Agave farmers ‘pushed into a corner’

13th April, 2016 by Richard Woodard

With an unavoidable reliance on an agricultural product subject to price rigging, disease, glut and shortage, what does the future hold for the Tequila category?


Some Tequila producers believe the agave shortage may have been “designed” by farmers

*This article was first published in the October 2015 issue of The Spirits Business magazine

It was late 2000, or maybe early 2001 – I don’t remember precisely when. But the first time I wrote about Tequila, all the talk was about the agave shortage, and its impact on supplies and pricing for the huge domestic market and for the booming US.

Fast-forward 15 years (or maybe it’s 14) and it’s Tequila’s remake of Groundhog Day. For various reasons – competing alternative uses of agave (agave syrup, inulin), the typical glut-shortage-glut cycle of any agricultural product – supplies are again running short. “We definitely keep a pulse on the market prices; however, we don’t focus too much on the issue,” says Gary Eisenberger, president and co-founder of ultra-premium Karma Tequila. “Agave prices were pushing up and have just recently dropped.

“It’s hard to judge if the market has an actual agave shortage as much as a designed shortage to increase agave prices by the farmers. I believe the farmers have been pushed into a corner over the last five years and need to earn a higher profit, which we’re all for.”

Producers have also learned – and often the hard way – to hedge against precisely this kind of situation. More have planted their own agave fields, giving them greater control over production and, according to Casa Centinela business executive Erica Magaña, many produced a lot of Tequila when prices were low, leaving them less exposed to rising costs now.

That said, there are clear signs of a real impact on the ground. Magaña reckons some farmers are illegally buying in agave from other, non-DO regions – rumours also relayed by Dale Sklar, MD of Wine & Spirit International, and owner of Bambarria and co-owner of Villa Lobos.

Price rigging

Sklar recalls a time just a few years ago when agaveros found it cheaper to leave unwanted agave to rot in the fields, because they were only getting 3-4 centavos a kilo – versus recent pricing of MXP7/kg (£0.30) or so. Some, he reports, have employed armed guards to stop lorries turning up at night and making off with US$100,000 (£66,000) of precious agave.

“Now temper that with often-heard [in Mexico] allegations of price rigging among some of the larger brands with huge stocks of distilled spirit, and the well-known allegations of agave from Oaxaca/Yucatan etc. travelling north,” he says. There have even been suggestions, Sklar adds, of agave juice being shipped in from Nicaragua.

Those whose livelihoods don’t depend on the maturation cycle of an obscure, spiky-leaved succulent might step back and take a more philosophical view of the situation. Production peaks and troughs are merely the flipside of what makes blue Weber agave – and, by extension, Tequila – special. It’s a farmed product, susceptible to its environment (terroir, if you must) and it is able to express that environment in its end product.

Introduce the human factor and you have something that combines the raw material diversity of grapes/wine with the multifarious production options of single malt whisky.

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