| MEXICO CITY -- Mexico created a nationwide sugar authority Oct. 31 to
oversee the management of 27 mills seized by the government in September
in a controversial expropriation move.
In a joint statement by Mexico's Agriculture and Finance departments,
the government says the new Sugar Sector Co. also will issue production
and export quotas to the remaining 33 mills in Mexico that still are in
private hands.
The new sugar authority will complete the 2001 to 2002 harvest,
scheduled to begin in mid-November, and eventually oversee the
re-privatization of the 27 seized mills. Fears had grown that the new
harvest would be affected by the recent seizures and management
restructuring.
The long-awaited program is intended to maintain stable local supply
and keep exports orderly -- an issue that has long been a major problem.
Industry plagued
The sugar industry is Mexico's second-largest employer, after oil,
sustaining an estimated 3.5 million people in the least developed parts of
the country.
However, despite recent record corps, the industry has been plagued by
low prices, massive debts from the 1989 to'91 privatization of the mills
and competition from high-fructose corn syrup imported from the United
States.
In addition, Mexico has been involved in a four-year row with the
United States over its right under the North American Free Trade Agreement
to export all of its surplus sugar production duty-free to the United
States.
The United States wants to limit Mexico's surplus sugar export, fearing
that an increase would flood the United States' already oversupplied
market.
Authority's duty
The new sugar authority will oversee all exports and seek the maximum
duty-free export quotas to the United States.
It also will offer credit to mill owners through the government's
export development bank, Bancomext, allowing mills to pay cane growers.
According to a 1960s presidential decree, Mexican cane growers are
guaranteed up-front payment for about two-thirds of their cane at delivery
to the mills. Mills have struggled to find credit to cover the payment,
leading to annual strikes by cane growers.
In a move bound to be seen as controversial with the powerful cane
growers' unions, however, the plan requires growers to be paid on the
basis of sucrose levels instead of tonnage. |