How does a drug cartel become a lime cartel?

File: In this Oct. 24, 2012 photo, soldiers check a house they suspect belongs to members of the “Caballeros Templarios,” or Knights Templar drug cartel near the town of Holanda in Michoacan state, Mexico. Knights Templar, a quasi-religious drug cartel that controls the area and most of the state, monitors the movements of the military and police around the clock. The gang’s members not only live off methamphetamine and marijuana smuggling and extortion, they maintain country roads, control the local economy and act as private debt collectors for citizens frustrated with the courts, soldiers say. (AP Photo/Alexandre Meneghini)
Joshua Tucker: The following is a guest post from political scientist Omar García-Ponce of New York University, and sociologist Andrés Lajous of Princeton University.
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In the western state of Michoacán, Mexico, groups of civilians have formed “self-defense” militias with the aim of kicking out one of the bloodiest drug cartels: “The Knights Templars.” The Templarios, as they are known in Mexico, are not a typical drug-trafficking organization. They are a mafia in a more traditional sense. They sell protection services, are involved in corruption rackets, and have been able to set up a fully functioning system of extortion, looting, and illegal taxation.
Violence and extortion are longstanding problems in Michoacán, but it was not until early 2013 that civilians decided to take up arms to defend themselves. Why did they rebel against the Templarios? The leaders of the self-defense groups have provided two different explanations. The first one, given by the leader of the rural town of Tepalcatepec, is that the Templarios crossed a line when they started to kidnap their women and children in groups in order to rape them. The second explanation, given by the leader of Buenavista — the town where the vigilante movement began — is that the Templarios moved from illegally taxing agricultural output to actually exerting direct control over agricultural production. In a recent interview published in the Mexican magazine Nexos, the founder of the self-defense groups explains:

[The Templarios] started to take over lime farms, many times illegally, without papers, or buying them with drug-trafficking money, and in numerous occasions at the price they would set: ‘I will give this much for your land, and if you don’t accept it, I will pass the money to your widow’. Then, they started regulating the lime-picking season: you couldn’t pick limes certain days of the week [and] packing companies would only receive limes from farms owned [or controlled] by the Templarios.

In retrospect, it is not surprising to find news reports about the extortion of lime producers by drug cartels. For example, in April last year, 13 lime producers and pickers were killed after asking government authorities to improve security conditions in lime growing areas. They accused the Templarios of closing packing plants and some lime farms, which, according to the press at the time, resulted in higher lime prices.
To better understand why violence has escalated in Michoacán, it is important to consider the agricultural boom that the region has experienced in recent years. The chart below shows that the production values for export crops such as lime, avocado, and strawberry, have grown strikingly in Michoacán (based on data from Mexico’s Ministry of Agriculture). This increase is mostly due to exports to the U.S. In the case of lime, the production value nearly doubled between 2003 and 2011, but it fell by 30 percent (in real terms) between 2011 and 2012.

The following map shows strawberry (in pink), avocado (in blue), and lime (in green) growing towns in the sate of Michoacán. This set of towns accounts for about 95 percent of the 2012 production of each crop in the state. Note that crop production is geographically concentrated in clusters of towns that do not overlap with each other, and lime production comes from only six contiguous towns: Aguililla, Apatzingán, Buenavista, Múgica, Parácuaro, and Tepalcatepec. Two out of every 10 limes produced in Mexico come from this area.

At first glance, the geographic distribution of agricultural production in Michoacán suggests that the lime region is relatively easier to “control,” at least in tactical terms. It is a compact area, composed mostly of flatlands known as the “Hot Land.” In contrast, the avocado region is far larger and mountainous, creating a territorial divide in the state; the strawberry-growing areas are dispersed in three sub-regions in the northern side of the state.
Coincidentally, the two towns where the self-defense groups began are Buenavista and Tepalcatepec, the first and sixth largest lime producers in the region. The self-defense groups expanded rapidly to neighboring towns, and finally reached Apatzingán, the Templarios’ stronghold and the region’s biggest and most important town.
Why did the Templarios try to directly control lime production if they could simply continue extorting farmers? Why did they make this move in lime-producing towns but not in strawberry and avocado regions? One possible answer relates to the sudden increase in lime production in Michoacán. According to Mexico’s Ministry of Agriculture, all lime-producing towns in the state experienced a significant increase in production volume over 2003-2012. In the case of Apatzingán, the trend stagnated for about three years, but it increased sharply again in 2011.

The sharp increase in production seems to have had an impact on prices. As shown below, the price paid to lime producers in Michoacán dropped dramatically from 2011 to 2012 (as reported by Mexico’s Ministry of Agriculture). In the town of Tepalcatepec it fell by more than 40 percent in real terms.

This information helps understand the story told by self-defense groups about the Templarios trying to control the regional supply of lime. The story could go as follows. Once the lime price fell between 2011 and 2012, the Templarios tried to regulate the regional market by directly controlling the supply, instead of just illegally taxing farmers. This encouraged lime farmers, whose incomes had fallen abruptly, to arm themselves and confront the Templarios. This was not the case in the avocado and strawberry regions, where producer prices remained stable or kept growing. So it makes sense that when the self-defense groups entered Apatzingán, the first decision was to set a new lime price in the local market.
In brief, the Templarios are not only a drug-trafficking cartel, or at least not a conventional one. They have attempted to become a cartel in the larger sense of the term by controlling the regional lime market. This does not imply that the clash between Templarios and self-defense groups is merely a land dispute. The fight over the lime price in Michoacán has triggered a broader phenomenon of armed conflict in the context of Mexico’s drug war, presumably making margaritas more expensive in the United States.