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Trade Agreement Threatens Minnesota Production Jobs
August 27, 2004
Rochester Post-Bulletin

Congress should kill the proposed Central American Free Trade Agreement because the benefits from lower sugar prices do not outweigh the negative impact. Industrial sugar buyers might find savings, but the potential hit for Minnesota jobs makes the deal a bad one.

Lower sugar prices would threaten the 31,000 jobs at Minnesota sugar producers such as American Crystal Sugar of Moorhead, MinnDak Farmers' Co-op in Wahpeton, N.D., and Southern Minnesota Beet Sugar Cooperative in Renville.

The 10-million-ton domestic sugar beet market is a wholly regulated industry. Beet sugar fills half of the demand. The 2002 farm bill gives American Crystal Sugar 38.5 percent of the market.

The United States buys, whether we need it or not, 100,010 tons of sugar from a coalition of six Central America countries. It's an action more about economic support for Central America than about U.S. need.

The CAFTA proposal would bump Central America sugar imports to 150,000 tons. For Jim Horvath, CEO of American Crystal Sugar, the real threat to sugar prices, the domestic sugar industry and Minnesota beet farmers isn't the proposed Central America sugar quota increase; it's the precedent CAFTA would set.

For reasons based on economic support, there is the potential that the United States might move to duplicate such a bilateral treaty with other sugar exporting counties. For example, Brazil exports 14 million tons of sugar annually. If the United States wants to create trade-based economic support for sugar exporting nations, the potential of a domestic price collapse is real.

Lower sugar prices are not all bad. Food giants such as Minnesota's General Mills clearly would benefit.

At the consumer level, even for a person with the sweetest tooth, lower prices for industrial sugar surely would not reduce the price of a candy bar, soda or cake to the point at which the savings would matter. Of course, a bakery or restaurant owner might see increased profits, but how much? It is a situation where the savings is tied to volume.

The central point is this: For General Mills, lower sugar prices are a gain. A decrease in sugar costs would not create pressure on job numbers. Lower sugar prices would directly threaten jobs with Minnesota sugar producers. These jobs matter.

Using trade policy to provide assistance to other nations is not the problem. The problem is when U.S. jobs are traded away, or threatened, for the benefit of other countries. Add to this the minimal benefit to consumers, and it makes it clear that Minnesota congressional members should vote no on CAFTA.

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