U.S.D.A. moves to boost U.S. sugar supply

by Ron Sterk
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WASHINGTON — The U.S. Department of Agriculture took action to increase the 2011-12 (fiscal year 2012) U.S. sugar supply through a combination of a 51,000 short ton, raw value, increase in the domestic Overall Allotment Quantity (O.A.Q.) and reassignment of marketing allocations between beet processors, and reassignment of a 420,000-ton surplus domestic cane sugar allotment to raw sugar tariff-rate quota (T.R.Q.) imports. The changes will be effective April 19 following notice in the Federal Register.

The 51,000-ton increase brings the 2011-12 O.A.Q. total to 9,507,250 tons, equal to 85% of domestic food demand projected at 11,185,000 tons in the April 10 World Agricultural Supply and Demand Estimates. The increase was split 27,719 tons for beet sugar and 23,281 tons for cane sugar.

The U.S.D.A. said it determined all U.S. sugar cane processors had surplus allocations in 2011-12 and thus reassigned 420,000 tons of the domestic cane sugar O.A.Q. to the raw sugar T.R.Q. (imports). All states’ cane sugar allotments were reduced, resulting in a new total cane sector allotment of 3,920,060 tons, down from 4,316,778 tons previously.

“The FY 2012 Sugar Marketing Allotment program will not prevent any domestic sugarcane processor from marketing all of its FY 2012 sugar supply,” the U.S.D.A. said. “Due to uncertainties that still exist in forecasting each company’s and sector’s 2012 sugar production, further reassignments are likely.

“The 420,000 short ton, raw value, raw sugar T.R.Q. increase, when combined with an estimated reallocation of 70,000 short tons, raw value, is expected to yield a net increase in raw sugar imports of 450,000 short tons, raw value, after normal T.R.Q. slippage because not all supplying countries will fill their import quota allocations,” the U.S.D.A. said.

“This T.R.Q. increase is not currently expected to increase FY 2012 domestic sugar supplies sufficiently to attain a level U.S.D.A. considers adequate,” the department said. “U.S.D.A used an ending stocks-to-use level of 14.5% in estimating the ‘reasonable ending stocks’ parameter for the most recent FY 2012 sugar market quarterly review mandated by statute. Significant uncertainties about FY 2012 Mexican imports, domestic refined and raw sugar demand, the early sugar beet crop and other market factors make it prudent for U.S.D.A. to not increase imported supplies further at this time.”

The U.S.D.A. said it would re-evaluate market conditions in June and if determined appropriate would make an additional T.R.Q. increase to bring the stocks-to-use ratio within the traditional range of 13.5% to 15.5%.

The initial T.R.Q. was set July 30, 2011, at 1,231,497 short tons, raw value, the minimum required under World Trade Organization agreements. The reallocation brings the 2011-12 T.R.Q. to 1,651,497 tons. The sugar may enter the United States until Sept. 30, 2012, the end of the 2011-12 marketing year.

The Office of the U.S. Trade Representative will announce country allocations for the additional 420,000 tons, and any reallocation of shortfalls soon, the U.S.D.A. said.

Today’s actions do not affect duty-free sugar exports from Mexico to the United States under the North American Free Trade Agreement.

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