US-Mexican sweetener market integration: Avoiding the train wreck

When free trade in sweeteners began for the United States and Mexico at the start of 2008, many observers predicted a train wreck: U.S. corn sweetener would displace Mexican sugar; the displaced Mexican sugar would be sent north and over-supply the U.S. market; the U.S. would export its excess sugar to Mexico; and, the combined market would implode. But that has not happened - yet. A combination of good policy and policy administration, good luck, and bad weather has prevented regional oversupply and allowed sugar producers and consumers in both countries to do well through the first four years of market integration. The world sugar price rebound, strong U.S. sugar demand, and mediocre beet or cane crops in both countries have been key. But challenges loom. On the political front, U.S. producers seek to renew sugar policy in the 2012 Farm Bill. And, producers in both countries face the danger that good weather in the United States and Mexico could transform a regional deficit into a price-depressing surplus.