10-03-00: Sugar industry awaits solution

TWIN FALLS -- As harvest dawns on the sourest sugar prices in perhaps 25 years, sugar beet growers are nonetheless on the verge of a sweet victory.

Legislation -- sponsored by Gem State senators -- was introduced this week to halt the influx of bootleg sugar from Canada, sugar that displaces U.S. product on the domestic market.

At issue is what the U.S. industry claims is obvious and blatant circumvention of the sugar TRQ (tariff rate quota). To get around the tariff agreement, which limits the level of sugar coming into the United States duty-free, a company in Canada is "stuffing" sugar into molasses, shipping it across the border under a different classification, and spinning out the sugar once it is safely in the United States.

"It's sheer, blatant circumvention, and that's what's being done," said Luther Markwart, executive vice president of the American Sugarbeet Growers Association.

"There is no end use for the product as it comes over the border, no market for it. That's the blatancy of it," Markwart said. "And it's not even a product of Canada."

Truck driver Mary Cardenas of Jerome, transloads sugar beets from a field truck to a transport truck as harvest begins in the Magic Valley. The beets were harvested from fields east of Jerome farmed by Russell Patterson of Heyburn.
Photo by Terrell Williams

"It's been very frustrating for us," said Mark Duffin, executive director of the Idaho Sugarbeet Growers Association. "These are such tough times for growers ... and this is such a blatant, obvious circumvention of the law."

Even at a conservative estimate of an equivalent of 124,000 tons of raw product via stuffed molasses, that accounts for about 40,000 acres of sugar beet production, roughly one-fifth of Idaho's 200,000-plus sugar beet acres.

Throw in the fact that the United States is a net importer of sugar, oversupply has prices in the basement, and Mexico has threatened unlimited access under NAFTA, and the frustration is multiplied.

Ralph Burton, vice president of agriculture at Amalgamated Sugar Co., who says prices are as low as they were in the mid 1970s, knows firsthand the frustration. Regardless of the amount, excess sugar is a burden, he said.

"When you have too much, that's that much worse. Add anything to the use-to-stocks ratio, and that could be significant."

The silver lining is that this week's legislation offers a quick closing of the loophole the industry has been trying to tie up for nearly four years. A lawsuit, appeals and an overturned ruling have blocked industry's path while foreign sugar continues to enters the country in skimpy disguise.

The legislation, introduced by Sen. Larry Craig, R-Idaho, Mike Crapo, R-Idaho, and Sen. John Breaux, D-La., to give the U.S. Customs Service authority to stop the imports, is expected to be passed before the November elections, according to Mike Tracy, spokesman for Sen. Craig.

Markwart, for one, believes that will happen.

"I have all the confidence in the world in Sen. Larry Craig," he said. "I have seen him work miracles, legislatively. I am reasonably confident ... and cautiously optimistic. But remember, this is Washington."
_______________________________________________________________________

The process

* Sugar is liquefied and added to water and molasses to produce a syrup. This is called "stuffing" the molasses.

* After entering the United States, the sugar is spun out of the syrup.

* The sugar is then sold into the U.S. market.

The route

* Sugar from Brazil enters Canada at Toronto.

* It is shipped to a British-owned company, owned by Tate and Lyle, to Windsor, Ontario,

where it is "stuffed" into molasses.

* The syrup crosses the border near Detroit.

* There the sugar is spun out by British-owned E.D. & F. Mann trade house.

The result

* Sugar from stuffed molasses circumvents TRQ (tariff rate quota) agreements.

* The sugar from stuffed molasses this year is estimated to be equivalent to 125,000 to 150,000 short tons of raw sugar or as much as approximately 140,000 tons of refined sugar.

* The illegal sugar displaces U.S. product in an already glutted market.

* If the practice is allowed to continue, other countries and companies could follow suit, taking an even bigger toll on domestic production and prices.

The fix

* Amendment SB 3176 gives the U.S. Customs Service the authority to stop circumvention of sugar TRQs.

* It was introduced by Idaho Sens. Larry Craig and Mike Crapo and Louisiana Sen. John Breaux.
_______________________________________________________________________

"Larry Craig is the greatest champion the beet sugar industry has, or I should say the best Republican champion."
-- Luther Markwart, executive vice president of the American Sugarbeet Growers Association, commenting on stuffed molasses amendment spearheaded by Sen. Larry Craig, R-Idaho, and Sen. John Breaux, D-La.

News & Events - Archived News