FARMERS DIFFER OVER CAFTA
July 20, 2005

The House is set to vote on the Central American Free Trade Agreement. Some U.S. dairy farmers believe CAFTA will help business, while some sugar farmers disagree.

 

Online NewsHour Special Report: The WTO and Global Trade June 30, 2005: Congress prepares to vote on the Central American Free Trade Agreement. June 23, 2005: U.S. trade representative discusses the trade deficit with China and CAFTA. Jan. 13, 2004: Experts discuss growing tension in U.S.-Latin American relations. Dec. 17, 2003: Update: U.S. and four Central American nations reach free trade agreement. Browse the NewsHour's coverage of the economy.   News for Students: Top Story: President Bush defends trade policies at the Summit of the Americas in Mexico 01.12.03     World Trade Organization White House: International Trade	BETTY ANN BOWSER: In this part of the Midwest where fields of corn, soybeans and sugar beets spread out as far as the eye can see what you think of the Central American Free Trade Agreement depends on what you farm. DUANE ALBERTS: Get in the barn, get in the barn. BETTY ANN BOWSER: Duane Alberts is a fifth generation corn and dairy farmer in southeastern Minnesota. His operation is high tech: he tracks his 550 registered Holsteins by computer and consults a nutritionist so his cows produce the best-tasting milk. DUANE ALBERTS: The agricultural products that America's farmers produce are second to none. We have the best product, period. And we want to export our products into other countries as much as possible.
	Dairy farmers support free trade deal
	BETTY ANN BOWSER: That's why Alberts is a strong supporter of the Central American Free Trade Agreement -- or CAFTA -- which is intended to liberalize trade with five Central American nations and the Dominican Republic. The agreement passed the Senate in June and is about to be taken up by the House of Representatives. DUANE ALBERTS: CAFTA opens up an opportunity to have another 44 million consumers consuming our products, agriculture's products, whether it be dairy products which I produce, or pork, beef, chicken, rice. BETTY ANN BOWSER: So you're a free trader? DUANE ALBERTS: I like free trade. I'm also competitive. I want to come out a little bit ahead in the trading game. And globalization, of course, is a trading game. I want to sell more of my products than are brought in. BETTY ANN BOWSER: Hog farmer Larry Liepold agrees. He says currently import duties as high as 47 percent are placed on U.S. pork products that go into Central American countries so not much is exported there. Under CAFTA, Liepold says those tariffs would be removed, and he could start sending a lot more pork down South. LARRY LIEPOLD: CAFTA is going to increase my profits by 4 1/2 percent. It will add to my bottom line, that's essentially what it's going to do. BETTY ANN BOWSER: And you're pretty sure about the export market for this? LARRY LIEPOLD: Just look at history. You can use NAFTA. I mean, NAFTA -- pig exports to Mexico have gone up immensely, Korea, Taiwan, Australia, other countries involved in free trade agreements, pork has benefited from them all. Pork is the one shining example that these free trade agreements are working.
	Sugar farmers' opposition to CAFTA
	BETTY ANN BOWSER: In fact, most American agricultural groups have endorsed CAFTA believing it will allow farmers to sell more of their products outside the U.S. But one group of farmers has been very vocal in its opposition to the trade agreement: Sugar producers like Mark Olson of Willmar, Minnesota who has 500 acres of sugar beets. MARK OLSON: When we harvest them, they'll probably be ten to fifteen pounds. BETTY ANN BOWSER: Sugar farmers are not directly subsidized by the U.S. government, as are farmers of most other commodities. Instead, the U.S. sharply limits the import of sugar, which means American farmers get a higher price since they don't face competition. Olson says if CAFTA's passed, those limits will be lifted and countries will be able to dump sugar in the U.S. at far below cost. MARK OLSON: Every other country subsidizes the production of their sugar. And when that subsidized sugar, they produce more than what their country needs, it gets dumped onto the world market. It costs well below the cost of production. We are some of the most efficient sugar beet producers in the world. But because of -- we can't compete with foreign governments. BETTY ANN BOWSER: Ninety percent of the sugar processed in this