Profitability of Mexican Avocado Production in the Face of an Increase in Exports to the Canadian Market

Abstract

Mexico is the main exporter of avocado in the world, while Canada is the seventh importer. To meet its domestic demand, Canada imports about 93.73% of avocados from Mexico. It is worth mentioning that, between 2003 and 2018, the average annual growth rate of Mexican avocado imports in Canada was 14.72%; while, from 2019 to 2021, this same rate averaged -4.65, that is, in this period Mexican avocado imports in Canada fell at an average annual rate of 4.65%. This research aims to determine the viability of increasing the annual growth rate of Mexican avocado exports to the Canadian market. To carry out the work, the avocado market between Mexico and Canada was represented in an econometric model and, with the results, a partial equilibrium analysis was carried out, simulating a 50% annual increase in exports. The results show that an increase in the amount of Mexican avocado exported to the Canadian market that results in an average annual growth rate of 50% is viable in terms of income. The simulation shows that the Benefit/Cost Ratio (B/C R) in avocado production for the states of Jalisco, Michoacan and the State of Mexico, in the hypothetical scenario, would be 1.4831, 1.4257 and 1.5322 respectively.