Editor’s note: This column completes a two-part assessment of the sugar beet industry in Northern Colorado. Lock’s previous Agribusiness column (NCBR, Aug. 19) addressed the closing of sugar beet processing plants in Weld County.
YUMA – When Alan Welp looks over his 600 acres of sugar beets near Yuma he wonders how long they will be there. Welp is concerned the Central American Free Trade Agreement will prevent him from earning a solid price for his beets in the future as sugar from Central America enters the North American market.
He suspects the impact of CAFTA will not be evident within the next few years. It is the years to come he is worried about.
“It will take time to feel the effects, especially since the other countries haven’t ratified it yet,” Welp said. “We are going to operate with a ‘business as usual’ mentality and we will see what we will do in the next two to three years.”
CAFTA is a free trade agreement between the United States and the Central American nations of Costa Rica, El Salvador, the Dominican Republic, Guatemala, Honduras and Nicaragua. The goal of the agreement is to open new markets to American manufacturers.
The agreement also allows for an increase in the volume of sugar allowed into the United States from the member nations – the area of contention for local sugar beet growers.
According to the U.S. Office of the United States Trade Representative, the increased market for sugar will amount to 1.2 percent of the current U.S. sugar consumption, growing to 1.7 percent of current consumption.
The policy brief continues by saying, “Approval of the CAFTA would not have a destabilizing effect on the U.S. sugar program. Under the current Farm Bill, Congress set a ‘trigger’ of about 1.4 million metric tons of total imports; the domestic sugar program is unaffected when imports are below this amount.”
“CAFTA is a forever agreement, but it will take 15 years to really ramp up,” Welp said. “The real impact will be felt after the (2007) Farm Bill takes effect, unless the sugar industry gets something to balance the increase.”
The trade brief attempts to calm Welp and other growers’ fears by mentioning how the agreement includes “a mechanism that allows the United States, at its option, to provide some form of alternative compensation to CAFTA country exporters in place of imports of sugar. This allows the United States to restrict imports eligible to enter under the CAFTA if the U.S. sugar program is threatened, and instead provide equivalent benefits to the CAFTA countries to make up for the lost access.”
The Western Sugar Growers Cooperative is grower-owned, so the cooperative’s 1,200 members have more to lose in the sugar beet fight than growers in other areas might. The growers have invested in the industry and are willing to fight to keep it alive in Colorado, Wyoming and Nebraska.
“We are all disappointed CAFTA included as much as it did, but we will regroup and prepare to fight other battles,” Welp said.
According to the United States Department of Agriculture, the sugar beet industry contributes 0.6 percent to Colorado’s $5 billion farm income and is the 12th-largest crop in the state based on farm receipts.
But Kent Wimmer, government relations specialist with Western Sugar, disagrees with these figures.
“Those figures only calculate our impact at the farm gate, not the $60 million we generate from property taxes, wages and other costs,” he said.
CAFTA benefits Colorado’s corn, wheat and beef producers, some of the top products in the state. Wimmer said he understands the benefits of the agreement for other industries, he just wishes it didn’t hit his so hard.
“I feel like they are giving away our market,” he said. “I don’t mind free trade as long as it is fair trade. These countries aren’t accountable to the same environmental or labor restrictions we are.”
The cooperative is also concerned the passage of CAFTA signals more agreements with detrimental effects for the industry.
“I think this has the full potential to bring 120,000 tons of sugar into the country, further depressing prices – whether we need the sugar or not,” he said.
Wimmer said he didn’t expect CAFTA to force the cooperative to close its Fort Morgan plant. Because the farmers own the plant, they are committed to planting the beets to keep it running.
“It is an economic decision for them, because they own the sugar factory,” he said. “If they don’t plant and others don’t plant and the industry goes away, they lose their assets.”
Kim Lock is the agriculture reporter for the Northern Colorado Business Report. To suggest column ideas contact her at (970) 221-5400 ext. 222 or at firstname.lastname@example.org.