AGAVE PRICE SINKS TO A NEW LOW

Similar to what Australian vintners have faced in recent years, an agave glut in Mexico is causing a crisis among local farmers. Seven years ago the plant responsible for making tequila was viewed as such a lucrative enterprise due to under-planting that most farmers and even non-farmers wanted a piece of the action. Now, prices are as low as $4 per agave plant after a prior peak of $70.

The National Chamber of the Tequila Industry estimates that agave farmers planted a total of about 300 million plants from 2000 to 2003, nearly four times what the industry typically requires. With a harvest cycle of about seven years, the first crops are now ready.

Members of the agave farmers union claims that some tequila makers are paying less than 2 cents a pound, half of the official rate. As a result, farmers are going bankrupt and burning their agave fields in favor of planting another crop, such as corn. Disease is also running rampant in the agave fields, a sign that farmers are paying less attention.

Tequila producers warn that a major cutback in production could lead to an agave shortage in a few years and take an eventual toll on the industry. To help prevent that from happening, the Mexican tequila industry last year began requiring farmers to register their crops. The government has also approved a number of initiatives to help struggling agave farmers.