Dallas Morning News | September 3, 2001 | BY: JIM LANDERS
WASHINGTON - When the coffee beans were ripe, there was no sense picking them. World prices were too low. When the sugar cane fields warmed, there was no sense in planting. Refiners haven't paid growers for many months.
Some farmers moved north, crossing the border into the United States. Others marched on the capital to demand help from Mexico's President Vicente Fox. He had little to offer beyond urging the farmers to acquire new skills and become entrepreneurs.
These are the tales working their way up from rural Mexico. Some demonstrate the complexities of trade agreements, while some are simply tragic. Six out-of-work Veracruz coffee farmers died trying to cross the Arizona desert last May.
Coffee prices have fallen by half in the last two years as beans from Vietnam flooded the world market. Vietnam has muscled its way into position as the No. 2 coffee producer in less than a decade.
Good for Vietnam, perhaps, but bad for farmers in Mexico who abandon coffee farms for the United States, and bad for Colombian farmers who forgo their coffee crops for cocaine's source, coca.
The sugar story is more complex. Mexico and the United States are fighting with lawsuits and trade sanctions over whether the North American Free Trade Agreement opened the U.S. market to Mexican raw sugar and the Mexican market to U.S. corn sweeteners.
Many Mexican sugar companies thought NAFTA would open the U.S. market. The U.S. side in the talks, however, inserted a letter with the trade text that kept intact limits protecting the insular U.S. sugar market.
Today both Mexico and the United States are struggling with mountains of unwanted sugar. The U.S. Department of Agriculture wound up with over a million tons of sugar last year as prices fell more than 30 percent and growers forfeited $ 430 million in loans. U.S. prices are still double the world price for sugar, which has U.S. candy makers threatening to move their factories elsewhere, to places such as Mexico.
In Mexico, refiners spent years expanding production and expecting the U.S. market would come open to them by October 2000. But the NAFTA side letter on sugar - which Mexican officials say they never accepted - limits Mexican exports to the United States to 116,000 tons a year. Mexico has more than 500,000 tons of surplus sugar.
Sugar vs. fructose
The growth in Mexico's sugar surplus has been compounded, in part, by competition from U.S. corn fructose. Mexican soft-drink makers like the corn sweeteners for their products, and have been dropping their sugar purchases in order to make the switch.
In 1998, the Mexican government fought back by imposing punitive tariffs on imports of U.S. corn fructose. That action was struck down in June after a U.S. challenge to the World Trade Organization in Geneva.
Mr. Fox has tried since November to find ways of converting Mexico's mountain of surplus sugar into ethanol, an alcohol that helps gasoline burn with fewer pollutants. This would have a beautiful neatness, since it would reduce air pollution, wear down the sugar mountain and, with luck, open new markets in California, which needs a replacement for the MTBE gasoline additive it has banned for fouling groundwater.
Seeking help
Mr. Fox was in Illinois in July and talked with Gov. George Ryan about getting help with his ethanol plan. Mr. Ryan offered Mexico technology for making ethanol. Mr. Fox, in turn, indicated Mexico would quit fighting corn fructose imports.
As appealing as this solution seems, it leaves intact the protected U.S. sugar market. The congressional Government Accounting Office last year estimated that protection costs U.S. consumers between $ 800 million and $ 1.9 billion a year.
A farm bill making its way through Congress this fall will probably leave that program intact, which may in turn send candy makers to Mexico, and leave Mexican sugar growers hard-pressed to make a success of ethanol.
But you have to wonder about the contrast between Latin American coffee farmers, who get no help in the face of global trade storms, and U.S. sugar growers, who live in a government shelter.
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