Celebrating Big Sugar's demise is premature

February 13, 2005|By JAY HANCOCK

PRESIDENT BUSH finally seems to be cracking down on agriculture welfare. Looks bad at first for Big Sugar and the Domino Sugar plant on Baltimore's Inner Harbor, which is owned by Florida's Fanjul family and other cane growers.

Sugar states such as Louisiana and Minnesota have gone ballistic on Bush. Foreign rivals are celebrating. It's "very positive news" for sugar growers and other Australian farmers, the Aussie trade minister told broadcasters last week.

"They might be getting carried away," counters Norbert J. Michel, an economist at the Heritage Foundation think tank in Washington.

What makes him say that?

Could it be the vehement opposition of powerful legislators in both parties to Bush's 1.2 percent tax on sugar producers, presented in his budget proposal last week?

"That's not going to happen," Rep. Collin C. Peterson, the ranking Democrat on the House Agriculture Committee, whose Minnesota district includes sugar-beet farmers, told the Associated Press.

"It should be rejected," said Minnesota Republican Sen. Norm Coleman. "It's something we'll try to derail," chimed North Dakota Democratic Sen. Byron L. Dorgan in the same article.

Doubts about Big Sugar's obituary also stem from the paltriness of the proposed reforms. They don't touch price supports or import limits. They're far more modest than changes proposed for other crops, changes that also face fierce resistance. The sugar tax would raise only $40 million, petty cash for the Agriculture Department.

"You need a microscope to find that in the USDA budget," says Kenneth Cook, president of the Environmental Working Group, which opposes farm subsidies.

Still worried for Big Sugar? Commerce Secretary Carlos M. Gutierrez, once seen as a sugar enemy, may have neutered himself.

Kellogg Co., maker of Frosted Flakes and Froot Loops and until recently run by Gutierrez, lobbied to open U.S. markets to Australian sugar. But at his confirmation hearing last month, Gutierrez vowed to stay out of sugar cases if ethics lawyers rule he has a conflict.

Reasons to bet against sugar reform definitely include tycoons Pepe and Alfy Fanjul. They own most of Domino Sugar through Florida Crystals, based in West Palm Beach, Fla., and control more than 100,000 acres of Florida sugar-cane fields.

The Fanjuls are to U.S. politics what Merrill Lynch is to corporate America: financiers extraordinaire. In the most recent election cycle they and their allies gave candidates and political parties more than $300,000, according to records kept by the Center for Responsive Politics. In the 2000 election cycle, before campaign-finance laws changed, Florida Crystals and its affiliates gave $780,750 in soft-money donations, spread liberally among both parties.

History supplies another reason not to fear for Big Sugar. It has repelled these attacks for decades. Sugar import quotas began inflating costs for consumers and food producers in 1934, and the outraged complaints probably began soon afterward.

"No logic at all other than politics can explain this," the late Ohio Sen. Howard Metzenbaum fumed about sugar protectionism in the 1970s.

Sugar enemies point hopefully to the Central American Free Trade Agreement, which is to be debated soon in Congress and which would increase sugar imports into the United States from six Central American and Caribbean countries. But the increases are small, and they're likely to be postponed even if the treaty passes, trade experts say.

People thought the U.S.-Australian Free Trade Agreement would flood this country with cheap, Down Under sugar. In the end, after huge pressure from the industry, sugar wasn't even part of the deal.

The Fanjuls do face some challenges.

Last September Ivana Trump's yacht came unmoored during Hurricane Frances and crashed into neighbor Alfy Fanjul's dock, forcing him to find other accommodations for the four vessels he usually keeps there, according to a lawsuit filed by Fanjul and reported by the Palm Beach Post.

A couple of hundred workers at the Domino Sugar mill in Yonkers, N.Y., are asking for 3 percent raises and have been on strike since December, echoing work stoppages two years ago at the Baltimore Domino plant and in December at a Fanjul-owned facility in Florida.

Yes, the Fanjuls have problems. But a major change in U.S. sugar policy won't be one of them.

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