The Best is Yet to Come
By Jim Simon
The 2012 sugarcane harvest was a record production year, not just for sugarcane farmers, but also for the Midwestern beet farmers. It would be impossible for the 2013 crop to even come near 2012’s output, right?
Well, not exactly.
Because the sugarcane plant is an amazing organism and the Louisiana cane farmer an extraordinary fellow, the 2013 crop ended up as one of the top five best harvests from a production viewpoint.
The 2013 crop produced 1.59 million tons of raw sugar from 409,000 harvested acres. The cane production per acre was 34.3 tons which produced an average of 7,771 pounds of raw sugar per acre.
Normally a top five crop would be cause for celebration, but sugar prices have gone down steadily over the last two years and reached a 30-year low. Some might say it was the great harvests of the last two years that created the low-price situation, but they would be wrong. Unintended consequences of the North American Free Trade Agreement (NAFTA) caused the oversupply in the American market and the subsequent low prices.
The American sugar program reserves 85 percent of the domestic sugar market for sugarcane producers like Bobby Morris of West Baton Rouge Parish and Chad Hanks of Lafayette Parish.
But to satisfy all of the United States’ sugar needs, we import sugar from 40 different countries. Fifteen percent of the American market may not seem like much, but it is actually the largest and best market in the world. These trade rules were established through years of careful negotiation.
The upshot is that the U.S. managed system of inventory control creates a fair price for foreign suppliers and a fair price for American producers. It’s what keeps us in business.
But NAFTA rules allow Mexico to import as much sugar as they want into the United States without any regulation at all. In fact, the Mexican market price was much higher that the U.S. price, but Mexican exporters sold their excess sugar to the U.S. rather than sell it in Mexico. Why? Because they wanted to preserve their high Mexican price.
We’re all for free trade, but the fact is, the Mexican government owns one-fifth of the Mexican sugar industry. When business is bad and a Mexican sugar mill is about to go out of business, the Mexican government says, ‘No.’ In the United States, when a sugar mill is about to fail, it fails.
The truth is the American farmer and miller is not competing with the Mexican famer, they’re competing with the Mexican government, but we’re taking all steps possible to correct this situation.
So what does it mean to the Louisiana sugarcane industry? It means prices will be low for a while until the oversupply works its way through the economy. And you know what? That’s nothing new. Louisiana’s sugarcane farmers have been facing adversity for 219 years and we’re still here.
When I was a teenager, my father was a county agent. Everything was going great in the sugarcane fields of 1973 and ‘74 because sugar prices were through the roof.
Things changed and sugar prices dropped into the ditch in 1975.
Charles Savoy was president of the American Sugar Cane League then. I read Mr. Savoy’s January 1975 Sugar Bulletin monthly column and believe I could’ve have taken his article from 1975 and used it word for word today.
Mr. Savoy warned of problems in Washington D.C. when there was no sugar program to speak of. He mentioned that prices had risen to all-time highs and then dropped to all-time lows. He spoke of labor shortages and said the mills were complaining about too much mud and trash in the loads. Production costs were going up, milling operations were closing and farmers were either retiring or quitting.
So what’s new? Nothing, really, it seems.
We’re dealing with the same problems today that our industry brethren fought 40 years ago. Despite labor issues, insect pressure, storms, politics and land competition, we’re still here. Sugarcane is still being farmed in Louisiana 219 years after Etienne deBoré perfected the crystallization process and I think the best is yet to come.
We’ve seen the difficulties and we’ve always managed through the tough times. I’m confident we’ll get through this tough time too. I’m confident Louisiana’s best years in the sugar business are still ahead of us.
I say that for one reason: the people in the industry. The people of Louisiana’s sugar industry are going to figure out a way to make sure that the best years of our industry are still ahead of us.