Sugar producers in U.S. request curbs on Mexico

Agency to look into whether trade rules have been skirted

Packages of standard sugar move along a conveyor belt at the Ingenio La Gloria SA sugarcane mill in Ursulo Galvan, Mexico, on Wednesday, April 6, 2022. MUST CREDIT: Koral Carballo/Bloomberg
Packages of standard sugar move along a conveyor belt at the Ingenio La Gloria SA sugarcane mill in Ursulo Galvan, Mexico, on Wednesday, April 6, 2022. MUST CREDIT: Koral Carballo/Bloomberg

American sugar producers are seeking to curb imports from Mexico after the United States said it would examine whether some shipments from the Latin American nation breached trade deal rules.

The American Sugar Coalition wants the government to lower the amount of sugar Mexico is allowed to send to the U.S. by 44%, according to a March 12 letter sent to Secretary of Commerce Gina Raimondo. The curbs would be effective from Monday and apply to the year ending in September.

Mexican sugar production slumped last season, but shipments to the U.S. continued to flow.

That prompted the U.S. Department of Commerce to say it planned to look into whether the supply deals skirted trade rules preventing Mexico from bringing in sugar from other countries to meet domestic demand, while exporting its own output to the U.S.

A similar picture is emerging this season.

"Exports from Mexico during the current export limit period already exceed the quantity Mexico can supply from its production surplus," Robert C. Cassidy Jr. of Cassidy Levy Kent, counsel to the American Sugar Coalition and its members, said in the letter. The DOC should consult with Mexico to see how the government plans to conform with the rules by reducing the quota, he said.

Any reduction to Mexico's export limit would likely require the U.S. to bring in more supplies from other countries, tapping already tight global stockpiles. U.S. sugar prices reached a high last year, while world prices gained for a fifth year, the longest winning streak since 1989.

The U.S. sugar industry is highly regulated, with caps on overseas imports.

The rules are intended to protect profits for beet and cane refiners, especially given higher U.S. production costs, and prevent other countries from flooding the American market.

Mexico is the biggest supplier.

The American Sugar Coalition wants to cap imports from Mexico at less than 500,000 short tons raw value, down from almost 900,000 now, according to the letter.

That's because dry weather cut production there, meaning the nation won't have enough to meet domestic consumption and fill its U.S. quota.

This isn't the first time the group wrote to the DOC. In a separate letter dated Oct. 6, it argued for the reduction in the export limit, without providing a particular target.

It also stressed inconsistent data from various agencies.

"The significant differences between the official Mexican government data and data from other sources inevitably raise the question: How much sugar is Mexico importing?" according to the Oct. 6 letter.

The Mexican government has previously denied having broken the rules of the trade agreement, according to a separate letter to the DOC dated Oct. 6.

The DOC's International Trade Administration, the Mexican Economy and Agriculture ministries and Camara Nacional de las Industrias Azucarera y Alcoholera didn't respond to requests for comment.

Members of the American Sugar Coalition include the American Sugar Cane League, the American Sugarbeet Growers Association, American Sugar Refining Inc. and the Florida Sugar Cane League.

Information for this article was contributed by Maya Averbuch and Scott Squires of Bloomberg News.

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