Todd Landry, a farmer who conjures big stands of sugar cane from the muddy fields of southern Louisiana, has been struggling lately against droughts and freezes and hurricanes. In January he will confront another peril: expanded sugar imports from Mexico.
"Will we have a flood of sugar coming across the border?" Landry wondered in a Cajun drawl. "Survival is on our minds every minute of every day."
Landry and other sugar producers think they have spotted a life raft, and its name is ethanol. Taking a cue from Midwestern farmers who have improved their lot by selling corn to ethanol distilleries, sugar cane and sugar beet farmers want an ethanol deal of their own, paid for by US taxpayers.
A little-noticed provision in the new farm bill working its way through the US Congress would oblige the Department of Agriculture to buy surplus domestic sugar resulting from the expected influx of Mexican sugar next year. Then the government would sell it, most likely at a steep discount, to ethanol producers to add to their fermentation tanks. The Bush administration is fighting the measure.
Sugar producers say the cost would be relatively low and the plan would help keep prices at a level they consider fair. As a side benefit, the deal would allow the nation to produce more ethanol to mix with gasoline, displacing some foreign oil, they say.
But ethanol producers are unenthused. And the plan is drawing fire from opponents of agricultural subsidies and from long-time critics of the sugar industry, who complain that producers already have one of the best deals in the nation's agricultural sector.
"It's a tax burden without a benefit that distorts both the ethanol market and the food-ingredient market," said Richard Pasco, counsel for the Sweetener Users Association, a lobby group for food companies that use sugar. "And guess who will pay the price? Taxpayers and consumers."
ASSUMPTIONS
The Congressional Budget Office calculates the cost at US$660 million over five years, relatively cheap as farm programs go. But that is an estimate based on assumptions about how much sugar will come across the border. In truth, no one is sure.
"The US Department of Agriculture would be taking on a limitless commitment to buy any quantity of sugar offered at a guaranteed price, and that would get very expensive, very quickly," said Robert Thompson, a University of Illinois professor of agricultural policy.
At issue is part of the North American Free Trade Agreement, the trade pact meant to create a common market among Mexico, Canada and the US. Though it was adopted in 1993, some of its more controversial provisions are only now taking effect.
One of them will soon open the US to unlimited sugar imports from Mexico -- the biggest crack in years in the wall of price supports and protectionism that the government, at the behest of the sugar industry, has erected against foreign competition. That system includes quotas to limit domestic production and tariffs to limit imports, resulting in a market price for sugar in the US that is typically twice the world market price.
The provision of the trade pact will work in both directions, with the US able to export to Mexico a form of corn syrup often used as a sweetener. That sweetener, much cheaper than sugar, could displace some sugar use in Mexico, making more available to ship to the US. Amid uncertainty over what will happen, the nation's 12,000 sugar cane and sugar beet farmers are appealing to Washington for an insurance policy.
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