U.S. and Mexico need to smooth out sweetener trade

Reuters ^ | August 2, 2009 | Rene Pastor

[Cheap_Hessian]

PARK CITY, Utah (Reuters) - The U.S. and Mexico must eliminate possible distortions in sweetener trade between them caused by a free trade pact, a senior U.S. sugar industry official said.

Under the terms of the North American Free Trade Agreement (NAFTA), the U.S. and Mexico can transport unlimited amounts of sugar to one another. It started in 2008.

"If either market is oversupplied, it would be disastrous for producers and government costs," Jack Roney, director of economics and policy analysis in industry group American Sugar Alliance, told Reuters at the start of the group's annual meeting.

He said there is a need for both nations to develop and share data so they can "anticipate each country's needs and avoid a disaster."

Last year, the United States relied heavily on Mexico to meet a shortage of the sweetener especially after a sugar refinery in Georgia reduced available supply by up to a month.

NAFTA led to the creation of the world's largest sweetener market, with total usage of over 15 million tons of sugar and around 10 million tons of corn sweetener.

Sugar merchant Czarnikow said in a monthly report released last month that U.S. and Mexican authorities would need to structure import programs to mitigate a shortfall in the combined regional market.