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STEAMBOAT SPRINGS, Colorado (Dow Jones)--While confident that
government help will continue to flow in its direction, the U.S.
sugar industry concluded a three-day gathering here with lingering
doubts about free world sugar trade, stressed by the ongoing dispute
with Mexico over sugar quotas.
U.S. domestic sugar prices are hovering around its lowest levels
in 22 years, and despite generous support coming from Washington,
the pace of price recovery remains unclear, not least because of the
threat of imports from Mexico.
With free world sugar trade far from reality, American producers
believe it will lead to further lobbying in Washington for a new
Farm Bill. The new legislation should prevent U.S. sugar growers and
farmers from having to contend with cheaper commodities coming from
nations that heavily subsidize their industries.
Luther Markwart, executive vice-president of the American
Sugarbeet Growers Association, said that farmers seemed willing to
band together to develop policies that ensure the survival of the
agricultural industry.
"Several sectors are willing - including corn, sugar,
soybeans and others - to work together to recommend a policy that
Washington can approve," said Markwart, also the new Chairman
of the American Sugar Alliance, a Washington umbrella group that
represents producers and processors.
Several U.S. lawmakers said they are prepared to back the sugar
industry to emerge from its current crisis, even if it takes more
Washington involvement.
Rep. Larry Combest (R-TX), Chairman of the House Agriculture
Committee, vowed to help farmers across the board, and urged the
sugar industry to come up with a viable solution that the U.S.
Congress can back.
"I don't want a bidding war (with foreign governments)...
but we will open the purse strings if we have to" to compete
against highly subsidized crops from other countries..."We must
not become dependent on foreign countries to provide our food and
fiber," he told the cheering conference attendees.
Sugar Excluded From Regional Trade Agreements
Jennifer Nyberg, a commodity specialist with the Food and
Agriculture Organization of the United Nations in Rome, said that
the recent cycle of very low world prices and surplus sugar stocks
led many countries to increase protection of domestic markets.
"There are 124 regional trade agreements worldwide at this
time, most of which substantially exclude sugar trade," she
noted.
And, to bring the point home, Jack Roney, director of economics
for the ASA, said that while American sugar farmers would like to
see free world trade because they are competitive by global
standards, "they welcome the opportunity to compete on a level
playing field with foreign farmers, but not with their
governments."
He stressed that if Mexico is allowed to increase sugar shipments
into the U.S. market, the domestic industry will have a difficult
time overcoming its current woes, caused mostly by oversupply and
depressed prices.
But debates at the 17th Annual Sweetener Symposium that ended
Wednesday revealed that the issue of Mexican exports is far from
being resolved.
The U.S. and Mexico have been in a dispute over a side letter to
the North American Free Trade Agreement that, according to Mexico's
argument, allows it to export all of its sugar surplus into the U.S.
Mexico also notes that the surplus emerges from higher high fructose
corn syrup imports from the its northern neighbor. HFCS, produced
from corn, is used as a sweetener in soft drinks and bakery
products.
American producers contend the letter allows Mexico to export up
to a maximum of 250,000 tons of its surplus, beginning Oct. 1.
The Nafta agreement calls for a North American common sugar
market by 2008, and the countries are trying to polish details to
meet that target. A common market will entail free trade, with
common barriers against international competition.
Mexico Considers Litigation Against U.S.
Luis de la Calle, Mexico's deputy secretary of international
trade negotiation said that his country will decide "in few
days" if it will call for a Nafta panel, as provided in the
agreements, to solve the dispute.
"For a fair agreement to be reached, the burden must be
shared by all sectors involved - the corn and the cane and beet
sugar producers," de la Calle said.
Ed Makin, executive vice president of U.K.-based trade house C.
Czarnikow, told Dow Jones Newswires the ongoing dispute and the
prospect of higher Mexican shipments will only keep the U.S. sugar
prices under pressure.
But he noted USDA effort to help the industry will partially offset
that effect.
On a more tangible and positive note, last week the U.S.
Department of Agriculture set up a payment-in-kind (PIK) program,
under which the USDA will pay sugarbeet farmers up to $20,000 in
government-owned sugar to destroy a portion of their crop. The
producers may then sell the sugar to processors for profits.
The plan could remove up to 300,000 tons of sugar from the U.S.
market in 2000-01, industry experts told Dow Jones Newswires.
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