March 12, 2014

Economy News

Lime, Gangsters and the Yellow Dragon

The  tangy lime is essential to Mexican cuisine. An ingredient of flavored
water, the fruit is also squeezed into soups, dabbed on fish, sprinkled
on tacos al pastor and utilized in countless other recipes. A cold
Corona or Tecate, or a shot of tequila,  without a dash of lime is
almost like a root beer float minus its foamy head. Lime is the juicy
salt of the Mexican diet.

It’s no small wonder, then, that  Mexicans are gasping in disbelief at the astronomical cost of limes. In  recent weeks, the retail cost of the product has gone through the roof,
jumping by  800 percent or more in some regions of the country.  An  item that once sold for 7 or 8 pesos  per kilo now fetches  a record 64  pesos a kilo in the state of Tabasco and even as much as 80 pesos in parts of Mexico City.

In the northern border state of Tamaulipas, where more than 12,000 acres of lime produce an estimated 20,000 tons of produce every year for a mainly export market,  the  retail kilo cost stands at 60 pesos for limes shipped in from other  parts of Mexico.

Nowadays, restaurant diners might notice less  limes on their plate, or the substitution of the favored small limes with the bigger, less tasty ones. In 2014,  lime is treated practically like gold.

What is behind the price spike? The answers vary,  depending on the source. But considered as a whole, the convergence of  different climate,  market structure and public security forces could  well be whipping up the perfect lime storm.

Widespread reports blame the lime crisis on the law-and-order melt-down in the state of
Michoacan,  which is one of the country’s largest lime producers with more than 75,000 acres of the crop.

According to  accounts  dating back to last year, higher lime prices were  connected to the
practice of the Knights Templar cartel in not only forcing lime growers to pay a protection fee,  but in regulating the quantity of production and the timing of the harvest.

Writing last summer, analyst Ilan  Semo noted that lime prices set off alarm bells in international financial circles of over heating inflation in Mexico,  with messages to
that effect  conveyed to the Bank of Mexico and the Pena Nieto administration.  As a result, Semo speculated that a pact had been reached with the underworld after an initial federal security thrust into Michoacan, temporarily lowering prices.

The squeeze on lime producers-and spiraling prices-commenced after the 2011 election of
Michoacan Governor Fausto Vallejo, Semo wrote.

Most recently, reports have circulated that the civilian self-defense groups which
arose to expel the Knights Templar from Michoacan have begun collecting a
tax from lime growers to fund their own security operations.

Alfonso Arenaza Cortes, economist for the Caseem firm of Ciudad Juarez,
attributed a  February  price surge to difficulties in bringing in the
Michoacan harvest precisely because of insecurity,  as well as the loss
of crops in other states due to inclement weather.

Mexican government officials deny that the Michoacan crisis is the cause of lime inflation.

Instead officials from a host of  agencies place the blame on lingering crop
damage from last year’s hurricanes Ingrid and Manuel, subsequent bouts
of bad weather and the HLB pest infestation, popularly known as  the
yellow dragon disease, an ailment which saps lime trees of their
productive capacity before death settles in.

The yellow dragon disease has been a particular problem in Colima, a state neighboring
Michoacan that is also known as a hotbed of organized crime.  In 2013, Texas state and federal agricultural authorities quarantined a property in Texas’ Lower Rio Grande Valley after discovering the presence of the yellow dragon disease, which is often referred to as citrus greening in the United States.

Ernesto de Lucas Palacios, Aguascalientes state delegate for the federal Secretariat of Agriculture and Livestock, defined yellow dragon as a viral disease spread by insects.

Mexico’s National Sanitary, Quarantine and Agro-Food Quality Service considers
the yellow dragon menace as the “most destructive disease” in the global
citrus industry.  According to the government agency,  the outbreak
jeopardizes more than 1,000,000 acres of Mexican citrus crops in 23 states.

Lorena Martinez, head of the Federal Attorney General for Consumer Protection (Profeco),   pointed the finger at as combination of adverse weather and plant disease.  Martinez, however, acknowledged that highway robberies of lime shipments had affected the production and marketing of the coveted crop.

To counter price gouging,  Profeco launched a verification campaign this month. Although
the federal agency has no power to set or curtail prices,  Profeco announced that it had temporarily suspended the operations of 14 business establishments in Mexico City for not posting lime prices or documenting the reason for the  increased costs, as stipulated by
federal consumer law

In a volatile market such as the current one for limes,  structural forces  come into play.

Like other Mexican agricultural products, limes are transported to market by
middlemen, or “coyotes,” who profit from controlling purchases and deliveries, which in turn are becoming more costly because of the monthly fuel price increases mandated by the federal government.

From the farmer to the consumer, limes pass through the hands of racket
collectors, transporters, wholesalers, retailers, processors, and even hijackers.

With limes commanding sky high prices, the fruit is now an attractive target for highwaymen.

In some instances, criminals are reportedly going straight to the source.
Jorge Lara Plaisant, Tabasco lime producer, said orchard heists by lime
thieves have upped the prices for the zesty product.  In response to
the thefts, Lara said local lime producers have organized their own
self-defense force, deploying patrols to guard their crops.

Profeco’s Lorena Martinez predicted that lime prices would drop sharply  by the
end of the month.  In the meantime, she said, consumers could switch from limes to other citrus fruit like oranges.

Additional sources: El Universal, March 11, 2014. Article by Karla Mora. Norte,
March 8, 2014. Article by Article by Nancy Gonzalez Soto.
Radioformula.com.mx, March 6, 2014. Article by Ricardo Rocha.
Milenio.com, March 3, 2014. Article by Luis Moreno.

La Jornada ( Michoacan edition), March 5, 2014. Article by Adriana Florian. La
Jornada,  July 20, 2013;  March 4, 5, 10, 11, 2014.  Articles by Ilan
Semo, Julio Reyna Quiroz, Carlos Alfonso Lopez, Martin Sanchez Trevino,
and editorial staff.

Frontera NorteSur: on-line, U.S.-Mexico border news
Center for Latin American and Border Studies
New Mexico State University
Las Cruces, New Mexico

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Author: Editor

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