Showing posts with label corn. Show all posts
Showing posts with label corn. Show all posts

Tuesday, June 12, 2007

Corn vs. Tequila

This article focuses on resource scarcity and cost benefit analysis. Mexican farmers are setting fields of blue agave on fire. As many know, blue agave makes tequila. They are not leaving the land barren. They are now planting corn. This is in reaction to the booming ethanol industry in the United States.
"Those growers are going after what pays best now," said Ismael Vicente Ramirez, head of agriculture at Mexico's Tequila Regulatory Council.
There has been an over supply of the plant, and the prices are dropping. It is also suggested this new corn craze will now leave a 35% gap in agave production. It takes many years for an agave to grow to a size worth exploiting.
Land is scarce. This is a trade off the Mexicans are hoping brings greater wealth. They can either plant agave, or they can plant corn. One or the other. They are trying to cash in on a profitable market in the United States. This also relates to trade between nations and a possible comparative advantage. We may have more land, but the value of their time might be less.