Small blips in the global economy can have big impacts in rural areas and developing countries.
Sugar being harvested (left) in Guanacaste, Costa Rica, by a combine (rather than by workers with machetes, due to the flat land that allows for heavy farm machinery). You can see how flat the land is there, and see sugar cane that has been cleared, with tall cane in the background (middle). Sugar cane needs irrigation (right) in a dry region like Guanacaste, and large scale growers there can afford to build their own canals that hook into the regional irrigation canals (small farmers can't afford the same luxury).
In one of my original experiences in Central America, studying abroad for a semester in 2003 in Guatemala, El Salvador and Nicaragua, we heard a lot of debate about the Central America Free Trade Agreement (DR-CAFTA) with the US, which was in the process of being ratified in the countries of Central America and in the US. Our group of undergraduate students heard from many people in the three countries we visited who were opposed to the agreement, due in part to concerns about the effect on small-scale agriculture in the region. One area, however, where Central America has a competitive advantage over the US is in sugar, and sugar producers in the US were one of the most vocal groups opposing CAFTA here. I happened to be in Washington, DC, in the summer of 2005 when CAFTA passed in the US Congress by 2 votes (at least one of which was changed from “nay” to “aye” at the 11th hour).
When my grandparents visited me in Costa Rica in 2011, we took them (and my parents) to a hotel on the outskirts of a small city on the Caribbean side of the country, called Turrialba. The hotel was located smack dab in the middle of a sugar cane field (well, several fields), and my grandparents watched with wide eyes as men cut the cane with machetes and piled it on trailers that would be pulled to the nearest mill. My grandpa said, “I never knew how we got sugar!”
Left: my cute baby getting an outdoor bath in hot hot Guanacaste, when he accompanied me on my research for my master's thesis. Center: a sugar cane field planted with corn around the edges, because Guanacaste farmers love their tortillas, and would rather be food secure than totally dependent on sugarcane. Right: a few of the yard and sugar cane in the distance from the old hacienda house on the large plantation near where I did my research.
This isn’t a post about what sugar does to our bodies, or how sugar is grown (well, sort of). We often think about food and commodities like sugar as a question of individual consumption – how many calories does it have, does it cause cancer, is it safe or healthy for my child to eat, how much does it cost me, etc etc. I’m not going to talk about that here.
Rather, I’m going to share a few pieces of information I was able to gather about how sugar moves around the world in the global commodity trade. As in, which countries provide us with sugar, and why? What causes us to get sugar in this way? This zoomed-out information can, I think, help us to better understand how the world works, and how we get to specific political events like this past week’s election, or how we can better understand local or national social movements and social identities (like “rural” and “urban” issues).
Let’s dive right in, shall we? Well, we know that US people consume a lot of sugar. We are the 5th largest consumer (and coincidentally also the 5th largest producer) of sugar in the world. We do not produce all of the sugar that we consume. Of course, we want all of our consumer products to be affordable for the “American” people, but we also want our farmers and producers to be successful. Back in 1789 (yes, you read that correctly) Congress started protecting the US sugar industry (which includes both sugar cane and sugar beets) by establishing tariffs on sugar imports. Today, through the framework of the 1990 Farm Bill, the US government regulates all aspects of sugar production in the US – through deciding the exact amount of sugar producers are allowed to grow (and which producers get to grow certain amounts of sugar), a guaranteed minimum price for their crop, and tariff controls on imported sugar that we get from other countries. You can learn more about all of this at sugarcane.org. But, note that when we talk about “free-market” or “low government intervention,” sugar is decidedly not that.
Because this blog is about connections between the US and Costa Rica (and because I don’t want to TOTALLY bore you), I’m not going to spend a lot of time looking at the domestic market for sugar, but rather give you a few facts about the international trade in sugar going on. First, it’s important to know that the US doesn’t just trade with other countries, willy-nilly, like going to an open-air market every day and buying what we need. Rather, each year the Secretary of Agriculture, (the USDA) announces an amount of sugar that will be imported to the US to ensure that the US has enough sugar to meet consumer demands. This amount of sugar is determined by negotiations at the World Trade Organization, during which the US agrees to important a minimum amount in total at a low tariff rate. This minimum amount is then allocated to the different sugar-exporting countries of the world. Here is an image to make it a little more clear:
You can see from this image that in Fiscal Year 2019, the US agreed to import 1.1 million metric tons of raw sugar from the rest of the world at the special low tariff rate (this number is of course reached after some negotiating with US sugar cane and sugar beet growers). The US Trade Representative then, acting under the authority of the President of the United States, allocates these 1.1 million metric tons to different countries. I didn’t include the whole list here, but I did include the top few in alphabetic order, which allows us to see Brazil (152,691 metric tons) and the Dominican Republic (185,335 metric tons), two of the largest exporters of sugar to the US. Other big ones are Philippines (142,160), Australia (87,402) and Guatemala (50,546).
