Food, candy makers seek relaxed sugar import restrictions

By DAVE WILKINS
Capital Press

A group that includes sugar producers and major users wants the USDA to announce import quotas for fiscal 2011 as soon as possible.

An early tariff rate quota announcement could clear the way for timely imports and ensure against potential supply disruptions later in the year, industry officials said.

Late summer is usually the earliest that the USDA announces tariff rate quotas for the new fiscal year that begins Oct. 1. Overseas suppliers then prepare shipments and transport raw sugar to the U.S., a process that can take weeks.

An early announcement would speed the process so that raw sugar could begin arriving as soon as Oct. 1, according to the Sweeteners and Sweetener Products Agricultural Technical Advisory Committee.

The 2008 Farm Bill requires that the annual tariff rate quota for raw sugar initially be set at the WTO minimum level of 1.1 million metric tons, raw value.

"Since the total TRQs are known and the country allocations are by formula, we could see no disadvantages in an early announcement of the 2010-11 quotas," the technical committee told USDA Undersecretary James Miller in a recent letter.

U.S. food and candy makers have become increasingly concerned about tight sugar supplies and have urged the USDA to relax import restrictions.

In April the agency hiked import quotas by 200,000 tons for the fiscal year ending Sept. 30.

An early TRQ announcement for fiscal 2011 "can head off possible problems before they occur," American Sugar Alliance Chairman James Johnson said in a press release.

Johnson said he expects the supply situation to strengthen as domestic sugar cane and sugar beet harvests get under way in the fall.

The market has already begun to price in larger supplies. Futures contracts for raw sugar delivered in November are 28 cents per pound, down from a recent trading level of 32.5 cents.

Sugar farmers around the world are gearing up for increased production this year after two down years.

Global sugar production is expected to increase nearly 8 percent during the coming marketing year -- Oct. 2010 to Sept. 2011 -- compared with the current year, the USDA has projected.

India, the world's largest sugar consumer, is expected to boost production by 27 percent during 2010-11, compared with last year.

Brazil, the world's largest sugar producer, is expected to increase production by 12 percent.

Idaho farmers planted an estimated 169,000 acres of sugar beets this year, an increase of 3 percent from 2009. Nationally, beet acreage is expected to be down 1 percent to 1.17 million acres.

The recent drop in sugar prices is "a recognition of world sugar production coming in a bit larger than what folks anticipated," ASA economist Jack Roney said in an interview.

Prior to the recent market correction, speculators had driven up sugar prices to lofty levels. Now the market appears to be trading more on fundamentals, he said.