Free trade could doom Hawai'i sugar
By Sean Hao
Advertiser Staff Writer
Hawai'i's two remaining sugarcane growers said yesterday that the Islands' industry could collapse if prices are driven down as a result of a free-trade agreement being negotiated between the United States and Central American countries.
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Talks between U.S. Trade Representative Robert Zoellick and ministers from Costa Rica, El Salvador, Guatemala, Honduras and Nicaragua started in January with the goal of reaching an agreement in December. Such a deal would then likely need congressional approval.
The sugar industry, down to two plantations, generates about 800 jobs statewide and accounted for $64.3 million in sales last year after years of decline.
The idea is to eliminate tariffs and other trade barriers for goods, agriculture, and investment between the United States and Central America. However, local sugar growers are concerned that the agreement will result in increased sugar imports from these countries.
Sugar imports into the United States are controlled under quotas established by the World Trade Organization, said Steve Holaday, plant manager for Hawaiian Commercial & Sugar Co. in Pu'unene, Maui. Hawai'i growers fear that a new agreement emerging from the talks could subject sugar to free trade.
"If allowed, that would push sugar prices way down to the point that none of us would make money," Holaday said.
In a statement released jointly by HC&S and Hawai'i's other sugarcane grower, Gay & Robinson on Kaua'i, the companies cited a study by economists at Louisiana State University that said added sugar imports would cut U.S. sugar prices in half. The five Central America countries have the capacity to export 2 million tons of sugar a year, according to the two companies.
Alan Kennett, general manager for Gay & Robinson, said estimates are that such imports would drive U.S. commodity prices for sugar down to 12 cents a pound, versus about 18 cents a pound today.
At that level, "We would find it almost impossible to stay in business," he said. "You will see a lot of sugar companies go out of business."
Because of Hawai'i's high labor, land and other costs, local companies cannot compete with Central American countries on a free-trade basis, Holaday said.
Statewide, the sugar industry generates about 800 jobs. Hawai'i sales of sugar last year rose 11 percent to $64.3 million after decades of decline.
Trade between the United States and Central America, meanwhile, is rising. U.S. exports to the region have grown 42 percent between 1996 and 2001 to $9 billion, about the same as exports to Russia, India and Indonesia combined, according to the White House.
Imports from the region totaled $11 billion.
Gov. Linda Lingle's office said yesterday that it sent a letter to President Bush asking that sugar remain exempt from any free trade negotiations.
Reach Sean Hao at shao@honoluluadvertiser.com or 525-8093.
