Producers' numbers project surplus at end of marketing year
By DAVE WILKINS
Major sugar users are stepping up pressure on the USDA to allow a hefty increase in imports.
The total supply of sugar available to U.S. food and beverage manufacturers is "totally inadequate," the Sweetener Users Association said Oct. 28 in a report sent to USDA Undersecretary Jim Miller.
The association said the report prepared by Promar International shows the need for an additional 850,000 to 1 million tons (raw value) of imports from countries other than Mexico during the marketing year that began Oct. 1.
Sugar users want the USDA to increase tariff rate quotas, the amount of sugar that counties can export to the U.S. without triggering tariffs. Mexico already has unlimited duty-free access to the U.S. market.
"USDA should responsibly manage the sugar program by announcing a significant increase in raw and refined sugar import quotas in the coming weeks," authors of the report said. "Pending litigation against genetically modified sugar beets provides another reason for USDA to act soon."
But there's no reason for USDA to make any import quota adjustments right away, said Jack Roney, director of economics for the American Sugar Alliance, which represents U.S. beet and cane sugar farmers.
"There are no sugar shortages in this country right now at all," Roney said.
Sugar producers are keeping an eye on the situation and it's possible they could support an increase in imports if it becomes warranted. It's not in the interest of sugar farmers for customers to run short, Roney said.
"The last thing we want is a shortage of sugar in this market," he said.
The 2009-10 sugar marketing year began Oct. 1 with a supply-demand forecast tighter than normal.
The USDA has projected a stocks-to-use ratio at the end of the marketing year of just 7.9 percent. The long-term average is closer to 14 to 15 percent.
Food, beverage and candy makers point to the projected stocks-to-use ratio as an argument for increased imports. Market prices reflect a tight supply situation, with wholesale refined prices at 42 cents per pound, the highest monthly average since 1980, major users said.
Sugar farmers point out that the stocks-to-use ratio, while low by historical standards, still indicates a surplus at the end of the marketing year.
Sugar producers also point out that the 2008 Farm Bill directs the USDA to set tariff rate quotas at the minimum amounts allowed under U.S. trade deals at the beginning of each crop year. The agency can then adjust import levels as the supply picture becomes clearer during the marketing year.
That's what the USDA did in September ahead of the new marketing year.
In the announcement, USDA officials said they believe the domestic sugar market will require additional supplies of sugar during fiscal 2010.
"During the year, appropriate adjustments will be made to sugar program parameters to ensure an adequate supply of sugar for the domestic market," the agency said.