| BOISE -- The sugar industry has bottomed out and may be
ready to recover, says one leading expert.
"We've seen the worst times, and better times lie ahead,"
said American Sugar Beet Association Executive Vice President Luther
Markwart Tuesday when he spoke to over a 1,000 sugar beet growers in
Boise.
But the trip back to prosperity and stability will demand patience and
persistence, he warned.
As Amalgamated shareholders know too well, the journey represents an
enormous test in tenacity. Now in the fourth year of ownership, the
company was just hit with the lowest prices for sugar in 22 years.
Markwart, who is a renowned figure in a lobbying group also renowned
for its clout in Washington D.C., laid out the reasons growers should be
hopeful.
Because of work done last year by industry officials, producers don't
have to worry that the government will push dietary guidelines
discouraging sugar consumption, thereby reducing demand. Markwart said the
role of sugar in the American diet will not be re-examined for at least
another 10 years.
"The future does indeed look bright for consumption," he
said.
The real problem now is supply, Markwart said.
Since an import quota of 1.25 million short tons imposed by GATT in
1996, U.S. sugar producers have watched prices drop.
"I always say clean up what's on your plate before you go back to
the buffet," Markwart said, referring to the need to eliminate
current import problems and to support domestic producers before allowing
more sweetener into the United States.
Markwart pointed out that if necessary the industry can stop many of
the complicated problems that have surfaced with Mexico since NAFTA kicked
in.
"We have remedies," he said.
For over a year, industry officials have been preparing trade cases to
take to court, he said.
"The message to Mexico is that it is in our interest and in your
interest to negotiate resolutions," Markwart said. "If they
don't work with us, we will shut down imports from Mexico."
But while Markwart is a head cheerleader for the industry, Peter
Buzzanell is a former Department of Interior economist who unemotionally
told Amalgamated shareholders on Thursday that stemming the tide of sugar
from Mexico will take a long time. Issues such as the "Side
Letter" to NAFTA, Tier II duties and expanding production in both
countries scheduled to become a common market in 2008 are just a few of
the problems the United States faces.
He doesn't rule out that forfeitures and another PIK (Pay-in-kind)
program could be coming up again in 2001.
As for the spun molasses problem, Markwart said if the ruling on the
February appeal to stop that flow of sugar -- equal to about 90,000 acres
of sugar beets -- is not favorable to domestic producers, then legislation
to outlaw it will be introduced.
"The U.S. government is also appealing," he said. "This
situation undermines the integrity of trade agreements, in general."
Both Markwart and Buzzanell predict that should producers be forced to
push legislation, Congress will be friendly.
A perception of less domestic sugar on the market should boost grower
prices, too, Markwart said, noting that two California factories have just
shut down for good.
That reduces California acreage from 110,000 acres to 55,000 this
coming year. The current Florida cane crop is suffering bad winter
weather, and that could also reduce the coming year's sugar production by
200,000 tons, Buzzanell said.
Though these events might appear insignificant when an overall U.S.
production of 9.0 million tons is considered, Buzzanell said right now
growers must take into account anything that might change profit margins.
As Ralph Burton, vice president of Amalgamated Sugar, studies the
current market, he said the coming crop might increase $1.50 to $3.00 net.
"This is a pivotal year," Buzzanell said. "The situation
with producers has been phenomenal."
In order to cope with the rapid changes in agriculture, more sugar beet
factories are heading toward becoming farmer coops.
"By the end of this year 92 percent of sugar beet factories will
either be coops or close to becoming co-ops," Markwart said.
And he sees that as a good thing.
When the serious problems of the present are resolved, it means more
profit for growers.
He has a story about shipbuilding that he tells to growers.
On dry land the new ship looks good, Markwart said.
"But it's not until you sail it that you know where the holes are
so you can plug them up," he said. |