In the western Mexican state of Jalisco, the tequila sector is facing a significant oversupply of agave, the essential component of tequila, following a period of booming prices.

Agave prices once soared to thirty pesos per kilogram, around one dollar and forty-five cents, igniting a cultivation frenzy that led to an increase in the number of agave growers from approximately three thousand two hundred in 2014 to over forty-one thousand by 2023.

One of those impacted is a farmer named Antonio, a forty-four-year-old who was raised on a family ranch in the area’s small towns.

Originally trained as a doctor, Antonio returned to farming when the tequila industry took off.

He and his associates invested ninety-seven thousand dollars into leasing land, acquiring young agave plants, and ensuring they received proper care.

With agave taking up to seven years to mature, these investments were designed to yield long-term benefits, especially after Antonio secured a deal with a tequila producer that stimulated further planting.

Unfortunately, the absence of price guarantees in that contract turned out to be detrimental.

By 2022, just two years before his first mature crops, agave prices plummeted sharply, dropping to between one and three pesos per kilogram—approximately fifteen to forty-five cents.

This unforeseen decline has led numerous small farmers to reduce their crop maintenance, with some choosing to incinerate immature plants and switch to growing alternative crops like corn.

The situation has intensified ongoing tensions within an industry characterized by cycles of booms and busts.

Many small-scale growers, some of whom took out loans to increase production, are now confronted with substantial financial setbacks in the face of an oversaturated market.

Both industry participants and farmers have expressed concerns that the regulatory system overseen by the Tequila Regulatory Council falls short in its oversight capabilities.

Critics assert that the Council, which manages licensing and quality certification, is overly swayed by larger producers, leaving smaller farmers with inadequate protection.

Local representatives and activists have banded together, advocating for stricter regulations that would mandate the use of agave sugar instead of cane sugar in blended tequilas and consolidate control over agave planting.

These groups believe that more effective regulation could help alleviate price fluctuations and stabilize the industry.

In one instance, a prominent activist from a multi-generational tequila family recounted that past crises in the sector caused widespread hardships and cautioned that the current predicament could have significant repercussions if left unaddressed.

Simultaneously, major international beverage corporations have heavily invested in modernizing production and expanding their distribution networks, even as consumer demand has begun to level off after a period of rapid growth.

In the United States—the leading export market for tequila—sales figures suggest that after a consumption spike during the peak of the boom, demand has cooled, with notable declines seen in recent years.

The efforts of industry regulators include a new initiative aimed at promoting contractual purchasing agreements and strategic land-use planning, enhanced by computerized tracking of supply chains and statistical tools to aid decision-making.

These actions are part of a larger effort to establish a more resilient production model in a market that has consistently been vulnerable to fluctuating demand and subsequent oversupply.