FARGO, N.D. - It'll be tough, but the sugar industry will defeat the Central American Free Trade Agreement, says Luther Markwart, who spoke at the 43rd International Sugarbeet Institute, held March 16 to 17 in Fargo, N.D.

About 3,000 people connected with growing or supplying the region's sugar beet industry typically attend the event, which rotates between Fargo and Grand Forks, N.D.

"We're going to have to take the president on, and that is no small order," says Markwart, executive vice president of the American Sugarbeet Growers Association. "We told the administration not to put sugar in this agreement, not to put sugar into a market that can't take it, not to have our farmers go get in line behind foreign producers."

The U.S. industry already is contracting. Sugar factories recently have been shut down or have announced closings in Oregon, Michigan, Louisiana and Florida. While Markwart didn't elaborate about the underlying reasons for those closings, he says it is a trend of "sugar in, jobs out."

Big, multinational corporations want a "race to the bottom" for cheap goods and cheap labor, and international trade is touted as a way to "lift all boats."

"No, it sinks most of the boats and it lifts a few yachts," Markwart says. "I think the effort going into (defeating) CAFTA is having huge ramifications on all these agreements into the future."

Timetable

When will CAFTA come up? Markwart says there are "mock hearings" on CAFTA being held in the Senate soon.

"It doesn't start any particular timetable," he said. "It's when the White House decides to formally and officially send it up to the Congress. They haven't done that yet. These hearings are just members starting to kick around a little bit of dust."

The legislation is a revenue measure and therefore must start in the House, where it is most vulnerable.

"That's where the line is going to be drawn," Markwart says. "The White House knows very clearly they are way short of votes."

A vote could occur as early as May, but if the votes aren't there, the administration could push it into June or July.

"If things don't get better (for its prospects), it may get pushed further than that," Markwart says.

Once the president sends it up, Congress has 45 session days for hearings to be held, the committees to report it out and 15 session days to be voted on.

"There are no amendments, there's no House-Senate conference committee. Once the body votes on it, it's done."

Seeking a solution

Meanwhile, CAFTA has passed the legislatures of El Salvador, Honduras and Guatemala and awaits action in Costa Rica, Nicaragua and the Dominican Republic.

The administration continues to say the U.S. sugar industry would be protected by a marketing "cushion," but that ignores looming increases in Mexican sugar imports, in some cases caused by U.S. trade actions.

U.S. is challenging a soft drink tax in Mexico that almost requires using sugar - not imported corn sweetener from the United States - under the North American Free Trade Agreement. If the United States is successful, that would free more Mexican sugar that would come into the U.S. market in 2008.

"And that equals chaos," Markwart says. "The industry in neither market can sustain that. I think the opportunity here - now - is to find some sort of negotiated solution."

The World Trade Organization negotiations will have a huge impact on what the U.S. domestic farm policy can and will look like in the 2007 farm bill. But building a viable program in 2007 will be much different than when the 2002 program was developed in the wake of budget surpluses from 1999 to 2001.

Economic factors

"That's a vise coming at agriculture from two directions," Markwart says. "What we have to do right now is fight as hard as we can with all of agriculture together to protect the baseline spending for agriculture."

Meanwhile, President Bush has proposed cutting $8 billion out of agriculture spending over five years. The House has proposed a $5.3 billion cut, and the Senate has proposed $2.8 billion in cuts.

The president's proposal includes a 1.2 percent of loan rate tax on sugar to help reduce the deficit.

"He wants to come and tax us on something we didn't contribute to in the first place," Markwart says, noting the zero-cost feature of sugar policy. The tax would cost growers about $15 to $20 an acre, and the industry $40 million a year.

"And I can tell you, no one on Capitol Hill is supportive of the tax," Markwart says.

The president's proposal also would rescind new research projects added in the past five years, and Markwart says he's optimistic about getting that back. Among other things, a group of commodity organizations have hired former House agriculture committee chairman Larry Combest,R-Texas, to help restore the budget for agriculture.

A new factor in the political mix is the formalization of a Sugar Reform Caucus, led by Rep. Mark Kirk, R-Ill., a graduate of the London School of Economics. The group will want to make sugar programs like those for corn and soybeans.

"If you let market prices plunge to the world market price levels, then most of the income coming out of the sugar market will have to go to the processors to run those facilities, which means a beet grower's beet check will have to come, primarily, as a government income transfer. The last time I checked, payment limitations were not going up, they're coming down," noting efforts by Sens. Charles Grassley, R-Iowa, and Byron Dorgan, D-N.D.

Other critics think sugar producers simply can be bought out. But half of the sugar in the world is produced at a higher cost than U.S. sugar, Markwart says. Buying out an efficient industry "makes no economic sense," he says.

View All News