Tequila Commodity Chain
Blue agave, the common name for Agave tequilana, is an agave plant grown primarily in the state of Jalisco, Mexico. Due to the plant’s high production of sugars, especially fructose, it is utilized to make tequila and remains the only source of tequila. This paper is divided into five parts. First, I provide background on the structure of the agave-tequila industry and agave growing conditions, to explain the cycles of surplus and shortage that characterize the industry. Second, I show how these cycles of surplus and shortage impede farmers’ ability to earn a livelihood and increase household economic insecurity. Third, I explain the environmental practices and ramifications of growing blue agave. Fourth, I discuss…show more content… This threatens the ecological sustainability of the industry, since farmers are unable to invest in sustainable methods and concentrates wealth in the few farmers with savings to survive the shortage cycles, thus leading to uneven development. In economic terms, during a surplus period, agave prices plummet, depriving farmers of the necessary capital or incentive to plant another crop of agave. Furthermore, when prices are low, farmers neglect their current agave plants due to a decreased incentive to ensure a large crop. This behavior often leads to the proliferation of pests or disease, which can lead to long-term problems within plantation areas. During a shortage period, prices explode, serving as an impetus for more farmers to enter the market and for farmers to expand their farm sizes. Moreover, these behaviors exacerbate the limited region agave can thrive in and will simply cause more farmers to go bankrupt during the surplus period. Farmers must also contend with the long period of time they must face before seeing a return on investment due to the length of the agave growth cycle. Agave farmers are also poorly organized, thus limiting their ability to bargain with tequila distilleries, causing much of the profit to be distributed among tequila distiller, foreign bottling, and…show more content… According to the National Chamber of the Tequila Industry (CNIT) estimate in 2006 there were 12,000 agave farmers, 11,200 day laborers (temporary workers who assist production), and 3,400 field workers (workers tending to tequila company farms) producing agave (CNIT 2006). These are, however, incredibly rough estimates. Agave is harvested and delivered to distilleries that roast and press the heart of the agave plant to obtain the juices, which are fermented and distilled to yield tequila. There are 124 firms registered to produce tequila and tequila companies are increasingly growing their own agave or contracting agave from the farmers to create a steady supply of the product. (CRT 2008). Companies primarily in Mexico and the United States constitute tequila bottlers and distributors, the third group. These bottling companies generally bottle the tequila in Mexico with the help of machines and often ship it via the appropriate avenues to various distributing plants, which then distribute the tequila to retail locations or fulfill online