August 23, 2000

The American Sugar Alliance held its 17th Annual Sweetener Symposium in Steamboat Springs Colorado, August 5-9, 2000. "Sugar 2000: Emerging From the Farm Crisis", addressed the current US and world over supply situation, sugar policies and prices as well as a current perspective on the US/Mexico sugar discussions. The following remarks include highlights from the symposium.

On the world sugar situation, speakers noted the more recent easing of the record sugar surplus and recovery of world sugar prices. Dr. Plinio Nastari of Brazil commented that,

"The problem is not so much the glut that we have just gone through, but the almost certainty of its repetition in the future. Looking back on to the past 20 years, one can see the shifting nature of periods of excess demand and excess supply, with greater intensity on the latter."

On the question of national and international sugar policies, there was resounding agreement that the net effect of the Uruguay Round was to increase, rather than decrease protection in sugar. Jennifer Nyberg of the FAO commented,

"The key to free trade in agriculture, specifically sugar, remains whether or not the United States and EC will liberalize their current sugar trade policies, and to what extent this liberalization will occur.". . . "Given the recent cycle of very low world sugar prices and surplus sugar stocks, many countries have moved toward more protection rather than less for domestic markets, and thus it may be more than possible that the current WTO agreements will continue beyond the time frame utilized for the FAO model projections."

On the prospect of trade liberalization regionally or through the WTO, the outlook was not very promising. Patrick du Genestoux of the French sugar research firm, ERSUC, was pessimistic and noted,

"The regional agreements are another story. They are all doing well, globally, but with no free trade on sugar. Sugar has been the exception about everywhere . . . So sugar looks like one of the, even the, major exception. You can have free trade, but not in sugar. And if you can't have 3 or 4 countries agreeing on a set on rules to be able to have free flows of sugar, one can visualise how complex it would become for the 137 members of the WTO."

Discussion of the US market focussed largely on how to dispose of the current record sugar surplus. There was strong support from US producers for the recently announced PIK (Payment-In-Kind) program (see August 22, 2000, SugarNews) although both government and producer interests recognize this as only a partial and short-term solution. John Love of the USDA admitted that USDA does not have a "vision" for what a long term solution might be. He noted that, on the fundamentals, USDA continues to project "a build up in unsold stocks, which have carrying costs and pressure prices."US producer interests place hope in a future sugar-ethanol program but there remain many technical and cost efficiency issues before any such program could become viable in the US.

Attendees were also brought up-to-date on the current Mexico/US negotiations on sugar and HFCS (see August 22, 2000, SugarNews). Luis de la Calle of the Office of SECOFI in the Mexican government, emphasized the value of two-way trade between the two countries, suggesting that the current sugar dispute is but one small element of a much bigger trading economy ($250 billion). He clearly outlined the gap in Mexico-US discussions – by Mexico's definition, Mexico should have 600,000 tons US access on October 1; by the US definition, that access would be limited to 120,000 tons. He indicated that Mexico remains committed to a fair and comprehensive agreement (i.e., sugar and HFCS) but that a NAFTA panel is a real possibility if an impasse is reached ( note: Mexico did request a panel on August 17, 2000).

Greg Frazier, Special Trade Negotiator with USTR, agreed with the description of the problem and the need for a sound agreement. He emphasized the importance of "balance" in trade in sweeteners and of maintaining the "stability and viability of the Sugar Program", reflecting on the current market problems and challenges.