U.S.-Mexico sugar plan fails

By Scott Kraus, Ag Weekly correspondent
Friday, February 15, 2008 5:18 PM CST

TWIN FALLS, Idaho 2/15/08 - U.S. sugar producers Feb. 8 abandoned a proposal to manage sugar trade with Mexico under the North American Free Trade Agreement, an official said.

Producers sought new farm bill language to prevent the potential for market upheaval in both countries, said Jack Roney, director of economics and policy analysis for the American Sugar Alliance in Arlington, Va.

Since Jan. 1 under NAFTA, sugar sales between the countries is unrestricted, Roney said.

But that extra supply could disrupt the U.S. sugar program, which relies on government regulation of foreign and domestic sales so farmers get their profits entirely from markets, instead of taxpayer subsidies.

The Jan. 11 proposal would have closed a NAFTA loophole, he said. The loophole could theoretically allow Mexico to sell all its domestic sugar into the United States, he said. Then it could buy sugar from elsewhere to meet its domestic needs. The management plan, detailed at sugaralliance.org, would also coordinate U.S. and Mexican market allocations.

The proposed farm bill includes language for the government to buy and use excess sugar from Mexico in ethanol plants. But the Sugar Alliance is concerned that problems could still arise.

If massive amounts of sugar enter the U.S., it could result in bankruptcies and retaliation, he said.

“We offered a solution so sugar doesn’t become a problem,” Roney said.

But producers dropped it in the face of opposition from other agriculture groups and the Bush administration, Roney said.

The plan would not have affected exports of corn or corn sweetener to Mexico, he said.

But one group opposing the plan is the National Corn Growers Association, said Jon Doggett, the association’s vice president of public policy.

“The proposal goes down the road of managed trade,” Doggett said. ” … We open up that door and there’s a whole lot of other goods that folks would like to manage.”

Since NAFTA was signed, Mexico has become one of the biggest importers of American corn, he said. The impact on trade of livestock, which are typically fed with corn, is a “huge concern,” too.

“We’re either going to have free trade or we’re not going to have free trade,” Doggett said.

But the proposal to manage trade originally came from a joint Mexican-U.S. task force, said Mark Duffin, executive director of the Idaho Sugarbeet Growers Association in Boise. The task force met periodically about sugar trade over the years as NAFTA was phased in, he said.

“The industry on both sides of the border had come to agreement on this,” Duffin said. “But others had problems with it.”

The issue is important to Mexico, too, according to Carlos Blackaller, the head of an organization representing Mexican sugarcane growers. Blackaller, who spoke Feb. 4 at the annual meeting of the American Sugarbeet Growers Association, said the Mexican sugar industry supports 2.4 million jobs.

But Mexican sugar prices are expected to drop 10 percent to 15 percent by the end of this year. A downward price spiral could lead to social unrest. And that could spur more Mexicans to seek to enter the United States, he said.

Further, if sugar industries fall apart, consumers could be left without reliable suppliers, Blackaller said.

But Agriculture Secretary Ed Schafer and U.S. Trade Representative Susan Schwab addressed the sugar issue in a joint statement Feb. 11. They said the United States has the tools and cooperative relationships with Mexico to ensure smooth integration of sweetener markets.

“The administration will continue to work closely with all parties to ensure that the rules for sweetener trade with Mexico continue to be fair and transparent,” the statement said, “and will address any valid concerns over sugar trade with Mexico as we move forward.”

Comments »

Comment on this story

Comments will be approved within 48 hours

Name:

Email: (optional)

Comments:

Image Verification: (Case sensitive)