FARGO—The U.S. Department of Commerce has reached an agreement with the Mexican government and sugar producers that would prevent Mexico from flooding the U.S. market with cheap sugar.
American Sugar Association members—a group of processors including cooperatives from the Upper Midwest—last March filed cases asking the U.S. International Trade Commission and the Department of Commerce to study whether the Mexican sugar industry was unfairly subsidized, and to take action to stop its impact on the U.S. market. This agreement settles those cases.
Mexican imports increased sharply in 2013, U.S. sugar prices fell below the loan levels and cooperatives and other processors forfeited sugar to the U.S. government. Plummeting prices cost sugar beet farmers in the Red River Valley of North Dakota and Minnesota hundreds of millions in payment reductions. Farmers in the Southern Minnesota Beet Sugar Cooperative in Renville, Minn., Sidney (Mont.) Sugars Inc. and Western Sugar Cooperative in Montana were similarly affected.
Minimum prices
The agreement establishes minimum prices to prevent the suppression of U.S. prices - 26 cents per pound (dry weight, commercial value) for refined sugar and 22.25 cents per pound for other sugar.
The deal also prevents imports from being concentrated during certain times of the year and limits the amount of refined sugar that may enter the U.S. market, according to the Department of Commerce.
The American Sugar Association issued a statement saying the agreement should stop "Mexico from dumping subsidized sugar onto the U.S. market and violating trade law.”
ASA spokesman Philip Hayes said, “Like our counterparts in Mexico, we want NAFTA (the North American Free Trade Agreement) to operate as intended and to foster free and fair trade in sugar between the countries.”
Hayes also said the agreement won't require changes in the sugar provisions of the 2014 farm bill.
Paul Piquado, the department’s assistant secretary for enforcement and compliance, who signed the agreement for the U.S., said it will "work in concert with the U.S. sugar program" and help promote stability.
Paul Rutherford, of Euclid, Minn., president of the Red River Valley Sugarbeet Growers Assocaition, and a grower for American Crystal Sugar Co., said on Dec. 22 ASA members have agreed not to comment individually, but referred questions to the ASA.
Robert Green, chairman of American Crystal Sugar, also declined to comment.
Unwelcome gift
The Coalition for Sugar Reform - a group of 25 organizations - called the deal an "unwelcome holiday gift for consumers," saying it will raise sugar prices for consumers for the next five years.
The coalition said the agreement will mean any Mexican sugar needed to "adequately supply the U.S. market must be priced well above world market prices - prices that are even higher than mandated by the U.S. sugar program."
The Sweetener Users Association - a member of the coalition and an organization that doesn't list its member companies, who are candy and confectionery makers - said "with the stroke of a pen, these agreements dismantle the unrestricted free trade of sugar between the United States and Mexico since 2008 and undermine the core principles of the North American Free Trade Agreement. While sugar is but one commodity traded between our two countries, these suspension agreements set a horrible precedent by undoing trade flows that have been established over two decades after NAFTA was first negotiated."
The SUA says the uncertainty surrounding the antidumping and countervailing cases cost U.S. consumers $837 million between March and September 2014 "and put in jeopardy thousands of U.S. manufacturing jobs."
Jennifer Cummings, a spokesperson for the SUA, acknowledged the figure is a calculation for extra costs to the manufacturers of candy and other products, but not necessarily what was paid by consumers.
Source: www.grandforksherald.com