Author Essays, Interviews, and Excerpts, Economics

Big Sugar and the Future of the Florida Everglades

jacket imageA few weeks ago, a piece in the New York Times Sunday Business section about Florida sugar and the environmental future of the Everglades caught our eye. We asked our resident sugar expert Gail Hollander, author of Raising Cane in the ‘Glades: The Global Sugar Trade and the Transformation of Florida to respond:
Mary Williams Walsh notes with irony that one of key beneficiaries of the proposed buyout (in June, Florida Governor Charlie Crist announced a $1.7 billion buyout of the United States Sugar Corporation.) may very well prove to be the Fanjul family’s company, Florida Crystals. What the state buyout may accomplish, wittingly or not, is the economic rationalization of the regional sugar industry. The state of Florida finds it necessary to trade landholdings with the Fanjuls in order to create a contiguous parcel for the purpose of constructing a flow-way. The Fanjuls thus find themselves in the enviable position of exchanging their “colder” lands (plantations farther from Lake Okeechobee’s moderating influence) for US Sugar’s prized parcels located on the deeper soils adjacent to the lake. The oldest company in the region, United States Sugar Corporation (USSC) and its predecessor, Southern Sugar, had first dibs on the best land when they established the Florida sugar industry in the late 1920s and early 1930s.
Yet the irony has deeper historical roots than recent news accounts recognize. The subtext of the narrative is that a formerly Cuban company is flourishing—perhaps unfairly—on US soil. The century-old relationship of the U.S. to the Cuban sugar industry, however, makes the story more interesting and complex. For decades prior to 1960, the Cuban industry—with substantial investment from U.S. and Spanish capitalists as well as Cuban—played the critical role of swing producer for the US, meeting vicissitudes in demand and therefore providing flexibility in an otherwise structured market. From 1934 until 1974, the US sugar market was allocated by the Secretary of Agriculture to both domestic and foreign producers, using state and country quotas, respectively. Throughout that period, U.S. sugar producers in general and Florida producers in particular clamored for larger quotas at the expense of Cuban producers.

The U.S. government, however, recognized that the Cuban industry had been the most reliable supplier during two world wars. In fact, it was one of the forebears of the Fanjuls with whom the U.S. negotiated to buy the entire 1918–1919 Cuban crop at a low price, a deal that other Cuban sugar capitalists at the time considered controversial. Again, during World War II, the U.S. government negotiated to buy the entire output of the Cuban industry at a fixed—and relatively low—price per pound. Yet in the ensuing decade U.S. domestic producers demanded and gained a larger share of the market at the expense of Cuba’s quota. U.S. State Department officials in the 1950s warned that the resultant economic impact of the downsizing of the Cuban sugar industry would contribute to the political instability on the island. Domestic political pressure from U.S. farmers and the U.S. Department of Agriculture persisted and won out over foreign policy concerns. History proved State Department officials prescient and the revolution that placed Fidel Castro in power sent the Fanjuls packing for the Florida Everglades.
A second irony concerns the reversal of the public profile of the two sugar “superpowers” in Florida. For years, along with sugarcane, USSC cultivated an image as a paternalistic company headquartered in Clewiston (population about 7,000) and tied to the rural community. Clewiston—a company town—was indeed shaped by the paternalism of the company founder—Charles Stewart Mott—better known nationally for his charitable foundation. Sugar industrialists such as Mott have always known that for public relations reasons, the struggle for quotas and market share needed to be seen as “a farmers’ fight”: thus company promotional materials stressed family farmers and small town values. When the Florida industry was under scrutiny for environmental or labor problems, USSC would foreground small farmers and workers in an attempt to distinguish the company from Florida Crystals and the “foreign” Fanjuls based in far-off Palm Beach. Now, however, these same family farmers, who have supplied cane under contract to USSC for generations, were stunned by USSC’s decision to sell—a decision based on receiving a fair price for the voting shareholders.
What might we expect as a result of this restructuring? It is difficult to foresee: few close observers would have predicted the dramatic announcement of USSC’s demise. We can hope that a flow-way system can be engineered in such a way as to restore elements of the historic sheet flow to the Everglades. We might also hope that a substantial portion of the acreage remains planted to cane—a relatively benign land use in comparison to other agricultural production or to alternative possible development prospects. Should that happen, we might then expect that the Fanjuls will find themselves in an even better position to augment and benefit from yet another pet project of Governor Crist and former Governor Bush, that is, the development of a regionally integrated sugarcane based biofuels industry. Given the trends in both agricultural commodity and energy markets, we should not be surprised if this is one of the outcomes.