President Trump is suggesting that the U.S.-Mexican border be closed unless Mexico assists with reducing the number of illegal immigrants reaching the border.
Beyond the humanitarian impacts, closing a border can have many impacts on supply chains. Hitting the news is the looming avocado shortage that would take place if the border is closed. Within three weeks, avocados would not be available, or in very limited supply, in the United States.
This is far from the first time an avocado shortage has made headlines. In 2014, with Chile and California facing drought, and gangs blocking production and delivery of avocados in Mexico, news spread of a potential avocado shortage. In 2016, a growers’ strike in Mexico led to a shortage. And in November 2018, a dispute between growers and packers threatened another shortage.
Avocados represents only one of the products that would be impacted. Other fruits, car parts which flow in both directions, and refined gas shipped to Mexico, would also be affected.
Video Spotlight: Trump reiterates threat to close U.S.-Mexican border
This post is based on the Newsbusters.org article, Holy Guacamole! MSNBC Fears Avocado Crisis if Trump Closes Border, by Kyle Drennen, April 1, 2019; and the YouTube video, Trump reiterates threat to close U.S.-Mexican border, by CBS News, April 2, 2019. Image source: lynx/ iconotec.com/Glow Images
1. What industries would be hurt if the Mexican border is closed?
Guidance: Obviously, avocados and other vegetables imported from Mexico would be affected. The automotive industry has parts going in both directions across the Mexican Border. Many auto plants might be shut down on both sides of the Border. The petroleum industry would be impacted as Mexico imports gasoline from the US. Students could do a search to determine other industries that would be impacted.
2. How could you reduce the risk of border closures in a supply chain?
Guidance: Having an international supply chain provides several advantages. One of its drawbacks is the impact of political policies, such as border closures or tariffs. To a large extent this is beyond most organizations’ control. They can analyze the quality of the relationship between the countries and the chance of border closures or tariffs. But, such analysis doesn’t guarantee that the border stays open. The solution would be more production inside the United States, or at least spreading out the risk by operating in and sourcing from multiple countries.
3. What can avocado suppliers do in the face of a potential border closure?
Guidance: In the long term, producers could look to move avocado production. However, growing avocados is a slow process taking many years for an avocado plant to produce fruit. Lobbying to keep the border open is a potential solution.
In the short run, producers might try to get more avocados across the border. However, avocado’s have a relatively short shelf life, so this doesn’t provide substantial help.