April 16, 2014
Mexico Sours Sugar Farmers' Easter Holiday

Nine in 10 Americans who will be celebrating Easter this year say they plan to stock up on candy, according to a National Retail Federation survey released April 9. All told, these celebrants will spend a combined $2.2 billion of Easter candy—an average of nearly $22 each—the survey found.
 
Those sales represent an incredible 4 percent increase from a record setting 2013 Easter season, noted the National Confectioners Association (NCA), which serves as the candy industry's trade association.
 
And Easter will only add to what’s been an extraordinary run of good news for confectioners. NCA President Larry Graham recently noted at an industry meeting that candy makers have seen 10 straight years of growth despite troubled economic times.
 
Unfortunately, things aren't quite as sweet in the sugar-producing sector, which makes possible all those Easter baskets filled with chocolate bunnies, peeps, candy eggs, and jelly beans.
 
Sugar prices have been cut in half since late 2011 and today are hovering at the same lows of the 1980s. And these low prices are expected to cost the industry an estimated $1 billion for the 2014 crop.
 
The reason for sugar producers' sour outlook: Mexico has been dumping subsidized sugar on the U.S. market and injuring the American businesses.
 
But U.S. growers aren't taking Mexico's unfair trading practices lying down. On March 28, American sugar producers filed antidumping and subsidy cases against Mexico with the U.S. government.
 
U.S. trade laws have existed for more than 100 years to ensure predatory trade practices don't drive domestic industries out of business. These laws have been used countless times for industries ranging from steel and chemicals to cattle, tomatoes, and wheat.
 
"We are more efficient than Mexico's sugar industry and can compete with anyone in a free market," explained Phillip Hayes, a spokesman for the American Sugar Alliance. "But it is hard for U.S. farmers to succeed when a subsidized industry that is largely government-controlled is dumping its product."
 
The Mexican government owns 20 percent of the Mexican sugar industry and props up that industry with numerous federal and state subsidies, according to the filings.
 
The cases also contend that the Mexicans are flooding the U.S. market with sugar at dumped prices that are 45 percent less than fair market value in Mexico.
 
Propped up by these subsidies and dumping margins, Mexico has rapidly increased exports to the United States. In fact, it has doubled its share of the U.S. market since 2012, from a 9 percent market share to nearly 18 percent in 2013.
 
And based on U.S. Department of Agriculture data, Mexico has further accelerated its exports during the first half of the 2014 crop year.
 
The antidumping and countervailing duty cases were officially filed with the Department of Commerce and U.S. International Trade Commission. The Department of Commerce is expected to announce on April 17 whether the cases have merit and will be considered.
 
If it launches a full investigation of Mexico’s actions, as expected, sugar farmers might yet have a small reason to smile this Easter.


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