ftaa, wto, farm legislation may23-24,2002ice cream raw cane sugar annual average prices, 1996...
TRANSCRIPT
1
FTAA, WTO, FARM
LEGISLATION
MAY23-24,2002 RESPONDING TO
OPPORTUNITIES AND
CHALLENGES
2
Regional trade
agreements…..opposed.
Global organization-preferable
venue for final, complete, and
positive results
Sugar program-protection
through tariff rate quotas[trq].
REGIONAL TRADE PACTS
FTAA
NAFTA
MERCOSUR
United States Industry
Size, efficiency
Reasons for U.S. Sugar Policy
– No cost to taxpayers, benefits to consumers
U.S.- Mexico Sugar Trade Issues
– Background on NAFTA sweetener provisions
– Developments since NAFTA began
– Contrast U.S. & Mexican sweetener markets
– Status of discussions
United States Industry
Size, efficiency
Reasons for U.S. Sugar Policy
– No cost to taxpayers, benefits to consumers
U.S.- Mexico Sugar Trade Issues
– Background on NAFTA sweetener provisions
– Developments since NAFTA began
– Contrast U.S. & Mexican sweetener markets
– Status of discussions
United States Sugar Industry
Size: Large, important industry
• U.S. world’s third or fourth largest producer, consumer of sugar
• Jobs: Major employer, critical in rural areas
• U.S.: 372,000 jobs nationally in sugar, corn sweetener production
U.S.Sugar Industry
Competitiveness: Efficient by world standards
• 28th lowest cost of 102 countries, mostly developing countries with low labor, environmental standards
• More than half of world’s sugar produced at a higher cost than in U.S.
World Dump Market: Dumping ground for subsidized foreign surpluses; does not reflect cost of producing sugar
• World price: 16-year average only half world average cost of producing sugar
Number of
Producing
Countries/Regions
Beet Sugar 2 40
Cane Sugar 26 63
All Sugar 28 102
Corn Sweeteners 1 19
All Sweeteners 21 112
Source: “A Worldwide Survey of Sugar and HFCS Field, Factory and Freight Production Costs: The 2000 Report,”
U.S. Cost of Production Rank Among
World Sweetener Producers, 1994/95 – 98/99
U.S. Rank
World Sugar Dump Market Price:
Barely More Than Half the World
Average Cost of Producing Sugar (16-Year Average, 1983/84 - 98/99)
9.52
16.26
0
5
10
15
20
Average World Dump Price* World Average Production Cost**
Cen
ts p
er
po
un
d,
raw
valu
e
*New York contract #11, f.o.b. Caribbean ports. Source: USDA.
**Beet and cane sugar w eighted average, raw value. Source: "The LMC Worldw ide Survey of Sugar and HFCS Production Costs:
The 2000 Report," LMC International, Ltd., Oxford, England, December 2000.
U.S. Sugar Policy: Consumer Benefits
• Low stable U.S. retail sugar prices
• 20% below developed-country average
• Virtually unchanged since 1990
• No pass through to consumers when
producer prices fall
86¢
84¢
83¢
75¢
75¢
67¢
67¢
62¢
55¢
54¢
53¢
53¢
51¢
45¢
44¢
43¢
37¢
33¢
0¢ 10¢ 20¢ 30¢ 40¢ 50¢ 60¢ 70¢ 80¢ 90¢ 100¢
Australia
Canada
USA
Netherlands
Germany
Portugal
OTHER DEVELOPED COUNTRIES
France
Ireland
Switzerland
Sweden
Italy
Austria
Denmark
Belgium
Finland
Japan
Norway
Source: LMC International Ltd., Ox ford, England, February 2000; 1999 prices.
"Other Dev eloped Countries" represents the w eighted av erage of 22 foreign dev eloped countries.
Cents per pound, refined
Developed Countries' Retail Sugar Prices:
USA 20% Below Average
-5.8%
-20.2%
3.9%
5.7%
8.2%
10.3%
12.8%
16.0%
Wholesale
Refined
Sugar
Retail
Refined
Sugar
Cereal Candy Cookies,
CakesIce
Cream
Raw
Cane
Sugar
Annual average prices, 1996 compared with 2001. Raw cane: Duty-fee paid, New York. Wholesale refined beet: Midwest markets.
