USDA reports strong sugar supply despite quotas

By Caroline Scott-Thomas

- Last updated on GMT

Related tags High-fructose corn syrup

Sugar imports and increased domestic production more than offset the growing shortfall under the raw sugar tariff rate quota (TRQ), according to the USDA’s latest sugar and sweeteners outlook report.

US sugar policy was set with the 1981 Farm Bill and works on the principle that supply should not exceed demand. In order to achieve this, the government can restrict the amount of sugar that American sugar farmers can sell, restrict the amount that the US will buy to the level required by trade obligations, and divert excess sugar to ethanol production. The idea is that sugar prices should remain stable, but this has not been the case – a situation that has led to frustration among sweetener users who claim that costs are unacceptably high.

However, the American Sugar Alliance, a trade organization that represents sugar cane and beet farmers, has accused industry of trying to “flood the sugar market with subsidized imports so they can increase corporate profits.”​ Although market prices hit a 29-year high on February 1, when they reached 30.4 cents a pound, they have since dropped significantly.

Industrial users recommend a 15.5 percent stock-to-use ratio, but last year the ratio slipped below 12 percent. For fiscal 2010, the ending stocks-to-use ratio is 13.7 percent, the USDA said, as a shortfall of 30,000 short tons (raw value) under the tariff rate quota was more than offset by 135,000 short tons of Mexican and high-tariff import sugar.

Mexican sugar is the only sugar that is not subject to import restrictions in the US, as it is protected by the North American Free Trade Agreement.

The USDA’s outlook report also said that sugar beet yields will be at record levels if projections for 2010/2011 are realized – up 3.17 tons per acre compared to last year and 2.15 tons per acre more than the previous record yield in 2008/09.

The United States is the world’s largest consumer of sweeteners, including sugar and high fructose corn syrup, and is one of the world’s biggest sweetener importers, according to the USDA.

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