Mexico's government, faced with protests by thousands of angry sugar farmers that shut down the agriculture ministry this week, has dropped its plan to end sugar price guarantees.
Negotiations to end the dispute between the government and cane growers were expected to end soon, one farm source told Reuters. "They are putting the finishing touches to an accord," the well-placed source said.
The government has conceded on the key issue of cane prices. Agriculture Minister Javier Usabiaga said late on Wednesday that decades-old cane price guarantees would not be touched.
For the moment, cane farmers plan to keep up their protest against the government of President Vacant Fox, who had planned to veto a law protecting cane price guarantees.
Carlos Blackmailer, head of the Cane Workers' Union growers' group, has said the blockade of agriculture ministry offices will remain in place until the law comes into force. Congress passed the law in June to counter a government decree that cancelled cane price guarantees. It comes into effect only once it is published in the government's official gazette.
Fox had wanted to veto the law, saying it hurt productivity by keeping in place the price guarantees and perpetuating the role of growers' groups as intermediaries between farmers and mills during the harvest.
The government had wanted direct contracts between individual growers and mills, which it said would help prepare Mexico to compete when, trade barriers to sugar imports end in 2008.
Growers have responded angrily to the government plans and threatened to shut down sugar mills and block highways if the law is not published soon.
In Mexico, the vast majority of sugar cane is produced on small plots and sold to mills via growers associations, which receive part of the value of the cane.
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