Luther Markwart, American Sugarbeet Growers Association executive vice president, shared some of the beet industry’s challenges and opportunities at the 53rd annual International Sugarbeet Institute on March 26 in Fargo, N.D.
He briefly summarized the countervailing and anti-dumping suits filed in the past year that resulted from Mexico oversupplying the U.S. sugar market.
"Suspension agreements put control over balancing supply with demand under U.S. sugar policy back in the hands of USDA's Michael Scuse, the undersecretary for Farm and Foreign Ag Services," Markwart said. "Before, with unlimited market access under NAFTA, it was in the hands of Mexico. Scuse's responsibility is to make sure the sugar market is adequately supplied—not oversupplied—and now he has better supply data from the United States and Mexico to determine if additional imports are needed."
Markwart said the suspension agreements limit the amount of sugar that can be imported based on U.S. needs and at minimum prices that are above the forfeiture price in the U.S. to assure the sugar policy runs at no cost to taxpayers. In addition, anti-bunching provisions are included to prevent Mexico from sending a surge of sugar into the U.S. and depressing prices. The suspension agreements were recently challenged by two independent cane refiners (Imperial Sugar in Savannah, Georgia and AmCane in Taylor, Michigan) who claimed that the agreements did not completely end injury to their companies.
“A challenge to a suspension agreement had never happened before," he said. "The International Trade Commission's decision on this challenge would set the precedent for any future challenges to a suspension agreement that may occur in any industry in the future."
On March 19, the ITC voted unanimously that injury was eliminated and that the suspension agreements will stay in place. The two cane refiners have the right to appeal the ITC decision to the Court of International Trade in New York City.
"The decision of whether to continue the subsidy and dumping investigation, which was also requested by the two cane refiners, is still up in the air," Markwart said. "That decision will be made by the Department of Commerce. The bottom line is we had a serious problem, but we have been successful throughout this process. It's not quite over yet, and we can't speculate on how it turns out and how the Department of Commerce will make its decision. The legal battle could possibly continue for many weeks and months to come, but thus far we are in a very good place."
World Trade
Markwart said the other biggest issue currently in front of the U.S. sugar industry is the Trans-Pacific Partnership (TPP).
"It will be the largest free trade agreement the U.S. has ever entered into," he said. "With regards to market access commitments in sugar, the U.S. will negotiate with each of the other 11 countries separately."
Markwart believes that Trade Promotion Authority (TPA), which promises the Congress will not amend a negotiated trade agreement and simply vote it up or down, will ultimately be granted in the months ahead.
"Congressional leaders are trying to get that worked out by the end of April," he said. "If that happens, it will speed up negotiations. If you want to speculate, they may be able to close negotiations by late spring or early summer with a U.S. vote late in 2015. Things are moving in that direction."
The Transatlantic Trade and Investment Partnership (TTIP) which is a free trade agreement with Europe, along with TPP, would have a substantial amount of international trade for the United States.
"It's huge but very complicated," Markwart said. "In 2017, all restrictions will be removed from European Union sugar production, including from isoglucose, or high fructose. There were very tight restrictions for decades. As we found in this country in the 1980s, when there was no restriction on HFCS, it was substituted for sugar. When this happens in Europe, it could create a sugar surplus."
The EU could again be a substantial sugar exporter because they import sugar duty free from the least developed countries, according to Markwart.
"The sugar they would be producing likely wouldn't be derived from biotech sugarbeets," he said. The Europeans don’t allow GMOs and U.S. producers expect they’ll use that as a market advantage, even though the process of making sugar removes the protein and DNA, making GMO sugar indistinguishable from non-GMO sugar.
What About Cuba?
Markwart also discussed Cuba and the opening of trade there.
"How do you change that country? How do you change any country?" Markwart asked.
"There was the 'Old Invasion,' with air power and troops on the ground. The 'New Invasion' strategy is tourists and communication, cell phones and Internet. You have to move in information and create the changes internally. The Cuban sugar industry is in great disrepair and they have not invested in it, because they don't have a profitable bilateral trade agreement. So why invest and why expand?
“While sugar may have been a big industry in the past, it is not likely to be in the future. They dropped from an 8 million ton producer to under two million tons.”
Defending the Farm Bill
Markwart also discussed the ongoing struggle to fend off attacks on the farm bill and the need to keep a close eye on its costs.
"We need to defend the 2014 farm bill in the budget and 2016 appropriations bill," he said. "We must also defend against attacks on crop insurance from organizations like the Environmental Working Group."
Biotech Watch and Weeds
With respect to biotechnology, consumer package labeling and weed resistance are the two big items on growers' plate, according to Markwart.
"The problem American farmers have faced and will continue to face on biotech is opposition from activists," he said. "For decades farmers and technology companies have been pacifists—the opposite of activists. The agriculture industry ignored the activists or wasted their time challenging them, but the activists were persistent and kept putting out bad information.
“Now they have forced expensive ballot initiatives in California, Washington, Colorado, Vermont and Oregon, based on bad information they have spread primarily through the social network. We cannot have a system in place to deliver food efficiently if you have states with different labeling requirements.”
Markwart highlighted the importance of the Safe and Accurate Food Labeling Act which was recently re-introduced into Congress.
"We would get a federal, preemptive solution if this passes. There is not a Senate counterpart yet, but that is in the works,” Markwart said. “The bill also calls for a clearer definition of ‘natural’ foods. There are lots of lawsuits about this, and FDA needs to clarify the word 'natural.'”
Markwart went on to discuss the threat that glyphosate resistant weeds pose to the sugarbeet industry.
"There are now 19 glyphosate resistant weeds in 38 states," he said. “The problem began in cotton and soybeans in the southeast and has moved through the corn and soybean belt. As it moves closer to sugarbeet growing areas, the best time to address it is before you have to."
Markwart outlined a potential pilot program that is under consideration to provide a community solution to this issue.
"There is no easy solution," he said. "We need education, communication, action and best management practices. It has to be a collective community effort. We know what to do, we just need everyone to work together to get zero tolerance on resistant weeds."