The USDA said that the extra imports will help offset losses in domestic cane sugar production caused by a January freeze in Florida and produce a projected stock-to-use ratio of 13.5 percent for FY 2011. Industrial users recommend a ratio of 15.5 percent, although in 2009 it slipped below 12 percent. The new allocation brings the total sugar import quota to 1,556,497 short tons.
“USDA will closely monitor stocks, consumption, imports and all sugar market and program variables on an ongoing basis, and may make further program adjustments during FY 2011 if needed,” the agency said.
In addition, the Office of the United States Trade Representative (USTR) announced country-specific allocations of the additional raw cane sugar allowance for FY11, in line with countries’ historical sugar shipments to the United States. Tariff-rate quotas allow countries to export specific quantities of sugar to the US at a relatively low tariff, but imports above the threshold are subject to a higher tariff.
The Sweetener Users Association, which represents companies that use nutritive sweeteners and associations that represent them, commended the USDA for increasing the sugar import quota, adding that the move underscores its position that US sugar policy is in need of reform.
“This action will provide additional sugar to a domestic market that needs it badly, but we believe that additional quota increases will be necessary to ensure adequate supplies,” the association said. “We also commend today's announcement that the Office of US Trade Representative will reallocate existing quotas to those countries able to supply additional sugar, and we respectfully urge USTR to move as quickly as possible in this regard. The need for these steps illustrates how the US sugar program distorts markets and must be reformed in the 2012 farm bill.”
Current US sugar policy was set with the 1981 farm bill, with the intention of controlling supply and demand to ensure stable prices for American sugar producers. However, US sugar prices have remained far above global sugar prices, leading to frustration among sweetener users.
Mexican sugar is the only sugar which is not subject to import restrictions in the US, as it is protected by the North American Free Trade Agreement.