By James Ronald Skains
Journal Correspondent

• Thibodaux, Louisiana
"The year 2004 could very well be the last year of existence for the Louisiana Sugar Cane industry," Charlie Melancon, President of the American Sugar Cane League headquartered in Thibodaux, Louisiana told the Piney Woods Journal. "If the Bush Administration has its way with its proposed Central American Free Trade Agreement, the imported sugar from just the five Central American countries of Costa Rica, El Salvador, Guatemala, Honduras, and Nicaragua included in the CAFTA Agreement could put our industry out of business next year."

In pursuit of "free trade," the Bush Administration is aggressively pursuing trade agreements with 42 countries. They are also pursuing Regional Trade Agreements with all the countries in North, Central, and South America modeled after the NAFTA Agreement (Canada, USA, and Mexico) which has proved so disastrous to the United States lumber and plywood industries.

On an annual basis, the U.S. consumes 8.8 million metric tons of sugar while it produces some 7.6 million metric tons and imports 1.2 million metric tons of sugar.

"If the Bush Administration continues its current course in the various Free Trade Agreement negotiations, the exposure to 27 million metric tons of sugar exports from the FTA countries - three times the U.S. sugar consumption- will destroy the U.S. sugar policy and industry," Melancon explained."If CAFTA or the other agreements are approved with the sugar tariff system as part of the deal, Louisiana's sugar industry will simply cease to exist. It will be a real disaster for this state. The sugar industry means $750 million to Louisiana's economy each year and 27,000 jobs"

Louisiana's sugar cane industry - one of the largest in the United States - employs 27,000 people in 15 sugar mills, two refineries and on 773 farms which planted 493,773 acres of sugar cane in 2003. In 2003, sugar cane is being harvested in 24 parishes across Louisiana, and production is expected to be about 16 million tons of cane with an actual crop value of $619.7 million which is estimated to have a $2 billion economic impact on Louisiana.

A recent study conducted for the Louisiana Bankers Association and First South Farm Credit Association by LSU Economist Michael Salassi confirms that if portions of the sugar import tariff system were removed, the Louisiana sugar industry would be driven out of business.

Figures demonstrated that the United States, which consumes 9 million metric tons of sugar annually, could see its market flooded with up to 27 million tons of sugar. The LSU report estimated that, "large increases in sugar imports, given the current structure of the industry and the domestic market, would likely drive the domestic raw sugar price down below breakeven levels for a large percentage of sugar cane producers."

The LSU analysts estimated that additional imports of just 2 million metric tons, which is the exporting capacity of the five Central American countries with which the Bush Administration was rushing to achieve a free trade agreement by the end of 2003, would cut U.S. producer prices for sugar in half, to less than 12 cents per pound. If sugar imports into the U.S. grew by 3 million tons, the authors of the LSU study predicted that prices for domestic sugar producers would fall to 8 cents per pound which is less than half of the world average sugar production cost.

Stephen L. Rochelle, chief executive officer of First South Farm Credit Association, said, As a lender to agriculture, we are very concerned over the findings of the study. The study bears out what we have feared. That is, the regional and bilateral trade agreements being pursued by the Administration could literally wreck the Louisiana sugar industry, and in truth, the entire sugar industry."

Rochelle also noted, "Based on the LSU study, in the near future the sugar industry will be overrun by foreign subsidized sugar, the premature dismantling of the sugar program, and the consequence of sugar prices below production cost for any country. It would put the state of Louisiana and its delicate economic base in great jeopardy."

The LSU study conducted for the Louisiana Bankers Association and First South, included the results of a survey of financial institutions in South Louisiana and their lending volume to the sugar industry. The current volume of loans to sugarcane growers in Louisiana was pegged at $112.7 million. Additional loans to the sugarcane mills in Louisiana of $198.3 million brings the total to over $300 million in outstanding loans to the Louisiana sugarcane industry.

Upon learning of the LSU study and its contents, Carolyn Cheney, chairman of the American Sugar Alliance which is headquartered in Arlington, Virginia right outside Washington, D.C. Virginia, said, "American sugarcane and sugar beet farmers, in 16 states, are among the most efficient in the world, but none could survive at the low prices these trade agreements would bring. This thorough and detailed study by experts outside of the sugar industry reinforces dramatically what we in the industry have been saying. Including sugar in these agreements and opening our borders to excessive tons of subsidized foreign sugar would drive efficient American sugar farmers out of business," Cheney added."Even with lower prices from foreign imports, consumers would not see any benefit from the lower producer prices because food manufacturers and grocers do not necessarily pass their savings along to consumers. For example, during much of 1999 through 2001, sugar producer prices languished 20 to 30 percent below previous levels and drove many farmers out of business, but consumer prices for sugar and sugar-containing products have not declined."

In addition to the CAFTA, the Bush Administration is in some stage of negotiating "Free Trade Agreements" with major sugar-exporting countries and regions such as Australia, South Africa, Thailand, and, in the Free Trade Area of the Americas, Brazil. Brazil alone produces 22,187,000 tons of sugar with an export capacity of 12,750,000 metric tons of sugar which is nearly four million metric tons more than total U.S. sugar consumption. ABC News announced on Friday, December 19, 2003, that the deal struck with four Central American countries immediately increases the existing duty free quota of sugar allowed into the United States under the terms of CAFTA by 80 (%) percent.

Louisiana Governor Mike Foster stated recently on one his live Thursday radio shows"I can't even fathom a national policy that a trade deal with a country that doesn't have environmental and health regulations, or a minimum wage would get a break to the tune of an industry that has been around here in Louisiana for 200 years."

Governor Foster added, "This CAFTA deal alone would gradually wipe out the Louisiana sugar industry." Foster also said that he was going to talk with President Bush, calling him a good friend and blaming the trade negotiations on Bush's staff. "It's got to be bad advice. I hope that we can get through to him."

Also, on Friday, December 19, U.S. Trade Representative Robert Zoellick, who played a key role in opening up U.S. lumber markets to cheaper subsidized foreign lumber and plywood, was in New Orleans trying to sell the merits of the CAFTA agreement to a group of Louisiana businessmen. During the meeting, south Louisiana sugar cane farmers protested outside on the streets of New Orleans.

When sugar cane farmers tried to question Zoellick during the meeting, the exchange became very heated with Zoellick stating, "I will discuss with people the substance. I will discuss with people how our sugar program works, but I don't want to be a prop for your game. And I think that it's a despicable way to treat somebody visiting your city."

The Free Trade Agreements, including the CAFTA, must be approved by Congress before being enacted into law. However, Congress can either or approve or disapprove the agreement." Congress can not make any changes to the trade agreements. Although, the total value of sugarcane, the state's largest row crop, to the Louisiana economy in 2001 was $619,700,125 ($377,865,930 gross farm income plus $241,834,195 value added), sugarcane is only a fifth of the value of forestry to the Louisiana economy. In 2001, the gross value of timber to the landowners was $905,014,509 with another $2,371,138,014 in value added for a total actual economic value of $3.27 billion.

Charlie Melancon, in closing noted "The forest industry, which has been hit hard by this Administration's 'free trade agreements' does have several national and international corporations such as Weyerhaeuser, International Paper, and Boise Cascade operating in Louisiana. However, the sugarcane industry in Louisiana has no international corporations operating in the state. Apparently, the Bush administration has no loyalty to either us or other sugar producing states."

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