
LOREAUVILLE, La. — 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. Come
January he will confront another
peril: expanded sugar imports from
Mexico.
“Will we have a flood of sugar
coming across the border?” Mr.
Landry wondered in a Cajun drawl.
“Survival is on our minds every
minute of every day.”
Mr. 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 American
taxpayers.
A little-noticed provision in the
new farm bill working its way
through Congress would oblige the
Agriculture Department to buy
surplus domestic sugar caused by 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 longtime critics
of the sugar industry, who complain
that producers already have one of
the best deals in American
agriculture.
“It’s a tax burden without a benefit
that distorts both the ethanol
market and the food-ingredient
market,” said Richard E. 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.”
The Congressional Budget Office
calculates the cost at $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 U.S. Department of Agriculture
would be taking on a limitless
commitment,” said Robert L.
Thompson, a University of Illinois
professor of agricultural policy,
“to buy any quantity of sugar
offered at a guaranteed price, and
that would get very expensive, very
quickly.”
At issue is a provision of the North
American Free Trade Agreement, the
big trade pact meant to create a
common market among Mexico, Canada
and the United States. Though NAFTA
was adopted in 1993, some of its
more controversial provisions are
only now taking effect.
One of them will soon open the
United States to unlimited sugar
imports from Mexico — the biggest
crack in years in the wall of price
supports and protectionism 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 United States that
is typically twice the world market
price.
The NAFTA provision will work in
both directions, with the United
States 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 United
States.
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. “If Mexico decides
to overproduce and send that to our
market, they have the potential to
eat up our market,” said James H.
Simon, general manager of the
American Sugar Cane League.
Sugar cane grows only in warmer
states, with production concentrated
in Florida and Louisiana. Farmers in
some northerly states grow sugar
beets.
In southern Louisiana, still
recovering from hurricanes Katrina
and Rita, cane is cultivated on
420,000 acres and has been a
mainstay of the economy for
generations.
Across a big swath of the state, the
sweet smell of molasses wafts on the
breeze in autumn, social life
revolves around sugar fairs and
festivals, and old sugar kettles
decorate flower gardens. Whitewashed
mansions, stately but not always
well maintained, are shaded by live
oaks draped with moss.
People fear the loss of a way of
life with the onslaught of Mexican
sugar. Louisiana’s farmers and mill
workers say sugar is in their blood,
in part because few crops grow so
well in the difficult climate,
punctuated in recent years by
powerful hurricanes that ripped
crops from their roots.
“Sugar farming has been my whole
life,” said Michael Comb, 48,
general manager of the Louisiana
Sugar Cane Cooperative in St.
Martinville. “I was 8 years old when
I got on a tractor in a sugar field.
It’s all I know.”
Sugar farmers see the ethanol
proposal as the beginning of a much
larger national commitment to
producing energy from cane.
Brazil, famously, has displaced much
of its gasoline by turning cane
juice into ethanol. Sugar prices in
the United States are far too high
for that — and this country imposes
a steep tariff that discourages
ethanol imports from Brazil.
But the American sugar industry
believes that with new technology,
the pulp left over after juice is
pressed from cane could eventually
become a fuel source for cars.
The proposal under consideration in
Washington “could be a bridge for
greater things for sugar,” said
Anthony Joe Judice, 61, who works
fields along the muddy waters of
Bayou Teche, near St. Martinville.
“It’s like an engagement to a future
marriage.”
The sugar ethanol provision has won
approval in the House. With the
support of Senator Tom Harkin,
Democrat of Iowa and chairman of the
Agriculture Committee, it may get
through the Senate despite
opposition from the administration
and the food industry.
The measure would be grafted onto an
existing sugar policy so complex
that even many farmers have trouble
understanding it. The government
limits the supply of sugar through
production quotas and import
restrictions, and it uses financial
mechanisms to set an effective price
floor.
The system does not cost taxpayers
money directly, a point of pride for
the industry. But it costs consumers
money in the form of higher sugar
prices. The system has been
subjected to withering criticism for
decades, but the sugar lobby has
clout on Capitol Hill. Sugar
producers donated $2.7 million in
campaign contributions to House and
Senate incumbents in 2006, more than
any other group of food growers,
according to the Center for
Responsive Politics, a Washington
group.
The new farm bill would retain much
of the existing system, which sugar
producers defend on the ground that
virtually every country with a
domestic sugar industry has strong
protections. But it would add more
guarantees, including one that would
assure American producers 85 percent
of the market no matter how much
sugar comes in from abroad.
To effect that policy, the
government would buy excess sugar
and sell it at a loss to ethanol
producers. They ferment corn starch
to ethanol, but adding a little
sugar can speed the reaction.
Mark E. Keenum, the Bush
administration’s under secretary of
agriculture for farm and foreign
agricultural services, said
administering the ethanol program
would be “very cumbersome.”
Mr. Keenum suggested that the
Agriculture Department would end up
buying sugar for 22 cents a pound
and selling it to ethanol producers
for 4 to 7 cents a pound. “You can
easily do the math and look at the
loss potential,” he said.
He added that the department tried
selling sugar to the ethanol
industry in 2001, but ethanol
producers were interested in buying
only 10,000 of 100,000 tons made
available to them, even at a low
price of 4 cents a pound.
Ethanol producers, who could be
forced to invest in new equipment to
process sugar, say they do not have
much use for the idea. “In today’s
grain-based biorefineries, the
amount of sugar you could introduce
into the process would be fairly
small,” said Matt Hartwig, spokesman
for the Renewable Fuels Association.
Mr. Keenum said the Agriculture
Department did not want to be forced
to sell only to ethanol producers,
arguing that it might get a better
price selling sugar for animal feed,
pet food or industrial alcohol. On
that point, the sugar lobby is
willing to negotiate.
The sugar producers say whatever its
costs, the new farm bill is needed
to save their industry.
“We don’t like the government
spending money, but if they are
going to give away our market to
foreign imports then we have to look
for alternatives,” said Mr. Simon of
the American Sugar Cane League.
“We’re confident we can get this
farm bill passed and that will keep
our heads above water until we’re
able to realize the full
opportunities of energy production
from sugar cane.”
