Pacific trade pact bittersweet for cane growers

By Krista Hughes and Ami Miyazaki

By Krista Hughes and Ami Miyazaki

LAHAINA, Hawaii (Reuters) - Japan and the United States have been at odds over many things during Pacific free trade talks but they are united in concern over the deal's potential impact on their domestic sugar producers.

The 12-nation Trans-Pacific Partnership (TPP) may allow more sugar imports into the United States and Japan. That has brought warnings from U.S. growers about economic devastation and some in Japan go so far as to see a threat to national security.

Hawaii's sugar industry was once the state's third-biggest employer, producing 1.2 million tons of sugar from 240,000 acres, according to American Sugar Alliance economics director Jack Roney, who attributes part of the decline to U.S. trade deals allowing imports from 41 foreign suppliers.

Hawaiian Commercial & Sugar (HC&S) is the only mill still in operation, producing 200,000 tons from 36,000 acres on the island of Maui, where trade ministers gathered this week to thrash out a deal on the TPP.

"Any additional sugar that's allowed to come into the United States with the TPP would be in direct competition with what we are producing," HC&S plantation general manager Rick Volner said.

"It doesn't take much to tip a business to the point where it's no longer profitable."

On the Japanese islands of Okinawa, 4,720 miles (7,600 km) to the west of Maui, 24,000 families depend on sugar production but that is down from 29,000 in 2004.

Japanese production has fallen from 980,000 tonnes to 730,000 tonnes in 2014, well under half its consumption. That compares to 4.6 million tonnes produced in Australia - which hopes to export more to both the United States and Japan under the TPP - and 7.8 million in the United States, OECD figures show.

Importers have to pay a levy to make up the hefty difference between international and Japanese prices, which are six to eight times higher than world prices for sugar cane and more than double for beets.

Australian sugar producers would like this levy to be cut under the TPP, allowing more exports.

Japan Sugar Refiners' Association President Shuji Hisano, in Maui for the TPP talks, said the sugar industry was strategically important because of Okinawa's proximity to China.

"If the sugar market is fully liberalized, sugar cane farmers will no longer be able to make a living, and they are likely to abandon farming and leave the island," he said.

"Is it a good idea to leave those border islands unmanned for the sake of national security?"

(Writing by Krista Hughes; Editing by Alan Raybould)