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ZACATEPEC, Mexico -- The towering smokestack and
hulking exterior of Zacatepec's sugar mill was like the Hoover Dam of this
town back in 1937.
That's when Mexican President Lazaro Cardenas
inaugurated the once-impressive state-owned processing plant before crowds
of enthralled peasant farmers.
But today the Emiliano Zapata mill of Zacatepec has
become a rusted symbol of Mexico's vexing trade problems and
corruption-plagued privatization endeavors of the 1990s.
The mill, which was privatized in 1992 along with
many other sugar-processing plants, was one of 27 mills seized Monday by
the government of President Vicente Fox. The takeover came because the
plants, which process almost half the country's sugar, are suspected of
fraud and owe billions of dollars to the government, cane growers and
others.
The problems of Mexico's mills are linked to their
inability to export their surplus production to the U.S. market, said Reg
McQuaid, a researcher with B.W. Dyer & Co., brokers in sweeteners and
foods based in Bernardsville, N.J. The United States and Mexico have
argued over the amount of sugar Mexico is allowed to export to the U.S.,
and Mexico had to export its surplus onto the depressed world market at a
loss.
Florida's three sugar companies, Florida Crystals
Corp. in West Palm Beach, U.S. Sugar Corp. in Clewiston and the Belle
Glade-based Sugar Cane Growers Cooperative of Florida, have fought any
increase in Mexico's sugar quota.
Following the North American Free Trade Agreement six
years ago, Mexican sugar producers geared up for a larger market share
that never materialized. The industry's problems are many.
"Those who came to run this place (in the 1990s)
didn't perform any maintenance. They just took advantage and pocketed
money," said sugar cane grower Francisco Toledo, 73, who lives
outside this town about 75 miles south of Mexico City in Morelos state.
For months farmers have been urging government
intervention in this crisis, and recently have blocked highways and staged
protests to provoke action.
Although Fox is a committed free market advocate, he
said the government takeover, which could last 18 months, was necessary.
Mexico's failing sugar industry employs, directly and indirectly, more
than 600,000 people in various states.
Because of fraud, ineptitude and an inability to
compete against an influx of cheaper U.S. sweeteners -- especially corn
fructose -- analysts say Mexico's sugar industry has racked up an
estimated $2.5 billion in debt since it was privatized 10 years ago.
Privatization of failing state-run industries -- like
sugar -- was a centerpiece of the 1988-1994 government of former President
Carlos Salinas de Gortari. Salinas is now widely viewed as a disgrace in
Mexico because of corrupt practices that took place during his term.
Many of the companies that took over the sugar mills
during Salinas' government received generous subsidies until Fox
intervened this week.
Fox said the purpose of the sugar mill takeover is to
"inject funds" before returning them to the private sector. The
government had to act, too, because of the urgent needs of the cane
producers, he said.
Fox also pledged to "insist" that the
United States raise U.S. quotas on Mexican sugar imports while taking
steps to ensure "that the foreign market doesn't inundate us with
fructose and other sweeteners."
susanf@coxnews.com
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