Agave Shortage Turns Tequila Into Gold

In a dank jail cell on Jose Cuervo Street, Vicente Bermudez sits contemplating a future of no bail and up to seven years behind bars. His alleged crime: stealing 700 baby agaves, the cactus-like plants from which tequila is made.

Police say Bermudez and Jesus Mora were caught red-handed at 3 a.m. just outside town last week, loading the plants into a half-ton pickup.

The misdeed is part of an unprecedented crime wave in Tequila. It was triggered by a sudden scarcity of the blue, spindly plant that since Mexico’s pre-Hispanic times has been the source of one of the country’s best-known products.

The thefts are increasing because the shortage has sent prices soaring. A ton of agave hearts--which after trimming look like oversize pineapples--is worth $1,400, up tenfold in just six months.

The shortage is due in equal parts to a plague of plant pests; the cyclical nature of the harvests of agave, a member of the lily family that takes eight years to reach maturity; and a boom in both domestic and foreign sales of tequila, the essence of the margarita.

But it’s also the result of what experts say is poor planning and coordination between agave growers and the distillers, dominated by Jose Cuervo, Sauza and Herradura, names as Mexican as mariachis, tortillas and chiles. Of no apparent help is the fact that the industry’s biggest players, including Cuervo and Sauza, are now part of international conglomerates.

Police in the picturesque town from which the liquor got its name take the situation seriously. They fan out day and night in the agave fields, watching the horizon for teams of robbers. Several dozen Jalisco state police are indefinitely bivouacked among the rows of aquamarine plants that slope down to the Lerma River.

Trucks laden with agave hearts are routinely stopped and searched on the way to the area’s 75 distilleries.

But with a single plant now worth as much as $35, roughly twice the minimum weekly wage, it’s easy to see why people like Bermudez and Mora might be tempted to lift a few.

(In interviews, Bermudez denied any wrongdoing. Truck owner Mora blamed it on his partner, saying he didn’t know he was doing anything illegal.)

The crime wave isn’t likely to stop any time soon. The shortage is expected to last two more years.

“It began three or four months ago, and now there are robberies every other day. It’s a very profitable crime. Where else can you make so much money so quickly?” Tequila Police Chief Salvador Leal said as he and three other armed officers cruised along dirt roads in this verdant region about 35 miles west of Guadalajara.

It’s Topic A in this city, where 80% of the population of 35,000 lives off the tequila industry. Jose Cuervo, the local distiller founded in 1758, dominates much of the city with a hacienda-like complex covering several city blocks.

The agaves being harvested this year were planted in 1992, when worldwide tequila sales were just half what they are today. The hot tequila market is a symptom of good times both here and abroad, analysts say.

The scarcity of tequila’s raw material has sent U.S. retail prices soaring by some 42% in just a few months, to an average $17 a bottle from $12, according to the Guadalajara-based National Chamber of the Tequila Industry.

For now the public doesn’t seem to mind the higher price.

“What crisis? Everything I produce I sell,” said Carlos Hernandez, whose family owns the La Cofradia distillery here, the 11th-largest. Eighty percent of what he makes goes to the United States.

But Hernandez concedes: “We are worried about when the moment might come that U.S. consumers would say, ‘No, it’s too expensive.’ ”

It doesn’t help that the loosely organized agave growers and the tequila distillers have long been at odds, sometimes violently .

Most years, tequila producers have enjoyed an agave surplus, which meant they could dictate prices to the growers. As recently as a year ago, growers fetched only about 5 cents a kilo for their harvest, even though the government set a minimum price of 10 cents, said Arnulfo Luna Ruiz, head of the 300-member Regional Assn. of Agave Producers.

That led to largely futile demonstrations by the agaveros, or agave growers. But now the growers have the upper hand and are returning the favor, charging up to $1.40 a kilo, far above today’s official price of 90 cents.

Distiller Hernandez figures the current problem is temporary and that prices will inevitably drop when all the agave that’s been planted to take advantage of higher prices hits the market.

But unless growers and distillers learn to work together, the imbalances are sure to repeat themselves, said Tomas Martinez, a rural development economist with the College of Postgraduates, a government institute linked to the agriculture ministry.

“This crisis could have been foreseen,” Martinez said. The tequila companies always saw the agave as the last part of the chain and we are seeing the results of it.”