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 News Around the Republic of Mexico | May 2005 
Protests Turn Tequila Sunrise To Sunset
 Sean Mattson - San Antonio Express-News
| | Tequila makers mollified protesters by purchasing agave at inflated prices and promising to buy more later a commitment industry analysts say will be financially impossible to keep. |
Guadalajara - A farmers organization has been disrupting tequila production as prices for blue agave, the primary ingredient of this country's trademark firewater, dipped to their lowest levels in almost a decade.
The demonstrations marked the beginning of what analysts are calling the worst primary material glut in the tequila industry's history.
The crisis is projected to last until 2009 and threatens the livelihood of thousands of farmers throughout western Mexico.
The protests began early this month when a few hundred members of El Barzon, a farmers group based in the state of Jalisco, blocked roads at tequila distilleries across western Mexico.
They halted deliveries of agave from other farmers and demanded distilleries purchase their agave at prices well above market value.
Tequila makers mollified protesters by purchasing agave at inflated prices and promising to buy more later a commitment industry analysts say will be financially impossible to keep.
Agave supply is expected to surpass nationwide demand by summer and conservative industry estimates predict it will amount to nearly twice the demand when the crisis hits a climax between 2007 and 2008.
At least 1.8 million metric tons of agave are expected to rot, and some analysts say it may even get worse. By last week, El Barzon had held protests at four distilleries and promised more at some industry giants in coming days, including José Cuervo in the town of Tequila.
"We are protesting at the factories that want to steal the livelihood of our families," said protest leader Francisco Javier Guzmán de la Torre after calling off a protest at the Pernod Ricard Mexico company in Arandas in Jalisco state, which makes Olmeca and Viuda de Romero tequila brands.
Guzmán said the company promised to buy their agave at 3 pesos per kilogram, though they hadn't worked out the details of the purchase.
The price is double agave's current market value of about 1.5 pesos, which is about one peso below a typical farmer's break-even point.
A spokesman for Pernod Ricard wouldn't comment on the deal that prompted 500 angry farmers to end their protest.
Tequila Orendain, Tequila San Matias and Tequila Supremo also have been targeted by protests.
Those companies downplayed the demonstrations but acknowledged they won't be able to keep agave farmers happy.
"We have made an effort to buy from some of them," said Javier Madrigal, the executive director of Tequila Supremo.
"But we cannot buy from all of them, nor buy the amount they want, nor at the price they are trying to demand." The root of the current agave crisis began 10 years ago when a similar glut hit. Farmers blocked highways, clashed with police, brought tequila factories to a standstill and dumped overripe, low-priced agave on the steps of government buildings in Guadalajara.
And they stopped sowing new plants. Agave takes five to seven years to mature, so this assured a shortage about five years ago that pushed prices to 17 pesos per kilogram.
Many farmers got rich, and a wave of new planting has led to the current over-production.
"This crisis is going to be worse. Nobody knows what's going to happen," said Salvador Gutiérrez, an industry specialist with the University of Guadalajara. "There are going to be 50,000 farmers who are going to lose everything." Farmers say they have again stopped planting agave. But the bust for farmers is a boom for the distillers.
Last year, tequila production increased by 24 percent and is on pace this year for another 15- to 20-percent increase, according to the Tequila Regulatory Council. |
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