Share “USDA takes unusual steps to shield sugar...”

USDA takes unusual steps to shield sugar producers from glut

Agency retires import credits, takes 330,000 tons of surplus sugar off market.
By Trevor Graff Published: July 26, 2013
Advertisement

U.S. sugar cane and sugar beet farmers are bracing for a flood — but not one caused by the weather. Rather, it's a flood of imported sugar from Mexico. Record production and imports are poised to sweeten the U.S. market a bit too much.

“This is a lot of sugar for our country to cope with,” said Jack Roney, the director of economics and policy analysis at the American Sugar Alliance, an industry group of U.S. sugar producers. “Prices are dropping to levels not seen since the 1980s.”

To deal with the glut, the U.S. Department of Agriculture has taken the unusual step of retiring sugar-import credits and purchasing more than 100,000 tons of sugar, which allowed it to take 330,000 tons of surplus sugar off the market.

The plan, which cost $43.8 million, wove through a maze of sugar policy, transferring purchased sugar from the Agriculture Department to refiners in an attempt to lower imports. In return, refiners surrendered import credits that had been awarded to allow them to bring in sugar from overseas.

The Agriculture Department expects the plan to save it an estimated $66.9 million by avoiding loan forfeiture costs from its sugar loan program. But many surrounding the industry say the move doesn't make up for what they charge is outdated policy.

Brian Mabry, acting coordinator of the department's communications office, said officials had to take action among “atypical market conditions this crop year, including record yields and increased imports.”

Mexico's recent sugar surplus is causing problems for the U.S. market because that country has unlimited access to the U.S. market, because of provisions that are part of the North American Free Trade Agreement. A June Agriculture Department report predicts that Mexico will export its record sugar surplus to the U.S., shipping more than 1.9 million tons into an already-saturated market this year.

Continue reading this story on the...