July 23, 2008 / 12:11 AM / 9 years ago

Florida deal may sound death knell for Big Sugar

<p>Bags of Florida Crystals cane sugar roll down a conveyer belt after filling at the Florida Crystals Corp. sugar mill, refinery and power plant in Okeelanta, Florida July 9, 2008. REUTERS/Joe Skipper</p>

OKEELANTA, Florida (Reuters) - A $1.75 billion land purchase deal Gov. Charlie Crist announced last month to save the Florida Everglades could also mark the beginning of the end for the state’s powerful sugar barons.

Florida would buy U.S. Sugar Corp, one of the largest privately held U.S. agricultural firms, and use a chunk of its 187,000 acres in the northern Everglades to restore the endangered wildlife habitat, Crist said.

“This is a dream come true for every Everglades advocate in the state,” said David Guest, a lawyer with the environmental group Earthjustice who has fought for years to sugar growers from sending fertilizer-tainted water into the Everglades.

The deal, which still has to be negotiated, hinges on the cooperation of another major sugar producer. If it goes through, the plan could close the book on the often unsavory history of sugar in Florida.

Experts say growing cane sugar in Florida would never have been possible if the state government hadn’t drained the Everglades in the first place. And the cane would have disappeared long ago if the federal government hadn’t used the Army Corps of Engineers to micromanage the landscape, keeping conditions just right for growers at taxpayers’ expense.

Never really operating in a free market, its growers have long been protected, like other U.S. farmers, from global competition. And they have profited at the expense of just about everyone -- from domestic consumers to farmers in developing countries and the once-precious Everglades environment itself.

The U.S. Sugar deal would put the company out of business after a six-year wind-down period. It would also give the state control over nearly half the 400,000 acres of (161,880 hectares) of sugar cane that grows in the swampy, coal-black soil of the Everglades Agricultural Area just south of Lake Okeechobee.

About 16,000 acres of the U.S. Sugar land would be converted into water storage reservoirs, treatment marches and a flow-way reconnecting the lake to the Everglades and Florida Bay.

But the state will also have to negotiate with the Fanjuls, the owners of Flo-Sun whose name is synonymous with Big Sugar. The deal envisions using as many as 35,000 acres (14,164 hectares) of their 180,000 acres of sugar cane for the same Everglades restoration effort.

The Fanjuls, who would be the last major sugar growers in Florida if U.S. Sugar is bought out, declined to be interviewed.

The deal puts Alfonso Fanjul, the reclusive chief executive of the family-controlled Flo-Sun, back in the public eye for the first time since his company’s takeover of the North American sugar business of Britain’s Tate & Lyle Plc, including its Domino sugar brand in 2001.

INFLATED PRICE

A cursory tour of the company’s Florida Crystals Corp. operations in the steamy marshland near the southern edge of Lake Okeechobee gives visitors a clear view of at least some of what the Cuban-born Fanjuls have at stake.

Sugar-cane fields stretch to the horizon around the Florida Crystals mill and refinery. And their packing and distribution center shows how they control not just a vigorous manufacturing process, but much of the branded sugar sold in supermarkets including major retailers like Wal-Mart Stores Inc.

The politically savvy Fanjuls, Alfonso and his brother Jose, are legend in Washington for their defense of a U.S. program that sugar and confectionary users want dismantled.

The sugar program, an extension of policies in place since the close of the U.S.-British War of 1812, basically shields U.S. sugar cane and sugar beet growers from real-world prices and competition through a system of import quotas and loans that dates back to 1981. It pays no direct subsidies as with other crops, but guarantees growers like the Fanjuls an inflated price by restricting supply.

Little of that has changed under recent legislation governing U.S. agriculture for the next five years.

But U.S. sugar growers have been trying to come to grips with more liberalized trade after the end of remaining trade restrictions with Mexico earlier this year. And U.S. sugar imports could increase more if negotiators finally close a deal in the World Trade Organization’s Doha round this summer.

Florida Crystals spokesman Gaston Cantens said the company sees the demise of U.S. Sugar as a potential opportunity to increase its U.S. market share, which could roughly double if it wound up taking over the U.S. Sugar Corp mill. But he declined to rule out a possible buyout of Florida Crystals as well, if the state government fails to sweeten the pot to lure the Fanjuls into its Everglade restoration effort.

If they close up shop, allowing Big Sugar to be booted out of the Everglades altogether, the Fanjuls would still have their sugar business in Europe and the Dominican Republic to tend to. From a sun-drenched corner of the Dominican Republic’s southeast coast, they also run Casa de Campo, one of the Caribbean’s most luxurious resorts.

One veteran Florida sugar analyst, who asked not to be identified, said the state could probably have the Fanjuls’ land too -- for the same $1.7 billion.

“We’d have to cross that bridge if we got there,” said Michael Sole, head of Florida Department of Environmental Protection.

Additional reporting by Missy Ryan in Washington; Editing by Michael Christie and Doina Chiacu

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