The U.S. Department of Commerce is due to make a preliminary decision on whether to impose duties on Mexican sugar imports: a development the state of Iowa should be watching very closely, says Craig Lang, a dairy farmer from Brooklyn, Iowa. The decision is to be made October 24. Lang, a long-time agricultural leader in Iowa and former president of the Iowa Farm Bureau, is president of Prairie Strategy Group.
Earlier this year, U.S. sugar producers filed an anti-dumping complaint against Mexico essentially saying Mexico is flooding the U.S. market with cheap sugar, thereby harming U.S. producers.
While on the surface it may not seem like an antidumping fight between U.S. and Mexican sugar producers (after all, we lead the nation in corn and soybean production, not sugar), there's one big reason this should concern Iowans: high-fructose corn syrup (HFCS).
Why is this upcoming decision important to Iowa?
The fact is HFCS is important to our state, notes Lang. He points out that in Cedar Rapids alone, 1 million bushels of corn a day is ground for use in high-fructose corn syrup. Statewide, HFCS means 2,600 jobs that the corn refining industry provides with potential for more jobs to be created; $170 million in salaries from these high paying jobs; and $1.9 billion worth of value is added to the 163 million bushels of Iowa corn used to make HFCS.
"But all of that is on the chopping block, thanks to U.S. sugar producers' greed," he says. "If their complaint stands and duties are placed on Mexican sugar imports, it's very likely the Mexicans will respond by limiting HFCS imports from the United States, which have increased eightfold since the North American Free Trade Agreement, or NAFTA."
To provide some background, Lang explains that NAFTA contained a 14-year exemption (the longest in the agreement) for sugar and other sweeteners. When that exemption expired, the U.S. allowed duty-free sugar to be imported from Mexico, and Mexico allowed duty-free corn syrup from the United States.
Even if Mexico didn't retaliate, they wouldn't need our corn syrup
If 'Big Sugar' wins and duties are imposed on Mexican sugar, we could hardly blame Mexico for returning the favor via corn syrup, says Lang.
Even if the Mexican government didn't take this step, the damage to HFCS and to Iowa would already be done. If duties on sugar imports are so high that Mexico stops exporting here, there is no need for our HFCS in Mexico (the country will use its own sugar instead).
Mexican officials have already indicated they will make a formal complaint to the World Trade Organization (WTO) against the U.S. sugar program and its illegal subsidization and other protection of the domestic sugar industry. "This and the threat against corn syrup are very real indeed, and needs to be taken very seriously," says Lang.
So what do we do?
Mexican officials have confirmed they are seeking a negotiated settlement to the dispute. "They want to sit down with their U.S. government counterparts and settle differences between U.S. and Mexican producers which is actually the route encouraged by NAFTA. We need to do whatever we can to encourage this alternative," says Lang.
With elections just around the corner, "We need to find out where Iowa's Senate candidates stand on this," he says. "Are they actively supporting a settlement agreement that protects the interests of Iowa's corn farmers and the HFCS industry? I sure hope so."
Lang adds, "Iowa's elected officials need to let the U.S. Department of Commerce and the office of the United States Trade Representative know that we are adamantly against duties on Mexican sugar imports because they are bad for our state. Times are tough enough with sinking corn prices; we can't sit back and let one industry's greed come before the best interest of our farmers, workers, businesses and consumers."