Press Releases

FOR IMMEDIATE RELEASE                                                   CONTACT:   Phillip Hayes
Tuesday, March 31, 2009                                                                              202-507-8303

WASHINGTON—If the U.S. Department of Agriculture decides this week to allow additional foreign sugar imports into the market, it will “jeopardize the ability of U.S. cane sugar refiners and beet processors to meet market needs by weakening an industry already under pressure from rising costs and stagnant prices,” according to a report released today by the American Cane Sugar Refiners’ Association.

The report examined low prices, uncertainty over Mexican sugar shipments, and logistical and quality problems following previous import increases and concluded, “The Department must take care not to worsen this situation by expanding supplies at this critical juncture.”

Raw cane prices—a predictable indicator of market supply—fell 15 percent between last summer and mid-March and have been depressed to levels where “turning the sugar over to the government becomes the only alternative in an oversupplied market,” the study’s author, Dr. Margaret Blamberg, wrote.

Compounding the pricing predicament, she explained, is the fact that the Mexican government has warned the USDA that it could ship 800,000 metric tons of sugar to America this year, far more than USDA estimates of 617,000 tons.

“The lack of precision in forecasting Mexican exports should be a red flag for the USDA not to underestimate [Mexican sugar] and oversupply the market with quota imports,” read the report.

Blamberg’s plea for caution is predicated on past problems—such as supply disruptions, price volatility, and underutilized refining capacity—that came on the heels of the USDA’s previous two announcements.

The refined sugar quota increases announced in 2005 and 2006 sent domestic prices into a tailspin and as much as half of the foreign sugar had to be re-refined by U.S. companies to remove impurities (burlap, rust, ash) and make it fit for human consumption by American standards.

A quota increase announced last August likewise oversupplied the market and, according to Blamberg, “for the second time in just four years, the already stressed sugar industry was once again burdened, not by falling demand or crop problems, but by unwarranted policy decisions.”

Blamberg is worried that additional pressure placed on the domestic industry from unneeded imports and falling prices could force some U.S. producers out of business.  “Without a vibrant U.S. cane and beet sugar industry, and without cane refiners providing the elasticity to process both domestic and foreign raws, industrial users and consumers would face the three monumental problems of ensuring quality, supply and stable prices,” she said.

Under the 2008 Farm Bill, absent an emergency shortage, April 1 is the first time during the year that the USDA can increase sugar imports beyond the 1.3 million tons America is forced to import because of international trade deals.