U.S. Sugar Industry in Dust-Up Over Cheap Imports from Mexico; Capital Expenditures Remain Steady

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Researched by Industrial Info Resources (Sugar Land, Texas)--The U.S. sugar industry is in an uproar over sugar imports from Mexico that could result in a $1 billion loss in net income by domestic producers for the most recent crop year. The American Sugar Alliance and other groups have asked the U.S. Department of Commerce to launch an investigation, claiming sugar imports, which are subsidized by the Mexican government, are being dumped on the U.S. market and have cut the price of raw sugar in half since 2011. The tightly controlled U.S. sugar industry has strict caps on imports--except for those from Mexico, which has unlimited, duty-free access under the North American Free Trade Agreement (NAFTA).

In one year, imports of Mexican sugar went from 9% to 18% of the U.S. market share, according to the Sugar Alliance, which represents growers and processors. Sugar imports from Mexico grew from 1.4 million metric tons in 2011 to a record of nearly 2.1 million metric tons last year. Imports from Mexico this year are on pace to break the 2013 record, totaling as much as 2.3 million tons by September 30. It is estimated that about one-fifth of Mexico's sugar industry is owned by the government.

In response to the U.S. complaints, Mexico's government said that the country should not be blamed for a collapse in prices, and has pledged to defend its industry.

U.S. confectioners and other users of sweeteners are wary, and oppose the complaints, fearing that any penalties or restrictions might ignite a broader trade dispute over sweeteners that might affect other U.S. industries.

Meanwhile, project expenditures at sugar milling and refining facilities in the U.S. have remained steady. There are 51 mills and refineries in the U.S. Capital and maintenance project expenditures amount to more than $365 million, according to Industrial Info. Mexico has 55 sugar manufacturing facilities and more than $1.6 billion in project expenditures.

Industrial Info's database of active capital and maintenance expenditures by the Food and Beverage Industry across North America and the Sugar Processing Industry and Water Desalination Segment around the globe lists current expenditures of $50 billion and more than 3,000 active projects. The North American portion comes out to more than 1,900 active projects that total more than $29.5 billion.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, three offices in North America and 10 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.