MEXICO: Agave shortage looms for Tequila makers

Fears are growing that Mexico's Tequila industry will face severe shortages, as farmers switch from the blue agave plant to so-called cash crops such as corn.

Low prices for agave, the cactus-like lily that constitutes Tequila's main raw ingredient, mean some farmers have been ripping out their plantations in favour of producing corn that can be sold at higher prices for biofuel, according to the Tequila Regulatory Council (TRC).

Judith Meza Nixon, TRC international spokesperson, told just-drinks yesterday (26 August) that hard figures were not available, but "this is something that's been going on for maybe about a year or 18 months".

If the trend continues, it threatens to make a predicted agave shortage within the next five years more acute, the TRC believes. It also threatens to drive up prices for producers, particularly in light of consumer trends for 100% agave Tequila.

Agave plants may take more than six years from planting to harvest, making them a longer term investment for farmers than corn, which can be harvested every year.

Nixon said a current agave surplus had driven down prices, making corn a more lucrative prospect.

Corn may also offer more security for some than the extreme boom-bust cycle that has plagued agave farming for decades. "Every six or seven years there is a surplus, and in the next six or seven years there is a shortage," Nixon said. 

But, she added that the TRC, which advises farmers on how much agave to plant, did not believe the situation had become critical. "We have not yet determined that this is happening on a huge scale, to the point that it would harm our industry."

Daniel Deephouse, brand manager for Tequila group Sauza, owned by Beam Global, told just-drinks: "Since agave plants take six to eight years to mature, growing the correct number of plants to cater for Tequila production in almost a decade's time can be difficult."

Top companies are looking to maintain stable supplies via in-house agave plantations or long-term contracts with growers.

Sauza manages the majority of its own agave fields, said Deephouse, adding that this "ensures that the company will not be affected by shortages such as the one forecast for 2010".

John McDonnell, chief operating officer at tequila firm Patrón, said: "Farmers who are planting and cultivating high-quality agave in the highlands of Jalisco, the premier growing region of the state where our agave for Patrón Tequila is sourced, are continuing to do so. We have strong relationships and long-term contracts with them so we aren't concerned about shortages."