Agave price confronts producers and tequileros

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The tequila industry consumed 2.6 million tons of agave during 2022, a figure 173 percent higher than what they consumed in 2017; However, in that same period, the price of agave skyrocketed much more, going from 8 to 31 pesos per kilo, which is due to the high demand for tequila in Mexico and the world, producers and distillers debate about the value of agave, since some want to take advantage of the growth in consumption on a global scale to achieve high prices for their crops, while tequila companies look for costs ” reasonable” and rules to uphold quality standards.

Sources close to the industry told MILENIO that they are in favor of agaves maturing for a minimum of seven years to maintain a base quality, but farmers don’t care about time, they only want to sell as soon as the pineapple can be extracted, which that happens in the fourth year.

Information from the Tequila Regulatory Council (CRT) shows that the tequila industry consumed 2.6 million tons of agave during 2022, a figure 173 percent higher than what they consumed in 2017; however, in that same period, the price of agave shot up much more, going from 8 to 31 pesos per kilo, that is, a growth of 287 percent.

On the other hand, information from the Ministry of Agriculture and Rural Development (SADER) shows that agave production grew 25 percent in the last five years; however, sources in the sector say that more is taken out than what is consumed.

But Ramon Gonzalez Figueroa, general director of the CRT, pointed out that there is no norm that regulates the maturation time of a pineapple to be used in the production of tequila, so there is not something that defines what is good or bad with respect to what is It is consumed to make the alcoholic beverage.

“The Official Mexican Standard says that the agave has to be registered, it never talks about age. Approximately 12 years ago they said that the agave has to be tougher, but that was withdrawn from the norm because there is no mature-meter or tequilometer, this depends on the care you give to your plantation, it may be that after five years you have an agave with a great wealth of sugars. You can have a small agave and when you make a jima you can make 40 percent at five years, another percentage equal to 6 and the rest is called drag, but that depends a lot on care. The norm never says five, four, seven, ten years,” he said in an interview with MILENIO.

It should be noted that the harvests are measured by vintages -the optimal period to classify the maturation of a fruit-, everything that is sown before the first rainy season counts as within a harvest year, it does not matter if it is January, March or July.

“There is more agave than the industry needs, when that happens there are many people who lose money, because they feel that they invested to obtain a great profit (…) there are associations that get together and stop the factories, forcing their sale”, said sources close to the sector who requested anonymity.

While Ramon Gonzalez Figueroa explained that prices are always set by supply and demand and that currently they have a precise record of one million 421 thousand agaves in 426 thousand hectares at the end of 2022, as well as 36 thousand farmers, who have agave in the 181 municipalities allowed in five entities of the country.

“I think the industry is going through its best moment, and I remember that before the council regulation you reached a production of 100 million liters, last year it was 651 million, it is a growth of 520 percent. In the last 10 years the productive chain has broken its own figures in terms of production”, he highlighted.

A large part of why agave producers raise their prices is due to the increase in demand in markets where they pay well for the drink, mainly in Europe.

Data from the CRT show that the United States continues to be the main market for tequila, representing 87 percent of the total volume of tequila exports; however, nations like Germany, Spain, France and even the United Arab Emirates increasingly want more of this traditional product from Jalisco.

The export of tequila to Germany grew 60 percent annually in 2022 by sending 10.3 million is liters, while Spain was 8.9 million, almost 90 percent more than a year before.

“This is a reflection of what an agro-industrial chain is doing to consent to new palates and this has led to the fact that there are people here who are not farmers and have agave or were not, and today they are experiencing the issue more, which is good for them ( …) this is like in all the crops or they can do well or they can do very badly”, affirmed Ramón Gonzalez Figueroa.

Source: Milenio