country is done so in farmer-owned co-ops like the southern Minnesota beet sugar cooperative. Olson has invested nearly1/2 million dollars in the equipment, which chops and cooks the beets producing a thick brown syrup. A centrifuge then spins out the white sugar crystals. Sugar producers say CAFTA is just the first of many free trade agreements supported by the administration and could be the beginning of the end of the U.S. sugar industry, which employs some 140,000 people. John Richmond is the president of the co-op. JOHN RICHMOND: As the administration says, CAFTA is just a small piece of the puzzle. But what it does mean is that we will get to produce less sugar than was produced before. We will become marginally less profitable than we were before. If that's a blueprint for other agreements that the administration presently proposes, that would mean that we'd become less and less efficient with every entry of sugar in the United States and eventually would be unprofitable and we'd discontinue the production.
	The sugar industry's fight
	BETTY ANN BOWSER: The Bush administration says sugar farmers are exaggerating the impact of the agreement. It estimates that CAFTA would allow less than 2 percent more sugar from Central America into this country. And free-trade advocates like Russell Roberts say it's time to stop protecting the sugar industry. RUSSELL ROBERTS: The bottom line is the price of sugar in the United States is about double what it would be outside the United States in a freer market. That means higher profits for sugar farmers and it means higher prices for U.S. consumers. And it's not just, of course, for the sugar you sprinkle on your grapefruit. It's for anything you consume that uses sugar: ketchup, all kinds of processed foods, candy that has higher prices that we don't see the higher price of sugar hidden in those higher prices. BETTY ANN BOWSER: But the sugar industry is putting up a fight. Sugar accounts for just 1 percent of all agricultural goods, but it is a large donor to political campaigns and has many allies on Capitol Hill. Last week farmer Mark Olson was there making the rounds to lobby against CAFTA. He bristles when he hears people complain about "big sugar interests" that keep sugar prices high. MARK OLSON: I am the sugar industry; 90 percent of the sugar beets are grown by people that own their factories so I am the sugar industry. I'm not big sugar. The price of sugar in the U.S. is less than almost any other developed country in the world, so we're not -- consumers are not paying too much for sugar. The only people that complain about the price of sugar are the big candy companies, that if they bought sugar cheaper, you would not see a reduction in the cost of your candy bar.
	Undecided lawmakers
	BETTY ANN BOWSER: CAFTA narrowly passed the Senate only after sugar-producing states were given some concessions. And CAFTA's facing a much tougher struggle in the House of Representatives, where some two dozen lawmakers are undecided. One of them -- Republican Gil Gutknecht from Rochester -- met with Olson and other sugar farmers from his state. He says he hasn't yet been convinced that CAFTA will lead to greater exports for any American producers. And he argues that NAFTA did not help most farmers. REP. GIL GUTKNECHT: Historically I have been a free trader. You know, I believe that markets are more powerful than armies. I believe that markets generally benefit both sides. But one of the facts that a lot of people sort of gloss over is that before we agreed to NAFTA, we had about a 1 1/2 billion dollar trade surplus with Mexico. Today, we have about a 45 billion dollar trade deficit. And so I think in some respects, this administration and previous administrations have tended to oversell the benefits of trade. BETTY ANN BOWSER: The Bush administration defends NAFTA, saying it led to a 30 percent economic growth in the U.S., Canada and Mexico. That doesn't comfort Olson, who gets quite emotional when he talks about how CAFTA could wipe out jobs for farmers and other sugar workers. MARK OLSON: It's a way of life; it's putting people out of business; it's rural jobs. BETTY ANN BOWSER: And you really think that can happen? MARK OLSON: Oh, I believe it. DUANE ALBERTS: I think the sugar farmers are safer than they think they are. And I certainly hope that a small group of sugar producers do not derail the entire CAFTA process. BETTY ANN BOWSER: The House is expected to vote on the measure later this month.