TED Case Studies
Everglades and Trade
CASE NUMBER: 106
CASE MNEMONIC: EVER
CASE NAME: Everglade Sugar Farms
A. IDENTIFICATION
1. The Issue
The rich marshlands of southern Florida known as the
Everglades are in jeopardy. The Everglades are half the size
they were in 1900 and many species that once called the
Everglades home are now extinct. Over the last several decades,
major engineering projects have drained the area for agriculture
and residential development. The sugar cane industry is one of
the largest contributors to this deterioration. As a result, the
sugar cane industry has spent many years in court fighting
lawsuits. However, in May, 1994, the Florida legislature passed
the Everglades Forever Act, which calls for a multi-million
dollar restoration plan over several decades. The case also
depends on U.S. trade quotas that limit foreign sugar imports.
2. Description
In the early 20th century the Everglades were seen as a
troublesome swamp that would be better off drained and plugged
up. After a series of hurricanes flooded the area and killed a
number people that is exactly what happened. In 1948 the Army
Corps of Engineers created the Central and Southern Florida
Project for Flood Control and Other Purposes whose "mission was
to make the coast safe for development, the interior south of
Lake Okeechobee safe for farming, and areas like the park secure
for plants and animals."
The army divided the Everglades into four major reservoirs
including the Everglades Agricultural Area and the Everglades
National Park. A system of levees and canals border these
reservoirs and control their water flow. The problem with the
system is that the South Florida Water Management District, who
controls water flow in the everglades, releases water in the
wrong area at the wrong time.
Environmentalists have challenged this project from its
inception. In 1983, they found a sympathizer in Governor Bob
Graham. When he came to office he launched the Save Our
Everglades Campaign with the purpose of restoring the Everglades
to its condition at the beginning of the century. Many
organizations have joined the fight to save the everglades. Over
the years these groups have gone to battle several times with the
major sugar companies in an attempt to save the Everglades. The
courts have had to decide what role the sugarcane industry should
play in the restoration of the Everglades. Early last year the
Florida Supreme Court rejected a proposed penny-per-pound tax on
raw sugar to fund the everglades restoration project. The state
did however reach an agreement with the sugar companies in May of
1994. The agreement requires the sugar companies to pay at least
$230 million for cleanup and to reduce the phosphorus runoff from
their farms, but allows the industry to stay in business.
The Everglades now has 440,000 acres of sugar cane and the
major sugar companies in Florida have of course resisted this
restoration effort. They challenge the part of the plan that
requires them to pay for the cleanup of the polluted saw grass
marshes. The fertilizers used in harvesting sugar cane contain
chemicals that are harmful to the Everglades eco-system. The
farming of the sugarcane also causes phosphorus and nitrogen to
be released from the soil. The nitrogen and phosphorus then flow
down stream from the agricultural areas, causing ecological
damage in the saw grass marshes.
There are many native species that call the everglades home
that have been endangered by the nutrient runoff from the sugar
farms. This includes animals like alligators, crocodiles,
panthers, turtles, and over 300 bird species of birds, notably,
the Everglades kite, short-tailed hawk, bald eagle, osprey,
peregrine falcon, wood ibis, roseate spoonbill, mangrove cuckoo,
and Cape-Sable sparrow. The Everglades are also rich in plant
life, such as the lilypad, water shield, sawgrass, bald cypress,
and palmetto. In the freshwater rivers that run through the saw
grass prairies there are many types of fish such as the large
mouth bass and bluegill. However, because of the nutrient runoff
they are loaded with mercury, and therefore unfit for human
consumption. The excess of nutrients has caused changes in
periphyton, the algal base of the Everglades marshes, and created
an eruption of cattails that are choking the live out of this
wildlife.
3. Related Cases
LESOTHO case
COCOA case
COFFEE case
Keyword Clusters
(1): Trade Product = OIL
(2): Bio-geography = TROPical
(3): Environmental Problem = DEFORestation
4. Draft Author: Kimberly L. Mott
B. LEGAL CLUSTER
5. Discourse and Status: AGREE and COMPlete
As was stated above there have been several court cases
involving the sugarcane industry's role in the destruction of the
everglades and what should be done to restore its ecosystem. The
discourse of this case is agreement. One of the major sugar
companies, FLO-SUN Inc., agreed in January of last year to pay as
much as $100 million to finance the cleanup of the phosphorus
runoff from their farms. the U.S. Sugar Corporation, the other
major producer in South Florida, declined to join the agreement.
