If you're in Mexico, that slice of lime will cost you. Source: Rosa Mexicana via Bloomberg
If you're in Mexico, that slice of lime will cost you. Source: Rosa Mexicana via Bloomberg

Why does Mexico, the biggest lime producer, also have the world’s most expensive limes? Ask the country's crime bosses.

Mexico's mobsters are squeezing lime growers and no one seems to be doing anything about it. The racket goes like this: criminals in lime growing states block roads and extort a fee for every truckload of limes they let pass. The choice for lime growers is simple -- they can pay or be killed. Those smart enough to pay push the “tax” up the supply chain until it hits consumers.

Lime prices have risen more than 200 percent since December to 80 pesos ($6.10) a kilogram, higher than Mexico’s daily minimum wage. Limes alone were responsible for a third of last month’s consumer price index increase. The lime crisis is no joking matter in a country where the citrus fruit is such a popular condiment that it ranks as the equivalent of mayonnaise in the U.S.

Mexicans are in denial, citing other reasons for the soaring prices. Some blame the “yellow dragon” plague for hurting crops last year. Others fault heavy rains and greedy middlemen. Those no doubt play a part, but the real plague in the state of Michoacan -- where most of the lime crop is grown -- has been runaway crime.

For those who missed it, Michoacan is a state in west central Mexico where drug cartels and paramilitary forces dominate -- so much that the federal government had to send in a platoon in January to rescue the state from lawlessness.

That Mexican crime cartels are muscling into the lime business should be no surprise. Crime organizations in Mexico these days are branching out from narcotics trafficking, dabbling in everything from smuggling iron ore to extorting companies and individuals. Almost any enterprise becomes immediately profitable if it involves holding a gun to someone’s head. Mexicans who dismiss cartel violence as something that happens to other people living far away, should check the price of their next margarita -- or the taste, since lime quality is declining too.

Lime producers in Michoacan yesterday said they would set the price at 12 pesos and will increase output. Whether this makes any difference in prices for consumers is hard to say because shippers presumably will still have to pay the crime gangs.

Mexico’s Federal Prosecutor for the Consumer has vowed to criminally prosecute anyone found guilty of hoarding limes. Plus, the government has vowed to sell affordable limes through Diconsa, a state-controlled chain of community grocery stores. This may offer short-term relief to low-income Mexicans but it is hardly a sustainable solution as long as law enforcers don't crack down on criminals.

If all else fails, Mexico is considering importing limes next month. The measure is such a political no-no that Agriculture Secretary Enrique Martinez y Martinez was almost apologetic when he announced the plan. “We will have to set a quota to import lime from other places; it would be very sad, ” Martinez said this week. "Shameful" might be a better word.

There’s a bitter lesson to be learned from Mexico’s lime larceny. Mexico has failed to check the growth of its organized crime syndicates, which now are infiltrating everyday life and commerce. The result? In Mexico, crime pays and all Mexicans are footing the bill.

To contact the author of this article: Raul Gallegos at rgallegos5@bloomberg.net.

To contact the editor responsible for this article: James Greiff at jgreiff@bloomberg.net.