A Bitter Pill for Sugar Beet Farmers

"We should not allow the very tiny minority of U.S. agriculture that believes it will be negatively impacted to derail this agreement," said Rep. Wally Herger (R-Calif.) at a House Ways and Means Committee hearing last month, noting that farmers in his district who produce rice, almonds, walnuts and other crops have enthusiastically backed CAFTA, which they feel offers important new export opportunities.

The specter of CAFTA collapsing over sugar is particularly galling to economists who have long criticized federal restrictions on sugar imports. "Sugar is a prototypical case of a policy that favors the few at the expense of the many," wrote Kimberly A. Elliott, a research fellow at the Center for Global Development, in an analysis last month.

Growers like Martineau bristle at such criticism, arguing that import restrictions are necessary because the world market is oversupplied with sugar that is often subsidized by the governments of other countries, notably Japan and members of the European Union. "We're not asking for the highest price. We just want a fair price," said Cleo Miller, a neighbor of Martineau's who raises beets on about one-quarter of the 3,000 acres he farms.

Sugar growers and refiners gave $2.4 million in contributions to Democratic and Republican candidates in the 2003-04 election cycle, more than any other agricultural group, according to Political MoneyLine, an organization that tracks such data. The best-known donors are big sugar cane growers in Florida and Louisiana, especially the Fanjul brothers, who come from a family of sugar barons in Cuba (their holdings were expropriated by Fidel Castro) and now produce cane near the Everglades.

Jose "Pepe" Fanjul, president of Florida Crystals Corp., raised enough money for the Bush campaign to gain entry into the elite group of GOP "Rangers." His brother Alfonso, who specializes in contributions to Democrats, gained notoriety during President Bill Clinton's impeachment trial, when it emerged that Fanjul's phone call to the Oval Office had interrupted a presidential meeting with Monica Lewinsky.

But in explaining the industry's influence, "it's not just the Fanjuls," said Sarah Thorn, a lobbyist for Grocery Manufacturers of America, who often crosses swords with Big Sugar because many of the companies she represents are sugar users and complain about the high prices.

Rather, Thorn acknowledged, major credit must go to the beet growers in a swath of northern states, including Montana, Wyoming, Colorado, North Dakota, Minnesota and Michigan, as well as Idaho. "They are lovely, sweet people," she said. "But they are extremely well organized."

Among farmers in this part of the country, the saying goes that sugar "pays the mortgage," because its price is not nearly as prone to violent fluctuations as crops such as potatoes, which trade in a much freer market. So farmers depend on beets for steady income and gamble on potatoes. But that doesn't mean they make a lot of money on beets; on the contrary, it is difficult to make much, even with sugar prices well above 20 cents a pound as ensured by the federal program.

Revenue from sugar beets is likely to be a bit over $1,000 per acre this year; yet the costs -- factoring in fertilizer, irrigation, seed and fuel -- run about $900 per acre.

To critics, that's an argument against the U.S. sugar program. "It's true that beet farmers don't make much money, but that's because it's inefficient to produce sugar from beets -- the rule of thumb is that it's about twice as costly as cane," said Donald Mitchell, a World Bank economist.

According to a study Mitchell authored, eliminating the distortions created by government policies in the United States, Europe and elsewhere could create 1 million jobs in developing countries that are more efficient sugar producers. And American consumers would benefit; workers in sugar-using industries might benefit, too.

High sugar prices have played a part in the exodus of American candymakers such as Brach's and Fannie May, and of Kraft Foods' Lifesavers plant, to countries such as Canada and Mexico. Although the sugar industry points out the those moves abroad were driven more by labor-cost than sugar-cost considerations, the plant closures have evoked bitterness in candymaking centers like Chicago.

American sugar growers say they would give up their protection if other countries would give up their subsidies. Until then, they refuse to back down in their fight against CAFTA, especially since the administration is also hoping to strike free-trade deals with Thailand, Brazil and other big sugar producers.

Referring to the CAFTA countries' access to the U.S. sugar market, Norman Shroll, another beet-growing neighbor of Martineau, said: "We feel they have enough. And it's not just giving them more. There are a whole lot of countries lined up behind them."