Posted: Thursday, June 02, 2011 11:00 AM
Venture to market sugar as free trade deals open up U.S.
By DAVE WILKINS
Amalgamated Sugar Co. LLC is expected to finalize an agreement soon with a France-based company to jointly market sugar produced in the U.S., Mexico and Central America.
"We are in the final stages of creating a national marketing company," said Vic Jaro, president and CEO of Amalgamated, a grower-owned sugar beet processor based in Boise.
The deal will involve Amalgamated and Sucden Americas Corp., a big player in the North American Free Trade Agreement sugar market.
The new venture will be called National Sugar Marketing LLC.
"When it's created we will have the exclusive rights to sell all refined sugar that's marketed by Amalgamated and Sucden in the United States," Jaro said.
Sugar sold by the new marketing firm will be sourced from the United States, Mexico and the six countries that are part of the Central America Free Trade Agreement: Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic.
Free trade agreements have opened the U.S. to additional sugar imports in recent years.
Mexico gained unlimited access to the U.S. sugar market with full implementation of NAFTA in 2008.
CAFTA, implemented in 2009, allowed for an additional 119,000 metric tons of imported sugar beyond the 311,000 metric tons already allowed under WTO rules.
The new joint marketing company will put Amalgamated in a position to sell some of that imported sugar.
"I think it's a very good move for us. It does broaden our horizons a bit," Jaro said. "I think it will be very beneficial to both companies."
The deal isn't expected to have any immediate impact on the company's physical operations, he said.
Amalgamated will continue to grow and process sugar the same way it has and will continue to maintain a sales support staff in Boise, Jaro said.
Amalgamated is still concerned about the negative effect that future FTAs could have on the domestic sugar market, Jaro said. But the company must live with the agreements that are already in place.
"We have to find a way to position ourselves to deal with that," he said.
Bill Smith, vice president of marketing at Amalgamated, will become president and CEO of the new marketing firm.
Amalgamated sells 18 million to 19 million hundredweight of refined sugar every year, nearly all of it in the U.S.
The company is owned by the Snake River Sugar Co., a cooperative with about 1,100 grower-members in Idaho, Oregon and Washington.