Mexico's tequila industry suffering

ZAPOTLANEJO, Mexico -- Here in the heart of Mexico's tequila country, where every town has a distillery and the air smells like sweet fermenting molasses, a sign proudly marks the entrance to Miguel Ramírez's farm: "Rancho Ramírez: Producer of Agaves."

But behind the fence, the blue agave plants, the raw ingredient of Mexico's famous tequila, are getting harder to spot. They are being replaced by row after row of leafy cornstalks.

That switch to abandon slow-growing agave plants to cash in on corn, beans and other food crops selling for record prices worldwide could limit the supply of tequila and drive up the cost of a shot or a margarita.

The move is part of an international trend from Idaho potato farmers to Bolivian coca growers as they cut back on their trademark crops in hopes of making big money on corn and grain.

"Corn is where the money is now," Ramírez said, admiring his new crop. "I'm going to get out of agave completely."

Martín Sánchez, director of agriculture for Mexico's Tequila Regulatory Council, said the corn gold rush was probably inevitable. White corn in Mexico is selling at its highest in at least a decade — 18 cents a pound this month — while agave sells for as little as 2 cents.

"We don't have good numbers, but we know it is happening: People are abandoning their fields of agave and flipping over to other crops," Sánchez said.

In many fields east of Guadalajara, overripe agave plants are turning brown and dropping their spikes. Prices are so low that the plants are not worth harvesting, said Antonio Aceves, a farmer in the town of Tototlán, who cut his agave fields to 25 acres from 74 this year.

Aceves said the seeds of uncertainty in the agave market were sown in 1997, when a frost killed millions of young agave plants. By 2002, agave prices rose to a stunning 80 cents a pound. Distillers such as José Cuervo, Sauza and Herradura were paying up to $100 for a single "pineapple," or agave heart.

"You practically had to guard your field with an army," Aceves said. "A lot of people got rich, and suddenly everybody was planting agave."