Mexican agave farmers are grappling with the repercussions of the booming tequila market, witnessing a drastic fall in agave prices from a high of 35 pesos to just 8 pesos per kilogram. The influx of new growers and celebrity endorsements contributed to oversupply, leaving traditional farmers at the mercy of low market prices and intermediaries. Despite increasing retail prices, consumers feel little relief from the economic strain on producers.
Zapotlanejo, Mexico faces a crisis as the tequila boom brings unintended consequences for agave farmers. While global demand for tequila has skyrocketed from 224 million liters in 2018 to 402 million in 2022, Mexican producers now deal with an oversupply. This has caused a significant decline in agave prices, from a high of 35 pesos (approximately $1.70) per kilogram to about 8 pesos (around $0.40).
The surge in demand initially created a shortage of agave, but the high prices attracted many new growers, leading to a rapid increase in planting. According to Francisco Javier Guzman from Barzon Agavero, many individuals liquidated assets to invest in agave cultivation, escalating the number of registered producers from 3,180 in 2014 to 42,200 by 2024.
Celebrity endorsements and marketing strategies, such as those by George Clooney and LeBron James, have further fueled this agave frenzy. However, the initial prosperity did not translate to sustainability, as a glut now persists in the market, leading to drastic price drops. Traditional growers struggle against low-priced intermediaries known as “coyotes.”
Recent tariffs proposed by former President Donald Trump present an additional threat to the industry, as about 85% of tequila is exported to the U.S. Despite the dramatic price increase in tequila at retail locations, such as La Iberia bar in Guadalajara, customers like Salvador Magana feel no benefits from the boom, as prices remain high.
In summary, while tequila’s global popularity has surged, Mexican agave farmers are facing severe economic challenges due to oversupply, crashing prices, and exploitation by intermediaries. Efforts are being made to establish fair trade practices, but uncertainty persists, especially with potential trade tariffs looming. The situation highlights the complexities within agricultural production as demand fluctuates and market dynamics shift.
Original Source: www.france24.com