Retail prices: BLS indices. Data source: USDA.
Other
Bakery
Products
Producer
Prices
Plummet
Consumer Prices Rise
From 1996 to 2001:
Producer Prices for Sugar Plummet,
Consumer Prices for Sugar and Sweetened Products Rise
Most Countries Mexico
Base 18.08 16.00
1994 -- 15.60
1995 17.62 15.20
1996 17.17 14.80
1997 16.72 14.40
1998 16.27 14.00
1999 15.82 13.60
2000 15.36 12.09
2001 15.36 10.58
2002 15.36 9.07
2003 15.36 7.56
2004 15.36 6.04
2005 15.36 4.53
2006 15.36 3.02
2007 15.36 1.51
2008 15.36 0.00Source: USDA
U.S. Sugar Imports: Second Tier Duties (Cents per pound of raw cane sugar)
443495585595520
246
30
1250
-480
-820
-360
-939
-162
-1200
-1000
-800
-600
-400
-200
0
200
400
600
800
1000
1200
1400
Th
ou
san
d M
etr
ic T
on
s
Source: USDA - Sugar Production Minus Consumption
NAFTA Begins
19
92
/93
19
93
/94
19
88
/89
19
89
/90
19
90
/91
19
91
/92
19
94
/95
19
95
/96
19
96
/97
19
97
/98
19
98
/99
19
99
/00
20
00
/01
Mexico Sugar Deficit/Surplus 1988/89 – 2000/01
Contrasting the U.S. and Mexican Sugar Industries
Both under severe financial stress from lengthy period
of market prices below production costs
United States:
• Open competition with HFCS: 50% of U.S. caloric sweetener market
• Casualties: 24 beet or cane mills have closed since 1993; no direct government support
Mexico:
• Government prevents competition with HFCS: only 10% of Mexican caloric sweetener market and could go lower
• Government does not allow sugar mills to go out of business: $2 billion in subsidies and only one closure
since 1993; expropriates 27 of 60 mills in 2001
BEET CLOSURES CANE CLOSURES
Delta Sugar
California, 1993
Columbia Sugar
Louisiana, 1994
Pioneer Mill Company
Hawaii, 1999
Holly Sugar, Betteravia
California, 1993
Hamakua Sugar
Hawaii, 1994
Talisman Sugar Company
Florida, 1999
Spreckels Sugar, Manteca
California, 1996
Hilo Coast Processing Co.
Hawaii, 1994
Amfac Sugar, Kekaha
Hawaii, 2000
Holly Sugar, Hamilton City
California, 1996
Oahu Sugar
Hawaii, 1994
Amfac Sugar, Lihue
Hawaii, 2000
Western Sugar, Mitchell
Nebraska, 1996
Ka'u Agribusiness
Hawaii, 1996
Hawaiian Commercial & Sugar, Paia
Hawaii, 2000
Great Lakes Sugar, Fremont
Ohio, 1996
Waialua Sugar
Hawaii, 1996
Evan Hall Sugar Cooperative
Louisiana, 2001
Holly Sugar, Hereford
Texas, 1998
McBryde Sugar
Hawaii, 1996
Caldwell Sugars Cooperative
Louisiana, 2001
Holly Sugar, Tracy
Califonia, 2000
Breaux Bridge Sugar
Louisiana, 1998
Holly Sugar, Woodland
Califonia, 2000
* In 2002, 28 beet and 25 cane mills remain.
24 Permanent Sugar Mill Closures Since 1993
U.S. and Mexican Sugar and Corn Sweetener
Consumption, 2001 -Million metric tons, Refined basis-
0
2
4
6
8
10
Sugar HFCS* Sugar HFCS*
United States
Mexico
*HFCS: High-fructose corn syrup
Data source: USDA
53
60
24
1
Source: Industry Estimates
Mills Closures Mills Closures
27 of Mexico's 60 mills
were expropriated by
the Mexican
Government, September
2001
U.S. Mexico
U.S. and Mexican Sugar Mills and Closures
Since 1993