Bloomberg | February 1, 2008

Mexico Won’t Curb Sugar Imports That Increase Surplus (Update2)

By Andres R. Martinez

Feb. 1 (Bloomberg) — Mexican Agriculture Minister Alberto Cardenas said the government won’t act to curb imports of U.S. sugar that domestic producers say will add to a surplus, reducing prices and profit.

The North American Free Trade Agreement limits Mexico’s ability to protect producers from the resumption of imports that began last month, Cardenas said. Instead, Mexican and U.S. companies should sort out their own limits, he said.

I am in total agreement with the producers reaching an agreement between themselves,'' Cardenas said today in a telephone interview from Mexico City. Producers in both countries agreed last month that U.S. companies would only export surplus sugar should Mexico face a shortage of the sweetener, according to a statement from the American Sugar Alliance. Mexico would limit the amount of sugar from other countries it imports and then sells in the U.S. Mexico will have a 500,000-ton surplus of sugar this year, according to Juan Cortina, head of Mexico's Sugar and Ethanol Chamber of Commerce. The U.S. and Mexico lifted trade restrictions on the sweetener on Jan. 1 as part of Nafta.The elements are there for the North American sugar market to fall into chaos,’’ Cortina said last week in a conference call held with the American Sugar Alliance. We don't want a train wreck.'' The trade groups have asked both governments to enforce the agreement they reached because they have little power to enforce it themselves. {{Farm Protest}} Mexican farmers shut down the capital's main boulevard yesterday to protest the government's handling of Nafta. They say it hasn't done enough to protect farmers from cheaper U.S. imports of sugar, beans, corn and milk. The country's largest farming group and the two largest opposition parties have asked Cardenas to resign. He said today that he won't quit unless President Felipe Calderon asks him. Cardenas defended his record, saying he has fought for farmers by seeking a 20 percent increase in subsidies and loans from the government in 2008 and by opposing a U.S. farm bill, a final version of which is being negotiated between Congress and the White House.We have already sent a letter to the U.S. Congress, in which we say we are against how they are managing subsidies and budgets,’’ he said.

The 60 billion pesos ($5.6 billion) that Mexico set aside in subsidies and loans for farmers this year isn’t enough, said Cruz Lopez Aguilar, president of the National Confederation of Farm Workers.

Mexican sugarcane farmers stopped deliveries to mills in December for more than two weeks to protest the amount they were paid, which is based on prices in Mexico City’s central market. The price for a 50-kilogram bag in the market has fallen 27 percent in the past 12 months.