Blood Avocados: Cracking Down on Cartels

Last year, millionaire real estate mogul Tim Gurner told 60 Minutes Australia that millennials are blowing potential savings on “buying smashed avocado for nineteen dollars.” While hyperbolic, Gurner’s comments highlight the avocado’s place in the pantheon of food fads. Trendy neighborhoods and Instagram feeds across the United States are replete with avocado toast and similar homages to the fruit. The boom of avocados has largely been attributed to the lifting of many NAFTA restrictions that previously prevented agricultural imports from Mexico. Since the policy change, the avocado has become a hot commodity, and US demand for the crop has continued to grow. As of 2016, the US was responsible for the consumption of eighty percent of the production of avocados in Mexico, and farmers saw $2.2 billion in profit from them alone.  This spike in demand has proven lucrative to Mexican farmers, and the rise in value of avocados has caught the attention of Mexico’s most notorious drug cartels. Last October, Reforma reported that avocado farmers in Mexico were being forced to give a percentage of their profits to cartels or risk violence against themselves and their families.

Organized crime syndicates using cash crops to diversify their income is nothing new. Mexican drug cartels have extorted lime farmers in the past, and the Sicilian mob in Italy rose to prominence through the extortion of lemon growers in the 19th century. US officials have long sought to combat cartels by stifling US appetite for illegal goods—Secretary of State Rex Tillerson said in a talk in Austin, Texas that “U.S. demand for drugs drives this violence”—but such an approach is no longer effective with cartels’ expansions into legitimate industries such as avocado growing. Efforts to fight cartels must stop focusing so much on the products themselves, and instead turn to directly attacking their financing. If the money stops flowing, so will the flow of illicit goods.

The avocado industry in the Mexican state of Michoacan demonstrates the devastating reach of the cartels. In the 1980s, the avocado was the largest cash crop in the region, and the profitable industry quickly became a primary target of the Los Caballeros Templarios cartel. By some estimates, the cartel gains $150 million each year from the local avocado industry, now controlling 10 percent of orchards in the state. Using this income, the cartel has consolidated its power to gain control over the police and the courts.

Vigilante groups have developed in various towns in retaliation to cartels’ state-like control over the region. These groups—whose membership comprises avocado growers—function like watchdog organizations. Members patrol the farms, report suspicious activity, and are funded by their towns and by other growers. The Mexican government has gone so far as to deputize vigilante groups, with great success in small towns. This past January, NPR reported that these avocado watches managed to effectively remove cartel influence from Michoacan. But, while vigilantism may work for smaller communities, this approach is not realistic on a larger scale.

Currently, many strategies to counter cartels focus on the illicit products themselves: these include securing the border, criminalizing drug use, and punishing distribution. While increased border security can help to cut off cartel drugs before they ever enter the states, cartels’ expansion into foods, such as avocados and limes, makes it much harder to stop cartel business. Another approach seeks to attack drug cartels by decreasing demand for the products in question. However, even if demand for avocados were to decline, the cartels have a sophisticated enough network—and people have sufficient appetites—that another lucrative food would likely pop up and be commandeered.

"These cartels are able to expand at high rates because of the litany of big banks, such as Wells Fargo, that fail to apply anti-laundering policies to the billions of dollars worth of currency exchanges that occur behind their closed doors."

A scalable solution needs to focus on weakening the cartels themselves—not on the demand for the products they sell—to have any hope of loosening the cartels’ industry strangleholds. With cartels’ expansion into agriculture, policies must prevent the structural monetary operations of these organizations, not just the products’ movements.

The best policies do not treat the violence on a case-by-case, town-by-town, or product-by-product basis. Rather, policymakers should redirect their efforts to curtail cartels’ access to financial resources. These cartels are able to expand at high rates because big banks, such as Wells Fargo, fail to apply anti-laundering policies to the billions of dollars’ worth of transactions that occur behind their doors. If properly followed, these laws and regulations could significantly hinder the cartels’ ability to maintain their complex system of smuggling and intimidation.

Cartel operations are financed primarily using big banks, not back-door cash payments or seedy investments. In 2011, the Guardian reported that the Sinaloa trafficking cartel purchased a private plane carrying 5.7 tons of cocaine using an account from the bank Wachovia, which has since been absorbed by Wells Fargo. In this instance, it didn’t matter whether the plane was carrying cocaine or avocados: The bank did not follow anti-laundering policies, allowing for the cartel to transport products and people internationally and expand its influence.

"Millions of dollars from drug cartels have been effectively washed through these banks leaving them untraceable."

This phenomenon is not limited to a handful of banks. In 2012, HSBC paid a $1.9 billion fine for knowingly laundering cartel cash and was placed on probation by the US Department of Justice. In February, the European bank Rabobank was fined $369 million by the US government for failing to track cash deposits. Large deposits are correlated with escalating cartel violence in Mexico, and lax bank policies help enable their activity. Millions of dollars from drug cartels have been laundered through big banks, leaving their sources untraceable. Though cartels have other ways to obfuscate their illegal activity, such transactions provide the easiest path for egregious amounts of cash to evade oversight. These financial institutions provide assurance to cartel organizers that their money is safe and anonymous.

Because cartels are adaptable, cutting them off from banks will not put them out of business completely. They will ultimately shift their financing options to alternative money laundering schemes, such as horse racing or family businesses. But these methods are not capable of effectively and anonymously transferring billions of dollars of cash under the radar. Therefore, placing stricter anti-laundering policies on banks—and ensuring proper enforcement of said policies—will limit the influence of cartels. The goal of the policy is not to immediately bankrupt these cartels, but rather to force them to scale down their operations to a level that is more manageable for governments and citizens to address on a local level.

Martin Woods, the former anti-laundering officer for Wachovia Bank stated, “the drug industry has two products: money and suffering.” Cartels are interested in whatever industry brings in money, and the nationwide extortion of avocado farmers is a symptom of organized crime syndicates just like drug violence is. These products’ profitability alone does not grow these cartels. Rather, banks that legitimize billions of dollars’ worth of cartel transactions enable these evil empires to effectively finance their operations. The exploitation of cash crops is a demonstration of the opportunism that underpins organized crime, and unless policy can successfully weaken the world’s biggest cartels, other industries will be quick to fall under their influence.

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