Countries are free to export more sugar than that to the US, but it will be purchased with a higher tariff rate, making it unlikely that the US will buy it. By the way, sugar growers around the world want to sell sugar to the US, because the US pays a higher price than the global market:
The US almost always pays a higher price for sugar than the "regular" global market. https://sugarcane.org/sugar-policy-in-united-states/
One country that does not get to export a lot of sugar to the US is Costa Rica, at only 15,796 metric tons. Costa Rica is also included in the Central America Free Trade Agreement that I mentioned at the beginning of this post, which also allows for some specialty sugar and sugar products to be imported to the US at a special tariff rate.
So here’s the thing. Sixteen thousand tons from Costa Rica out of 1.1 million tons imported to the US is pretty much a miniscule amount of sugar. However, inside of Costa Rica, sugar has an impact that is much larger on the national economy and political system. According to LAICA, the Costa Rican Sugar Growers Association, sugar cane provides 58,000 jobs (in a country of only about 5 million people) and contributes $13.7 million in taxes and social contributions to the Costa Rican government.
You can see from the map below that sugar is grown all over the country in Costa Rica, but the largest and fastest growing area is in the northwestern province called Guanacaste. This is because it is flat and producers can plant and harvest the cane using combines and other machinery, rather than paying the high labor price for human workers. It just so happens that the large landowners in Guanacaste are also powerful people in the Central American and Costa Rican political class, and have been for several hundred years, way back to when the land was used for primarily for speculation or for cattle grazing. Many of those same landowners actually made a lot of money in coffee growing, and have been holding on to land for generations and only recently have started growing sugar there.
https://laica.cr/en/producers/ Guanacaste hasn't always been the most important region for growing sugar cane in Costa Rica, but it is now, as many medium- and large-scale producers move to the flatter land of the northwest, or landowners there change from cattle ranching to sugar production.
While sugar cane is not Costa Rica’s most important export crop (it’s number 3 in terms of the amount of land dedicated to growing it), Costa Rica does supply itself with much of its own sugar, and grows over 430,000 metric tons of sugar each year. This is why the fear that Brazil was dumping cheap sugar on the Costa Rican market was met with concern by sugar growers in Costa Rica (if another country can sell you sugar more cheaply that you can produce it yourself, the producers are in trouble, as we saw with the US sugar growers’ concern over CAFTA). This is happening as recently as last month. Sugar is also important throughout Central America because it has been linked to deadly kidney disease in workers who labor under the hot sun for many hours. Many people who work in sugar cane in Costa Rica are immigrants from Nicaragua, so labor and immigration issues are also closely tied to sugar.
There are many ways that sugar impacts Costa Rican and Central American society in a big way. Despite the fact that Costa Rican sugar is just a small part of the US sugar imports, you can see that sugar producers in both the United States and Costa Rica stand to gain or lose a lot depending on trade policies, internal quota systems, and price supports or ceilings that impact consumers as well as producers in both countries. Also, the amount of political influence that sugar producers (to name one interest group) have in a country like Costa Rica might be more related to their land ownership or generational political power than it is to sugar, per se.
Getting sugar from the field to the mill to the ship to your table involves a lot of people, and a lot of machines. Here is a truck carrying cane from the field to the mill in Guanacaste. And different cane arriving to a different mill in Grecia, Costa Rica, and the being cooked down and filtered as it is transformed into granular sugar.
All of this is to say that there are a lot of details that go into our different claims of what our economy looks like, and what we want it to look like, and it’s worth looking into these details to try to unpack the messages that our political leaders would like to share with us. For those leaders who espouse free market capitalism, the sugar trade is a clear example of how many commodities are actually closely regulated and controlled by governments. For leaders who would have us believe that the US is losing in our international trade agreements, I would point to sugar as an example of the complexity of this statement. Yes, the US agrees to adhere to rules set at the WTO regarding trade in this commodity, but it also does so with a lot of power over the market due to the high prices it is willing to pay for sugar imports. Every country certainly has the right to defend its own economic interests, and those interests are very complex; whose interest are the most important – the consumers’? The national companies’? The workers’ at those companies? These are all issues that we continue to debate in the US and all over the world, and they’re worth debating!
As you sprinkle sugar in your coffee or enjoy your Halloween candy this week, maybe now you’ll taste some politics as well. My recommendation would be to leave out as much sugar as you can, for health as well as political reasons, but I hope that this post has at least provided a little bit of information that you didn’t know before.