illegally cutting down forests to make room for avocado orchards. One avocado trade group even formed their own militia to ward off the cartels (LA Times).

 

Popular accounts liken criminal organizations to firms, and not without reason. In New York City, the mob infiltrated licit industries such as construction, shipping, and waste management during the 1970s and 80s. This was not unprecedented. The New York mob cornered artichoke production in California during the Great Depression. Its precursor, the Sicilian mafia, first emerged in regions where lemons and sulfur boomed in the late-19th Century.

 

Mexican Cartels have followed in the mafia’s footsteps. Besides avocados, they have been known to steal oil from pipelines and control access to gold mines.

 

In our working paper, we seek to address some of the broader research questions surrounding the behavior of organized crime by examining the effects of the expansion of the avocado market in Mexico in the last decade. In understanding this phenomenon, we theorize that cartels will orient themselves towards licit markets when their expertise suits those markets, and to diversify revenues reliant on illicit markets. We expect that, because the avocado industry is immobile, efforts by criminal groups to monopolize production entail monopolizing territory. Such efforts should therefore translate into greater violence between cartels, or so we thought. Our findings, however, suggest the exact opposite.

 

We find that Mexican municipalities that were allowed by the US government to start exporting to American markets after being declared free of avocado pests experienced a significant decrease in cartel-related homicides compared to municipalities that were barred from exporting. On average, expansion of the avocado market led to 0.28 fewer homicides by firearm per 100,000 people in “treated” municipalities. Given the populations of these municipalities, this translates to approximately 32 fewer homicides by firearm during the 2014-2019 period we studied.

 

We were surprised to find this negative effect, particularly because those most familiar with the industry say that cartel violence over avocados has increased. We are naturally inclined to believe that there is still some truth to the local account. In our paper, we understand this aggregate decrease in violence as still fitting within our framework. We argue that cartels likely anticipate increased territorial contestation and behave preemptively, allocating more resources to defending those territories before contestation increases. Greater defenses reduce incentives to contest others’ territory, resulting in a net decrease in cartel violence.

 

Yet, in giving weight to local accounts, we acknowledge that this process may still be more complex. It may be that contestation decreases in most areas but increases in a select few. The direction of the effect may depend on whether territories were already contested before treatment. The ability to export avocados may cause contestation to decrease in areas under the control of one cartel but increase in areas where no one cartel is in control. Because violence is more newsworthy than no violence, this would provide the publicity for the local accounts we see.

 

Another interpretation, still, is that the ability to export avocados causes violence to decrease at first and then to increase after some time. Cartels may not be immediately aware of a municipality’s ability to export avocados. It may take some time to notice the increase in commerce or in the wealth of producers. In this scenario, violence first decreases because wealth reduces the average person’s incentives to engage in violence, but later increases as cartels enter the industry. Our results weakly suggest this may be the case. In an event study, we find that the estimated effect of export ability on violence starts out negative but becomes positive over time. Since most of the municipalities in our dataset were only recently allowed to start exporting, however, we have insufficient statistical power to assign much significance to this later effect.

 

To get at these underlying mechanisms, and to explore further hypotheses, we are examining a host of other outcome variables as well. For example, we also looked at the effect of avocado export ability on the incomes of agricultural workers. In the absence of cartels, or if cartels were solely vertically integrating, we would expect the incomes of agricultural workers to rise as a result of the ability to export avocados. If cartels are extorting producers, we would expect to see no effect or a negative effect on incomes. We are unable to find any significant effect of the ability to export avocados on agricultural worker incomes.

 

We still have a lot of work to do, but there is one key lesson we’ve drawn from this project so far: Mexico’s drug cartels are far from just drug cartels. This rings especially true for the avocado producers of Michoacán. Acknowledging this and appreciating their nuances promises to teach valuable lessons about organized crime, institutions, and development.

 

By Megan Erickson and Lucas Owen

Click here for the paper