Avocado Shortage

Andrew Simpson

GVPT200

Avocado Shortage 

Recently California has suffered from massive water shortages and as a result of this their production of avocados is decreasing dramatically. California is the number one producer of avocados both for and in the US. I believe that this will cause the price of avocados to rise in the US. People can argue that there are other places for the US to purchase avocados but since California has the absolute advantage on avocado production the price will still go up.

            There are many different reasons why the price of avocados would go up. First, if there is a shortage of water then that means that the price of water will increase. Since water is an essential resource for avocado production an increase in the price of water would result in an increase in the price of avocados. Another way avocado price could increase is with an increase in wages. I would assume that producers of avocados in California would want to produce the most amounts of avocados possible. If this is the case then they might have to hire skilled worker at higher wages to respond to the water shortage. What would happen is producers would grow the avocados for a shorter period of time in order to conserve water. This change in production would definitely cause a change in the skill demanded from the workers. There are many different ways that the water shortage can directly affect the production cost of avocados.

            It can be argued that the US could simply purchase their avocados from other producers. The US also acquires some of its avocados from Mexico and other South American countries, however when it imports goods it is more expensive. Either way, California had the absolute advantage of avocado production in the US so wherever the US gets them from its going to cost them more. Absolute advantage means that California is able to produce more avocados than other domestic producers and foreign producers. It can also be said that California specializes in the production of avocados meaning that they are the top supplier. California avocados are also preferred at most places in the US so a probable scenario will be that most places will continue to purchase from California despite the price increase.

            It has been reported that California production of avocados will decrease 40 percent in the next couple years. This is directly related to the water shortage going on in California and will cause the price of avocados to rise dramatically. Factors such as the price of water and higher wages for workers are directly affecting the price of avocados. It can be said that the US could acquire avocados from other foreign and domestic sources. However, California has an absolute advantage on avocados in the US and it will cost the US extra to shop elsewhere. It is clear that lack of water and other resources can have a major impact on different aspects of the economy, and due to water shortage we will see the price of avocados rise in the next couple years.