Sugar Imports May Cost U.S. Producers $1 Billion

Sugar Imports May Cost U.S. Producers $1 Billion

Sugar prices are down 50% from 2011 and sugarbeet acres are likely decline for the fourth consecutive year.

Mexican sugar imports will cost U.S. sugar producers $1 billion this year, predicts the American Sugar Alliance, a beet and cane sugar producer trade group.

The ASA charges that Mexico has been illegally subsidizing sugar production and is violating anti-dumping trade rules. The U.S. Department of Commerce recently announced it will investigate the industry's charges.

"Considering what's currently happening in the market, we are hopeful that corrective action will be taken as soon as possible," says Phillip Hayes, ASA spokesman.

Sugarbeets are placed in piles for shortage, but the piles could be smaller this year. Acres will likely be down and prices are 50% lower.

The Mexican sugar industry – 20% of which is owned and operated by the Mexican government -- increased exports to the U.S. from 9% of the U.S. market in FY2012 to nearly 18% in FY2013. As of March 31 this year, Mexico had sent to America 1.15 million tons of sugar, putting it on pace to ship 2.3 million tons for the year. That is compared to last year's all-time record of 2.1 million tons.

Unless the pace slows, imports of sugar from Mexico will be 500,000 tons more than U.S. government officials had expected this year, Hayes says.

The growth in Mexico's exports to the U.S. is being fueled by substantial subsidies and dumping margins of 45% or more, according ASA. It contends that Mexico is directly responsible for sinking U.S. sugar prices, which have fallen 50% since late 2011 and are back to the lows of the 1980s.

In March, USDA predicted an that U.S. sugarbeet growers would plant 4% fewer acres. It would be the fourth consecutive year that U.S. sugar farmers have reduced plantings.

"If the Mexican sugar industry was gaining market share in the United States because it was more efficient than U.S. producers, that would be one thing," Hayes says, "but they are inefficient and are simply making advances because of unfair trading practices."

The North American Free Trade Agreement "gives Mexico the right to export sugar to the United States on a tariff-free and quota-free basis-but that does not give the Mexican industry the right to export its surplus to the U.S. market at dumped prices, nor does it permit the [Mexican government] to subsidize its sugar industry without regard to the impact of those subsidies on U.S. producers," reads petitions filed by U.S. sugar producers.

NAFTA explicitly permits the filing of antidumping and countervailing duty cases. NAFTA countries have filed 114 antidumping and countervailing duty cases against each other since the trade deal went into effect. Of these 114 cases, Mexico has filed 31 cases against the United States, and the United States has filed 30 cases against Mexico, not counting the pending sugar petitions.

Source: American Sugar Alliance

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