WASHINGTON, D.C.—Trade cases U.S. producers have filed against Mexican sugar imports will likely cost consumers $2.4 billion in higher prices this marketing year, according to a new white paper by the Sweetener Users Association.
The sugar growers filed their case six months ago, alleging the illegal dumping of heavily subsidized Mexican sugar depressed domestic prices. Due primarily to market uncertainty stemming from the case, U.S. refined sugar prices have risen from 26.5 cents per pound in March to 37.5 cents per pound in September, according to agricultural economist Tom Earley, a consultant who authored the paper.
Earley estimates higher prices resulting from the trade case have already cost consumers an extra $837 million during the past six months. His future price outlook assumes the continuation of current sugar prices, compared with March prices.
In response to the sugar growers’ allegations, the U.S. International Trade Commission made a preliminary ruling in May that unfair Mexican trade practices have likely hurt U.S. producers. The U.S. Department of Commerce also made a preliminary ruling that subsidies have given Mexican sugar an unfair advantage, leading to the Sept. 2 imposition of temporary tariffs averaging 15 percent on imports from Mexico. The department is scheduled to rule as to if illegal dumping occurred on Monday, which could result in additional temporary tariffs.
Tariff revenue is being held in an account pending a final Commerce ruling, scheduled for Jan. 7. That deadline, however, will likely be extended to March 8.
Phillip Hayes, a spokesman with the grower organization American Sugar Alliance, described the white paper as “elementary” and based on “cherry-picked spot prices.”
“Prices are many cents cheaper than they were in 2012. If you carry that forward, they’ve saved money,” Hayes said.
Hayes also emphasized that most of the sugar now on the market was contracted long ago at cheaper prices.
“(Their analysis) is based on the faulty assumption that if sugar prices fall, they pass along the savings to grocery shoppers,” Hayes said, pointing out that candy bar prices in 2013 were 300 percent higher than in the 1980s, though the cost of sugar was about the same.
John Herrmann, an attorney representing the sweetener users, said it’s possible the U.S. and Mexican governments will settle on the issue prior to final rulings. If that occurs, Herrmann said his client will insist that the ITC investigation continue and that terms of the agreement remain on hold pending that outcome. If ITC were to find no injury in its final ruling, any settlement would be moot. Furthermore, Herrmann said his client would advocate for a provision in an agreement guaranteeing a continued stable and dependable supply of Mexican sugar into the U.S.
Earley wrote in the white paper, “Even if the U.S. and Mexico work out some agreement to restrict Mexico’s sugar exports to the U.S. in the coming months, the implicit shorting of the market and uncertainty about how our supply deficit will be met is expected to keep U.S. sugar prices higher than they would have been otherwise.”
Source: www.capitalpress.com