In the western Mexican state of Jalisco, the tequila sector is facing a significant surplus of agave, the essential component of tequila, following a period of rapid growth that led to unprecedented price levels.

At its peak, prices for agave soared to around thirty pesos per kilogram, or roughly one dollar and forty-five cents, prompting an increase in cultivation that raised the number of agave farmers from about three thousand two hundred in 2014 to more than forty-one thousand by 2023.

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

Originally trained as a physician, Antonio returned to agriculture with the onset of the tequila boom.

Along with his partners, he invested ninety-seven thousand dollars in leasing land, purchasing young agave plants, and providing essential care.

Given agave’s slow growth period of up to seven years, these investments aimed to deliver long-term benefits, particularly after Antonio secured a contract with a tequila producer that encouraged further planting.

However, the absence of price guarantees within the contract turned out to be a significant drawback.

By 2022, with the first mature crops still two years away, agave prices began to plummet, dropping to a range of one to three pesos per kilogram—about fifteen to forty-five cents.

This unexpected decline has led many small farmers to reduce their crop maintenance, with some even choosing to burn young plants and replace them with alternative crops like corn.

The crisis has intensified ongoing tensions within an industry characterized by cycles of boom and bust.

Numerous small growers, some of whom had taken loans to increase their output, now face severe financial setbacks in an over-saturated market.

Stakeholders and farmers criticize the regulatory framework overseen by the Tequila Regulatory Council, claiming it lacks adequate oversight.

Critics assert that the Council, which is responsible for licensing and quality standards, is overly swayed by larger producers, leaving small farmers with minimal protection.

Local representatives and activists have banded together to advocate for stricter regulations, including proposals to require the use of agave sugar instead of cane sugar in blended tequilas and to centralize control over agave planting.

These groups argue that improved regulation could help reduce price fluctuations and stabilize the market.

In one instance, a notable activist from a multi-generational tequila family recounted previous industry crises that caused widespread suffering, warning that the current state could lead to serious repercussions if not addressed.

Simultaneously, major international beverage companies have heavily invested in production modernization and expanding distribution, even as consumer demand starts to taper off after years of rapid growth.

In the United States, which is the largest market for tequila exports, sales data show that following a consumption surge during the height of the boom, demand has begun to soften, with notable reductions observed in recent years.

Industry regulators are striving to implement a new program that promotes contractual purchase agreements and strategic land-use planning, bolstered by advanced supply chain tracking and statistical tools aimed at enhancing decision-making.

These initiatives form part of a broader effort to establish a more resilient production model in a market that has historically been vulnerable to cycles of high demand followed by oversupply.