Helios AI shares price risk analysis with avocado and tomato

The rising cost of avocados and tomatoes has become a pressing concern for consumers, retailers, and procurement leaders alike. These staple produce items, heavily imported from Mexico, have already seen significant price increases over the past year due to a combination of supply chain disruptions, adverse weather conditions, and strong consumer demand. Now, the recent shift in trade policies, including the proposed tariffs under Trump’s administration, threatens to further exacerbate this issue. While tariffs are only one piece of the puzzle, the underlying factors driving price spikes are multifaceted and deserve closer scrutiny.

Tariffs one more factor of inflation

Mexico is the leading supplier of avocados and tomatoes to the U.S., providing nearly 80% of the avocados consumed in the country and a significant portion of the tomatoes. However, extreme weather conditions, particularly a prolonged drought in Michoacán—the heart of Mexico’s avocado industry—have severely impacted yields. According to the Detroit News, "Mexico’s avocado industry is grappling with a severe drought, which has led to a 26% drop in shipments to the U.S. early this year compared to 2024." This has led to wholesale prices more than doubling, with a standard box of avocados now costing upwards of $90, a sharp increase from last year’s $40 price point.

Comment on graphic about precipitation risks

A screenshot from CommodiTrack of the precipitation risk for Avocados in Los Coyotes, Michoacán, showcasing the drastic deviation of precipitation levels in the past year in the region. This region received 67% less rain than the historical average (14 inches compared to the normal 42 inches). Tomato prices have similarly been affected, with lower yields due to unpredictable rainfall patterns and water shortages in key growing regions. NPR reports that "tomato growers in Mexico are facing an uphill battle with declining yields due to persistent drought conditions, driving up costs for U.S. buyers”. The Produce Blue Book adds that anxiety on supply shortages has caused spikes in market prices, particularly for premium-grade produce." As a result, consumers are seeing higher prices in supermarkets, while restaurants and food suppliers are forced to pass these costs onto customers.

More unpredictable conditions

Looking toward the future, these price pressures are unlikely to subside in the short term. With climate change driving more unpredictable weather conditions in Mexico, growers are struggling to maintain consistent output. NPR notes that "without significant rainfall in the coming months, Mexico’s avocado and tomato yields will continue to shrink, further inflating prices for U.S. consumers." Additionally, if tariffs are implemented, they would add another layer of expense to an already constrained supply chain. Analysts suggest that the combined impact of reduced supply and increased import costs could push avocado and tomato prices even higher in the coming months, particularly during peak consumption periods such as the Super Bowl and Cinco de Mayo. These price surges are expected to have ripple effects across the food industry, affecting restaurants, grocery stores, and food service providers that rely on these staple ingredients.

Proactive approach to sourcing

For procurement leaders, staying ahead of these fluctuations is critical to maintaining supply chain stability and cost-effectiveness. Given the volatility in pricing and supply, businesses must adopt a proactive approach to sourcing, leveraging data-driven insights to anticipate price movements and identify alternative suppliers when necessary. As the market for avocados and tomatoes continues to evolve, industry stakeholders must remain vigilant in monitoring these developments. With the right tools and strategic planning, businesses can mitigate risks, adapt to changing conditions, and ensure a steady supply of these essential commodities despite ongoing economic and environmental challenges.