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 as high as thirty pesos per kilogram, about one dollar and forty-five cents, which triggered a cultivation frenzy that increased the number of agave farmers from around three thousand two hundred in 2014 to over forty-one thousand in 2023.

One of the individuals impacted is Antonio, a forty-four-year-old farmer who grew up on a family ranch in the area.

Originally trained as a physician, Antonio returned to agriculture when the tequila boom took off.

He and his associates invested ninety-seven thousand dollars in leasing land, purchasing young agave plants, and performing essential upkeep.

Given agave’s lengthy maturation period of up to seven years, these investments were meant to ensure long-term returns, especially after Antonio secured a contract with a tequila producer that encouraged further planting.

However, the contract's lack of price protection turned out to be a significant liability.

By 2022, as the first mature crops were still two years away, agave prices began to plummet, dropping to between one and three pesos per kilogram – roughly fifteen to forty-five cents.

This unanticipated decrease has forced numerous small farmers to reduce their crop maintenance, with some even choosing to destroy immature plants and replant with alternative crops such as corn.

The crisis has exacerbated existing tensions in an industry that has historically experienced boom and bust cycles.

Many small-scale growers, some of whom borrowed money to expand their production, now contend with considerable financial losses in an oversaturated market.

Both industry participants and farmers have raised concerns that the regulatory framework overseen by the Tequila Regulatory Council lacks adequate oversight.

Critics assert that the Council, which is responsible for licensing and quality certification, is unduly influenced by larger producers, leaving small farmers vulnerable.

Local representatives and advocates have established groups demanding stricter regulations, such as requirements to use agave sugar rather than cane sugar in blended tequilas and to centralize control over agave planting.

These groups argue that stronger regulations could help reduce price fluctuations and stabilize the market.

In one instance, a prominent activist from a long-established tequila family noted that previous crises in the industry caused widespread hardship and cautioned that the current situation could have detrimental long-term effects if not addressed.

At the same time, major international beverage companies have made substantial investments in modernizing production and expanding distribution, even as consumer demand has begun to level off after years of rapid growth.

In the United States – the primary export market for tequila – sales data suggests that following a surge in consumption during the height of the boom, demand has since softened, with significant declines noted in recent years.

Regulatory efforts include a new initiative focused on promoting contractual purchasing agreements and strategic land-use planning, bolstered by computerized supply chain monitoring and statistical tools designed to enhance decision-making.

These initiatives are part of a broader effort to establish a more resilient production model in a market historically prone to fluctuations between high demand and subsequent oversupply.