Video: U.S. Sugar to pull out of Everglades

updated 6/24/2008 8:08:01 PM ET 2008-06-25T00:08:01

In one of the biggest conservation deals in U.S. history, the nation's largest producer of cane sugar reached a tentative agreement Tuesday to get out of the business and sell its nearly 300 square miles in the Everglades to the state of Florida for $1.75 billion.

The deal with U.S. Sugar Corp. results from a convergence of interests: The state is trying to restore the Everglades and clean up pollution caused by Big Sugar and other growers, while the American sugar industry is being squeezed by low-price imports.

Republican Gov. Charlie Crist declared the agreement "as monumental as the creation of our nation's first national park, Yellowstone."

Under the deal, the state would buy U.S. Sugar's holdings in the Everglades south of Lake Okeechobee, including its cane fields, mill and railroad line. U.S. Sugar would be allowed to farm the 187,000 acres for six more years, after which it would go out of business.

Wetlands restoration enhanced
The state would then protect the land from development, which has been encroaching on the Everglades for decades.

State officials would also build a network of reservoirs and marshes to filter water flowing into the Everglades and help restore the River of Grass to a cleaner, more natural state. For generations, farming and development have blocked the natural flow of water and allowed fertilizers and other pollutants to spill into the wetlands.

Negotiations are still going on, and officials hope to sign a final agreement by September.

David Guest, a lawyer with the environmental group Earthjustice and a longtime foe of U.S. Sugar, gloated over the announcement. "In the old days, you didn't just beat your opponent, you also ate them," he said. "Today, we're eating U.S. Sugar."

The deal would not end sugar production in the Everglades. Some 300,000 acres of land, or close to 500 square miles, used by other companies would remain in production.

"But it makes it a lot more manageable," said Ken Ammon, deputy executive director of the South Florida Water Management District, the state agency overseeing restoration efforts. "It totally changes the face of Everglades restoration ... No one ever thought that a whole corporation like U.S. Sugar would up and potentially leave the Everglades."

Ammon said that considering the land and the other equipment on the property, the sale price "looks like a tremendous deal" for the state.

U.S. Sugar chief executive Robert Buker called the deal "monumental" but said he was saddened to see the demise of his company. Its 1,700 employees, including those who work in the mill and operate the cane-cutting machinery, will lose their jobs, though the state is offering them retraining.

"We built a company that right now is the pillar of the agriculture community in Florida," Buker said. "Because of that, I stand here today with mixed feelings. ... On the other hand, I'm excited about what we're doing here today."

The entire American sugar industry has struggled with stiff competition from imported sugar.

At least 33 mills have closed nationwide in the past decade as producers try to remain competitive in a market flush with sugar from the likes of Brazil and Thailand, which have lower labor costs than U.S. producers, and, unlike the United States, subsidize their sugar growers, said Phillip Hayes of the American Sugar Alliance.

"Sugar producers are receiving less for their product now then they did when Jimmy Carter sat in the Oval Office," he said.

Last year, U.S. Sugar — which grows and refines sugar and sells it wholesale or packages it under private labels for about 60 customers, including Publix and Albertsons supermarkets — shut down its other mill, blaming foreign competition.

In recent years, U.S. Sugar has also had to bear the higher costs of cleaning up its water before it enters the Everglades.

The company's vice president, Robert Coker, said U.S. Sugar began talks with the governor last year "to make sure our business for the long-term was sustainable."

"Out of those discussions with the governor, he put on the table that maybe we should just buy U.S. Sugar out," Coker said. "After we caught our breath and picked ourselves up off the floor ... we all decided that this was a good deal for the people of Florida, for the Everglades and the environment, and a good deal for our employees and our shareholders."

The Everglades restoration effort is the largest of its kind in the world. It is aimed at undoing or rerouting decades of flood-control projects that were built to make way for houses and farms.

A key component was approved by Congress in 2000. The project was originally estimated to cost $7.8 billion and take 30 years. The price tag has since ballooned by billions because of rising construction and real estate costs, and it is unknown how long it will take. The state and federal governments are supposed to share the costs 50-50.

Copyright 2008 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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