Source:
Andrew Schmitz aschmitz@ifas.ufl.edu, 352-392-1845 ext. 415
GAINESVILLE, Fla.—Pending trade agreements with foreign countries could cost Florida sugar producers hundreds of millions of dollars and cause many to go out of business, according to an economic study released today by the University of Florida’s Institute of Food and Agricultural Sciences (UF/IFAS).
The study, conducted with the Morrison School of Agribusiness at Arizona State University, examined the economic impact of increased sugar imports on Florida’s sugar producers and the nation’s sugar industry. The published findings indicate that a small increase in the level of sugar imports will cause significant damage to U.S. Sugar producers.
“If imports were to increase by a mere 500,000 metric tons, Florida sugar producers would lose $175 million, according to our calculations,” said Andrew Schmitz, a UF/IFAS professor of food and resource economics and coauthor of the study. “That’s an eye opener when you consider that America is currently negotiating trade agreements with 27 countries that export nearly 27 million tons of sugar.”
The study found that if imports were to increase by one million metric tons, U.S. sugar prices would fall by nearly 28 percent. A two-million-metric-ton increase would send prices plummeting by more than 48 percent to less than 12-cents per pound.
According to Schmitz, the prices are well below the 19-cent to 20-cent market price needed by Florida sugar-cane growers to cover their total production costs.
Low prices such as these, Schmitz said, would force many beet and cane farmers in the U.S. to go out of business.
Congress is currently examining a pending trade agreement with Central America that Schmitz believes could cause economic loss to Florida’s cane industry.
“The Central America Free Trade Agreement would increase imports by 153,000 tons,” he said. “That doesn’t sound like a lot. But when you combine that with import commitments under the North American Free Trade Agreement and stored U.S. sugar, you are quickly looking at a sugar flood of more than a million metric tons.”
That much surplus sugar could cost Florida as much as $291 million, according to Schmitz’s calculations.
His study concludes that given the potential for vast economic loss in Florida and other sugar-producing states, reform is needed in all countries that export sugar. According to the report, the reform “will be achieved only through comprehensive multilateral negotiations within the World Trade Organization.”
With a value of more than $517 million in 2003, sugarcane ranks as Florida’s third largest cash crop.
The study was co-authored by Troy Schmitz, a professor in the Morrison School of Agribusiness at Arizona State University.
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