Global Policy Forum

By Larry Rohter

Scores of angry bees are swarming around his head, but Juan José Baudino doesn't seem to mind. It is harvest time here on the pampas, and as he moves from hive to hive, removing trays to check the production and health of his bee colonies, sticky, golden honey oozes from the combs.

A few miles down the road, a gleaming new processing plant, financed by contributions from hundreds of local beekeepers, is also buzzing with activity. There, gallon after gallon of honey is separated from wax, either to be bottled and trucked to supermarkets in Buenos Aires or poured into 55-gallon metal drums and shipped to Germany, France and Spain.

Abroad, Argentina's image is of a country unable to compete globally and intent on protecting its inefficient local producers. The Bush administration has been especially critical, citing Argentina's supposed unwillingness to compete as a main cause of its economic crisis.

"They don't have any export industry to speak of at all," Treasury Secretary Paul H. O'Neill said dismissively in an interview with the magazine The Economist last summer. "And they like it that way."

But here on the humid pampas, where fields of alfalfa and clover stretch to the horizon, the emergence of a flourishing honey industry belies that notion. In little more than a decade, Argentina has become the world's leading exporter of honey, selling nearly 90,000 tons a year to foreign markets, with almost half of it going to the United States.

The United States, however, has not greeted this with praise or support. Instead, responding to complaints of dumping by American honey producers (complaints that honey importers in the United States call unfounded), it placed tariffs of up to 66 percent on Argentine honey, effectively shutting it out of the market.

The decision, which went into effect in November, has dealt a serious blow to an industry that earned $86.6 million in much-needed foreign exchange in 2000 and provides a livelihood to thousands of farmers. Though the Argentine government has done little to mount a defense or appeal, officials argue that Argentine beekeepers are being unfairly punished for being more efficient.

"What's really going on is that they don't want to buy from us," José Ignacio de Mendiguren, the new minister of production, said in an interview in Buenos Aires. "Argentina is a large and very competitive exporter in the agricultural sector, but we're matched against agricultural economies in the United States and Europe that not only close their borders to us, but subsidize the same products that we make.

"If they really wanted to help Argentina, what they would do is not so much lend us money, but let us sell what we produce," Mr. de Mendiguren said of the Bush administration.

"This always happens. It happened with lemons too. Whatever Argentina is capable of exporting, we know that the United States will administer its own trade in such a way as to be able to protect its own producers at our expense."

Argentina's position is largely shared by honey importers in the United States. Nicholas Sargeantson, president of Sunland International, an importer in New Canaan, Conn., said Argentine honey was "of a very high quality," adding that some packers prefer it to domestic honey because it is cleaner.

The Commerce Department ruling against Argentina illustrates "the immense hypocrisy of U.S. trade law," he added.

"On the one hand, the U.S. advocates to the world to tear down trade barriers," he said, "but on the other it has these wonderfully convenient dumping laws which enable domestic producers to bring a case against foreign suppliers any time they see competition they don't like."

The main honey producer in this dairy region of north-central Argentina is a nonprofit federation of cooperatives known as FCJAC SanCor. Founded in 1985, largely with a $500,000 loan from the United States- supported Inter-American Development Bank, it set a goal of providing opportunities for poor farmworkers.

"Nobody knew much about beekeeping when we started, but it seemed to be the perfect complement to cattle raising," the traditional economic backbone of the region, said Oscar Paira, the cooperative's manager. "Beekeeping didn't require space or food, so it seemed to be a way to get a big result from a small investment."

Mr. Baudino, a 40-year-old father of two, was an early and enthusiastic supporter, seeing it as his only way to progress. The son of a windmill repairman, he began with 20 hives and a $2,000 loan and today owns nearly 1,000 hives.

"When I started, I had just gotten married and had nothing at all," said Mr. Baudino, who estimates his family income at $12,500 a year. "I'm not rich by any means, but to go from nothing to where I am now in just 16 years is quite a feat in Argentina, and I owe it all to honey."

The American dumping complaint baffles beekeepers here, who tend to be small producers of limited means and education and no experience with accountants and lawyers. The United States began its investigation by giving producers and exporters 30 days to answer a nearly 150-page questionnaire in English, but because they could not understand English, failed to realize what was at stake or had incomplete records, the beekeepers did not respond.

In the absence of what it considered a satisfactory response from beekeepers, American auditors were authorized to turn to "the best available evidence." That turned out to be a magazine article that producers and exporters here say was riddled with errors and false assumptions.

"It's absurd to think that we somehow determine international prices for honey," Mr. Paira said. "It's the market, in particular the United States, that does that. And as small producers, we couldn't possibly remain in business if we were selling below the cost of production."

Another key element was tax rebates that American honey producers called an unfair subsidy. But producers here say the government is so bankrupt it has been years since they received state support.

"It's not just that these subsidies don't exist, but that we have to pay all kinds of taxes that weren't taken into consideration in the evaluation of the complaint," said Fernando Esteban, a producer with 200 hives who is also editor of the country's leading beekeeping magazine.

In a telephone interview from Bruce, S.D., Richard L. Adee, president of the American Honey Producers Association, dismissed the Argentine accusations. "They were unable to prove that they weren't dumping," he said, and thus deserve to be penalized to the extent permitted under American law. "Everybody has an equal opportunity to defend themselves, and if they don't want to do that, they have to accept the consequences."

For producers here, incomes have dropped from $1,150 a ton to $950. "We had the same amount of honey to sell, the middlemen knew we had to sell it, and with one less market to sell it to, they were able to take advantage of the situation and drive down the price," Mr. Paira said.

At the same time, wholesale prices are rising rapidly in the United States, importers say. In just a few months, the cost of a pound of white honey has gone from 50 cents a pound to 80 cents, reflecting the inability of honey users to fill the gap left by the disappearance of Argentine honey.

"We really don't have a clue how we're going to meet the requirements of the U.S. packing industry over the next 12 months," Mr. Sargeantson, the president of Sunland International, said. "What we have now is a situation that I've never seen before in 27 years in this business, one that in the long run is going to benefit nobody."

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