Beer, Tequila, and Bio-Fuels

I offer the following two stories up for you to compare and contrast:

Mexicans torch tequila fields for ethanol boom corn

Mexican farmers are setting ablaze fields of blue agave, the cactus-like plant used to make the fiery spirit tequila, and resowing the land with corn as soaring U.S. ethanol demand pushes up prices.

Biofuel Fettering Beer Business in Germany

Brewers in Germany may be forced to raise beer prices in the coming months. Since increasing area of farmland in the country is now being used for growing subsidized crops used for obtaining bio fuels and not beer, thereby causing price rise on the ingredients of beer.

Welcome to Economics 101.

Whilst I have very little in the way of snark for the above stories, I do find them notable for a variety of reasons. First is the impact of energy consumption has upon farming. From everything I’ve read in regard to bio-fuels, I don’t recall once seeing any predictions regarding how the demand for corn (and other bio-fuel plants) would adversely affect the beer and spirits industry. Of course, I didn’t see anyone predict the adverse affect it would have on the tortilla industry either, so I shouldn’t be all that surprised.

Secondly, while I think the German Beer market will work itself out, I think that the 25 percent to 35 percent reduction of agave growth will hurt the Tequila industry. Which is a shame, because there has been a tremendous amount of new and unique brands of tequila to come out of Mexico recently. Not the cheap stuff either, but high end artisinal brands which are changing many people’s perception of the spirit.

Let’s hope I’m wrong.


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