However, as of January, 1994 the state reached an agreement with
the sugar growers requiring them to pay their part in the cleanup
effort.
6. Forum and Scope: USA and UNILAteral
7. Decision Breath: 1 (USA)
8. Legal Standing: SUBLAW
The legal standing of the case is sublaw because it involves
agreements in state law. In May, 1994, the Florida Legislature
passed the Everglades Forever Act, which calls for a multimillion
dollar restoration plan over several decades. About 40,000 acres
of man-made filtration marsh are scheduled to be constructed to
reduce the level of phosphorus in water flowing into conservation
areas and eventually into the Everglades National Park. In the
future some of the acreage for the filtration marshes could be
taken from land currently in sugar cane production.
C. GEOGRAPHIC Clusters
9. Geographic Locations
a. Geographic Domain: North America [NAMER]
b. Geographic Site: Eastern North America [ENAMER]
c. Geographic Impact: USA
10. Sub-National Factors: YES
There are sub-national factors associated with this case
because it involves the State of Florida.
11. Type of Habitat: TEMPerate
D. TRADE Clusters
12. Type of Measure: SUBSIDY
In 1981, the U.S. Congress passed the Farm Bill establishing
a full system of sugar price supports. Under the bill, the
government loans money to the sugar mills, accepting sugar in the
case of default. It also set an artificial selling price for
sugar called the "market stabilization price." In 1982, Congress
established quotas and tariff levels on sugar to keep domestic
prices high in order to guarantee the industry against losses.
When prices dropped below the artificial MSP in 1985 the mills
forfeited the sugar in order to keep the loan money. To avoid
any more expensive forfeitures the government now severely
restricts imports to keep sugar prices artificially high.
The current import quota system allows entry at the rate of
0.625 cents per pound, except sugar from the Caribbean Basin
Initiative countries and the Generalized System of Preferences
countries, that enter duty free. Any non-quota sugar entering
the U.S. for consumption is subject to a duty of 16 cents per
pound. However, with the passage of the new GATT agreement it
will be raised to 17 cents per pound in 1995 and then pushed dow
to 14.45 cents per pound over 6 years. Because of the sugar
program Americans are force to pay higher prices on virtually
every product that contains sugar.
13. Direct vs. Indirect Impacts: INDirect
The impact on trade is indirect because the laws being
implemented as a result of the case are environmental which have
an indirect effect on trade.
14. Relation of Measure to Environmental Impact
a. Directly Related : NO
b. Indirectly Related : YES SUGAR
c. Not Related : NO
d. Process Related : YES HABITat Loss
In this case there are no trade laws that have been created
because of the environmental problems in the case. The laws that
were created are simply for restitution of damages caused by the
sugar industry to the ecosystem of the Everglades.
15. Trade Product Identification: SUGAR (Raw)
16. Economic Data
Based on information reported in the 1990 Book of Vital
World Statistics and The 1994 Statistical Abstract of The United
States the sugar industry's total output was 6,415 in 1988 and
there were a total of 1,655 people employed in the food industry
in 1993. Industry output in 1934 was 110.24 million metric tons
and employment totaled 18,000 workers in 1993.
17. Impact of Measure on Trade Competitiveness: MEDium
Because this case forces the sugar industry to pay for the
environmental problems it has created in the Everglades, the cost
for that restitution is then passed on to the consumer. As was
mentioned above, because of the sugar program Americans are
forced to pay not just an extra 60 cents on every five-pound bag
of sugar but higher prices on almost every product that contains
sugar.
18. Industry Sector: FOOD
19. Exporters and Importers: USA and MANY
The following information is based on data from the 1992 FAO
Yearbook and The 1994 USDA Sugar and Sweetener Situation and
Outlook Report. For fiscal 1995, the regional distribution of
sugar deliveries is expected to be the strongest in the North-
Central States because of the high concentration of industrial
users such as the confectionery, bakery, and cereal industries in
these states. Sugar deliveries to the North-Central States
totaled 2.98 million tons in fiscal 1994 and deliveries to the
South totalled 2.55 million tons.
The United States exported 242.9 thousand metric tons of
sugar in 1993/94. U.S. refiners export domestic sugar under the
reexport program and deferring the import of raw sugar to 1996,
due to spreads between nearby and distant futures prices. This
is reducing the availability of sugar for the domestic market. In
comparison Cuba exported 3.20 million metric tons in 1993/94.
