Partner Interview
Published November 5, 2023
Becle: CRT Inventory Accuracy, Pricing Dynamics & Local Ecosystem
inpractise.com/articles/becle-crt-inventory-accuracy-pricing-dynamics-and-local-ecosystem
Executive Bio
Blue Agave Farmer
Interview Transcript
Disclaimer: This interview is for informational purposes only and should not be relied upon as a basis for investment decisions. In Practise is an independent publisher and all opinions expressed by guests are solely their own opinions and do not reflect the opinion of In Practise.
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You mean currently?
Yes, currently, the producer who sells directly to the industry receives between 22 to 24 pesos per kilo at the factory. The second type of producer has a close, but indirect, relationship with a factory partner. This producer relies on an intermediary for business and receives about two pesos less than the first type. The third type of producer is an agave producer who lacks contacts and contracts, and is therefore dependent on others. There are many people who enter the business, go to the field with the producers, and make the final offers. I'm talking about 10 pesos per kilo in the field. Some are paying eight pesos. If a producer is well-informed about the business, they can negotiate a better position. If they don't have other options, they must sell their agave at these prices.
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Maybe I can pause for a minute and ask some questions. So what has pricing done? And you're saying those are the current prices, but have you seen prices come down this year and what's the trend been like?
The current situation is the result of speculation, intermediaries, exchange rate fluctuations, and a lack of accurate communication in rural areas. The third type of producer and intermediaries have taken advantage of this misinformation to claim that prices have fallen. However, this is not the case. According to the CRT's inventory, the majority of agave will be ready in 2024, not 2023. There are some bad practices in the industry and the CRT that have caused this problem. The price of agave remains at least 22 or 24 pesos, although the market has moved up to a minimum price of 12.40 pesos.
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Has the pricing come down now? Companies like Becle and Jose Cuervo are saying, publicly, that they are paying lower prices in the third party spot market. Do you agree with that?
They are paying the last price. They claim to have sufficient inventory or plantations and say they are self-sufficient. However, I see a different situation in the field. Correct, they claim self-sufficiency. However, I observe in the field, in different regions of the state, and in the NOM - Denomination of Origin - that Cuervo and Diageo plantations are in poor conditions. We see agaves being transported every day from rural areas, each weighing around eight to six kilos. They are harvesting agaves from all their fields in that range. When they are harvesting agaves weighing eight to 12 kilos maximum, they are getting 20 tons of agave per hectare. However, the sugar content doesn't reach 24% concentration, which means they are not getting maximum results from the kilos of agave. They have a lot of plantations, but not all of them are in good condition.
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