Chris Benjamin/President & CEO – Alexander & Baldwin, Inc./General Manager – Hawaiian Commercial & Sugar Company (2009-2011): “Good morning and thank you all for being here today…the day we hoped would never come…but it’s here. There is a modest sense of defeat here today as we are faced with the reality that we were not able to stave off the economic and external forces that have been conspiring against us for so long.”
Last year ended on a sour note for a sweet domestic industry as Hawaiian Commercial and Sugar Company uprooted its long standing Maui sugarcane plantation – the last of its kind in the Aloha State.
Though Hawaii’s sugarcane tradition stretches back nearly 200 years, industry officials believe limited federal protection, and rising land values combined with pressure from environmental groups over cane burning and irrigation contributed to the crop’s decline on the islands.
So even though 165,000 tons of raw sugar, worth $83 million, was produced in Maui in 2015, the company lost roughly $30 million – prompting 2016’s final harvest.
As HC&S’ parent company Alexander and Baldwin works to diversify 36,000 acres into a patchwork of orchards, row crops and pasture land, remaining sugarcane producing states Texas, Louisiana and Florida want to keep Hawaii’s fate from reaching the mainland.
Jack Roney/Director of Economics and Policy Analysis – American Sugar Alliance: “It’s very sad because they achieved the highest yields per acre in the world. There’s really no better place in the world to grow sugarcane than Hawaii.”
Jack Roney is an economist with the American Sugar Alliance, a national coalition that lobbies beltway lawmakers to ensure the survival of domestic sugar production amidst heavily subsidized foreign competition.
Jack Roney/Director of Economics and Policy Analysis – American Sugar Alliance: “We’re very proud of the fact that we are some of the lowest cost producers in the world, while we are adhering to some of the world’s highest standards for worker and food safety. We’ve really found a way to be both competitive and sustainable. And people wonder: well if you’re so efficient, why do you need a sugar policy at all? And the answer is in the distortions in the world sugar market.”
The $20 billion dollar U.S. sugar industry churns out about 9 million tons of sugarcane and sugar beets annually. But that pales in comparison to the over 1.5 billion ton worldwide yield.
Roney says every sugar-producing nation subsidizes themselves, and surpluses drive down global prices – creating dependence on aid to offset the cost of production. Brazil leads the pack at 750 million tons of sugarcane – which USDA projects for the current harvest. The U.S. is the world’s 5th largest producer but also a net importer of sugar, where it is added to a wide variety of consumer staples.
The industry claims U.S. sugar policy has cost taxpayers nothing for 14 of the past 15 years. However, a loophole in the North American Free Trade Agreement, or NAFTA, allowed Mexico duty-free access to dump tons of the sweetener on the U.S. market in 2013 – pushing domestic prices to a 30-year low.
So USDA ended up paying producers $259 million to keep the U.S. sugar industry from collapsing. Roney believes Mexico’s move was a big reason Hawaii was forced out of business.
Jack Roney/Director of Economics and Policy Analysis – American Sugar Alliance: “So the U.S. government responded and judged Mexico had injured our industry and calculated subsidy and dumping margins of over 80%. It wasn’t even close. And rather than put those duties in place, the U.S. and Mexican governments tried to work out an accommodation, but those so-called suspension agreements were not successful.”
John Hundley/Vice-President Agricultural Operations for Hundley Farms – Clewiston, Florida: “Our prices have remained stable. The world market pretty much dictates our domestic market.”
John Hundley’s family has farmed in the Everglades Agriculture Region of Florida for over 80 years, and grown sugarcane there since 1960. Favorable weather the last few years has delivered a bumper crop on Hundley’s 5,800 acres – about 300,000 tons by last count.
In contrast with other states, Florida has its own set of challenges, from huge population influxes stressing the local eco-system to the surprising cost of compliance.
John Hundley/Vice-President Agricultural Operations for Hundley Farms – Clewiston, Florida: “We have what they call an Everglades privilege tax that we pay on a per-acre basis every year. It has been like that for well over a decade…maybe even closer to two decades. And there is no other area in the U.S. that gets taxed to farm.”
Hundley champions the Sunshine state’s no-waste production model, where mills employ every part of the plant in processing, foregoing the need for fossil fuels.
And despite implementing best management practices decades ago for his thirsty crop, Hundley says politically driven environmentalism has led to roughly 140,000 local acres being bought up and taken out of production over pollution fears. So pushing back against public misconceptions has become essential.
John Hundley/Vice-President Agricultural Operations for Hundley Farms – Clewiston, Florida: “So we’re farmers. We can put up a fight all we want. A lot of times we lose. We gotta win this one. We’re able to farm this land pretty much year round. And that’s just that much less food that this area can provide for the consumers here in the U.S.”
According to the United Nations, over 100 countries grow the bulk of the world’s sugar supply. And Obama-era U.S. Trade Representative data indicates America buys the tropical sweetener from about 40 nations.
As preliminary discussion over the 2018 farm bill ramps-up, sugar advocates are seeking better prescriptions to handle offshore disruptions. Some like Roney find favor with President Trump’s call for a closer look at U.S. trade agreements, and are open to reexamining subsidies, if other sugar-producing nations follow suit.
Jack Roney/Director of Economics and Policy Analysis – American Sugar Alliance: “Ironically, there are some dogmatic free traders who think that its somehow evil and protectionist to respond to foreign subsidizing and dumping. But that’s really foolish. You’re essentially just saying we’re not going to subsidize and we’re going to give up our jobs to those countries that still do. That’s unilateral disarmament. It’s the antithesis of free trade. So we are encouraged that the administration is supportive of us pursuing our rights under U.S. trade remedy laws.”