Cuba remains heavily dependent on sugar exports to generate
income to buy food, oil, consumer goods, and production inputs on
the world market. While higher world prices can be expected to
generate improved per unit export revenue, lower export volume is
likely to dampen Cuba's sugar export earnings potential in fiscal
1995. The Russian Federation imported 3.15 million metric tons
in this period. The principle source of imported raw sugar
continues to be Cuba, which supplied Russia with 1 million tons
of raw sugar in exchange for 2.5 million tons of oil.
E. ENVIRONMENTAL Clusters
20. Environmental Problem Type: HABITat Loss
The sugar industry applies to both general habitat loss and
bio-diversity loss because the phosphorus run off from the
agricultural area destroys the general habitat of the Everglades
in turn causing bio-diversity loss.
21. Name, Type, and Diversity of Species
Land species, such as alligators, and air species, such as
birds, lose their feeding grounds because of phosphorus
destruction and die off. Sea species loss includes stone crabs,
dolphins, sharks, and barracuda because the phosphorus runoff
eventually reaches Florida Bay, polluting it. Sink problems
include accumulations phosphorus and nitrogen.
Name: Sugar
Type: Plant
Diversity: 19,473 higher plants per 10,000 km/sw (USA)
22. Impact and Effect: High and REGULatory
23. Urgency and Lifetime: LOW and 100s of Years
Many of these species could be gone by the year 2000 if
something is not done the change the current situation.
24. Substitutes: SYNTHetic
This case can apply to both the development of synthetic
alternatives such as nutrasweet and switching to like products
such as honey. However, replacing sugar with substitutes would
hurt the industry and causes severe job loss.
F. OTHER Factors
25. Culture: No
26. Trans-Boundary Issues: No
27. Rights; YES
The sugar companies in Florida such as U.S. Sugar Corp. and
FLO-SUN Inc. hires considerable amounts of labor and some times
abuses them.1 U.S. Sugar was indicted for slavery in 1942 for
its treatment of African-American workers, so the company began
hiring Jamaican workers the following season. The companies
turned to the West Indies because there is an inexhaustible
source of labor. The sugar industry as a whole has been
employing Jamaican and other Caribbean cutters since 1944. The
growers prefer Caribbean workers because they are able to export
them if labor disputes arise. Men from the West Indies are
employed on a temporary basis for a few months during the
harvest. The workers live in camps near the sugar fields in run
down barracks with no privacy. The stalls in the bathrooms do
not even have doors. Employers frequently cheat the workers on
their wages and force them to work in conditions near those of
slavery.
28. Relevant Literature
Billington, Thomas H. "The Unsweetened Truth About Sugar
Subsidies." Reader's Digest August, 1987: 51-54.
Binger, Al. "Unintended Consequences." EPA Journal
July/August,
1990: 44-45.
Carney, James. "Last Gasp for the Everglades." Time
September 26, 1989: 26-27.
Cushman, John H. Jr. "Negotiations to Restore Everglades
Collapse." The New York Times December 17, 1993,
A:32.
Cushman, John H. Jr. "Everglades Clash Threatens Accords."
The New York Times December 19, 1993, 1:31.
Cushman, John H. Jr. "Growers Pushed to Help Everglades."
The New York Times January 16, 1994, 1:18.
Derr, Mark. "Redeeming the Everglades." Audubon
September/October, 1993: 48+.
Douglas, Sue. "Save The Everglades." Oceans, March,
1985: 3-9.
Jackson, Jerry. "Mexico Imports Pose Challenge; Trade Pact
Threatens To Drive Many Farmers Out Of Business Florida
Forecast." The Orlando Sentinel January 9, 1995
(Lexis/Nexis).
Levison, Marc and Peter Katel. "Not So Sweet in Sugar Land."
Newsweek October 14, 1991: 49.
Kriz, Margaret. "Mending the Marsh." National Journal March
12, 1994: 588-593.
Noah, Timothy. "Flo-Sun Negotiates Cleanup of Runoff From
Everglades." Wall Street Journal January 14, 1994, A:
12.
References
1. Timothy Noah, "Flo-Sun Negotiates Cleanup of Runoff From
Everglades," Wall Street Journal, January 14, 1994, A:12.
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