MEXICO CITY—Limes are part of Mexico’s identity. Essential companions to tequila, tacos and guacamole, they’re critical ingredients in the country’s gastronomy.
They are also a pawn in an escalating war among rival drug cartels that is driving lime prices to record levels.
In part, limes are subject to the same global forces that are driving prices up all over the world. But they also face a criminal form of price-fixing imposed by cartels, who are turning to the lime business to help finance their violent operations.
Lime prices have been steadily rising for years and frequently peak during winter months. The past year was unprecedented though. Lime prices jumped some 90 percent in December 2021 compared to December 2020. In Mexico City, a kilo of limes is selling for around 85 pesos (roughly $4), $1 more than the highest price a kilo has ever reached in the past. Lime prices are even higher in northern Mexico.
A major supplier of winter limes in Mexico is the Pacific Coast state of Michoacán, the battleground for a bitter fight for control between the Jalisco New Generation Cartel, or CJNG, and a coalition of local groups known as the United Cartels. Growers in the state’s multi-billion avocado and lime business are forced to co-exist with the cartels´ drug trafficking and extortion operations.
Organized crime uses lime production as a kind of war tax, limiting the harvest to manipulate the price and then demanding a percentage of the profits. Gangs have cut the number of days workers are allowed on farms to just twice a week, instead of the usual three days a week, said Hipólito Mora, a Michoacán lime producer.
“It’s been two or three weeks since they don’t let us harvest more than two days a week,” he said. “Because of that, there is less production, and the price rises.”
Mora said the cartels collect the tax this way: Packing plants set the price they pay farmers for a kilo of limes. But they don’t pay that price. Instead, they are forced to divert a portion to organized crime groups, cutting profits for the farmers.
In some cases, the cartels themselves have invested in packing plants, said Romain Le Cour, program officer for Security and Violence Reduction at the think tank Mexico Evalúa.
The higher the lime price, the more money for cartels that operate in the area.
“It’s a great way to make quick money for all illegal armed groups, and right now the fight between them pushes them to look for more funding, more money,” Le Cour said. “The ability of criminal groups to regulate the economy is something that’s been really interesting in Michoacán for the past 10, 12 years.”
The trend echoes the story of avocado, known as the “green gold.” Nearly a million tons of avocado, valued at around $2.4 billion, are exported to the U.S. annually, virtually all of it from Michoacán. That production has lifted thousands out of poverty but also fed the coffers of organized crime, which often charges a tax on every kilo sold.
It’s impossible to quantify how much of the lime price spike is a result of organized crime and how much has to do with overall inflation, the seasonal volatility of produce prices, and a poor harvest.
But the reduced lime production is showing up in the government’s broader statistics. Mexico’s agriculture ministry reported that output from Michoacán fell some 26 percent in December compared to the month before. In a press release, the ministry’s agricultural information service attributed the high lime prices to poor weather, rising fuel and fertilizer costs, and violence in producing states, particularly Michoacán.
Ricardo Sheffield, head of Mexico’s federal consumer protection office, also attributed the sharp price increase to a spike in violence in Michoacán in November and December.
Warring groups “blocked and destroyed roads that were used for the production of lime,” he said in an interview. Lime prices have started to drop since the roads were reopened last week following the deployment of more than 1,000 soldiers from the Mexican Army and National Guard to the state, he said.
Organized crime groups in Michoacán have leveraged limes as a source of income as far back as 2011. The then-powerful Knights Templar cartel — whose members have since split between the CJNG and the United Cartels — began kidnapping and threatening people in the industry as a means of extorting them for a share of the profits. Business owners responded by forming self-defense groups. Mora was one of the first to organize one of these vigilante groups, although he said it’s since disbanded.
As lime prices steadily climbed over the last decade, growers reached a detente of sorts with criminal gangs – until the CJNG intensified its push into Michoacán last year.
The cartels’ presence has created an additional cost for the state industry, which produces some 27 percent of the country’s limes. The spiraling violence has pushed tens of thousands of people to flee, leaving fewer people to work the fields. By some estimates, more than 5,000 hectares of lime orchards lie abandoned, and there is a shortage of workers to cultivate and harvest the fruit.
Falko Ernst, Mexico analyst for the International Crisis Group, said the lime business, like avocados, is in many ways a “shadow industry.”
“What drives and sustains their ability to make war hinges on their capacity to extract rent from the billion-dollar industries,” he said, while also warning not to overstate the impact of organized crime on prices when other factors like weather and broader inflation play a role.
In Michoacán, lots of producers and farm workers who pick limes are happy with the price hike — at least for now.
Farm workers are paid for every box of limes they pick, and the earnings on each box fluctuates with the fruit’s selling price. When the price is high, lime pickers can earn as much as $60 in a day, Mora said. When the price is low, they earn as little as $7.
“Of course, I don’t want the price to drop. Same as all the producers and the people who work in the fields,” he said. But, he added, it’s not worth it in the long term. “People can’t live off of two days a week of work.”
Le Cour said if history is an example, the honeymoon won’t last long. A decade ago, when the Knights Templar cartel started manipulating the lime market and forcing an increase in prices, they encountered little resistance at first.
“In a way, it was a win-win situation, until they started being targeted with extortion and violence," Le Cour said of the growers. And like then, with violence on the rise now, he said, the remaining auto-defense groups are threatening to rise up once again.