The US Agriculture Department proposed in its farm bill last week to maintain the no-net-cost sugar support program but resort to domestic marketing allotments if needed. USDA said allotments, which regulate how much sugar can be brought to market, are needed to control costs and prevent forfeitures.
The American Sugar Alliance, representing growers, said USDA could use domestic marketing allotments to arbitrarily change domestic sugar production without any parameters or guidelines.
"It's asking US farmers to take a backseat to subsidize foreign producers," said Phillip Hayes, a spokesman for the American Sugar Alliance. "We're being relegated to a residual supplier to our own market," he added.
The United States and Mexico resolved a decade-long dispute over sugar and sweetener trade last July, with free trade of these commodities beginning in 2008 under the North American Free Trade Agreement.
The USDA is uncertain how much sugar will be imported from Mexico starting next year. An unexpected surge in imports could stifle market access for growers in the United States, the sugar industry fears.
As part of the move toward free trade of sugar and sweeteners, the United States agreed to accept 500,000 tons of sugar tariff-free from Mexico between 2006 and 2007. Last month, USDA reduced its estimate of sugar imports by 100,000 tons this fiscal year, due to reduced competition from Mexico.
"How (free trade) translates into actual imports. I don't know," said Mark Keenum, USDA's undersecretary for Farm and Foreign Agricultural Service. "I think that is something we're going to have to monitor and gauge along the way," he told members of the American Sugarbeet Association.
Keenum said domestic marketing allotments would give USDA a "mechanism to ensure" the no-net-cost provision works.
The office of the US Trade Representative, USDA, their counterparts from Mexico and the sugar industry hope to meet as early as this month to discuss the changes to sugar imports in 2008 under NAFTA. Talks will include efforts to ensure that sugar coming from Mexico was produced in Mexico rather than another country looking for an avenue to get their product into the United States.
Sugar imports from Mexico were 784,000 tons in fiscal year 2006 and are estimated at 330,000 tons in 2007, according to USDA figures. (Reuters)
