Bakers association wants easing of sugar quota

by Josh Sosland
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WASHINGTON — The American Bakers Association is seeking an increase in the import sugar quota allowed under the U.S. Department of Agriculture sugar program. A longtime opponent of the sugar program, the A.B.A. is reiterating its position in view of extraordinary sugar price strength.

“Bakers and consumers were paying record prices because the government deliberately keeps sugar supplies tight,” said Robb MacKie, president and chief executive officer of the A.B.A. “Bakers across the country must purchase sugar to produce their products, just as consumers buy for home baking use, and these companies are getting squeezed.

In particular, Mr. MacKie cited U.S.D.A. figures indicating prices in February reaching an all-time high. World and domestic sugar prices since then have slipped from the highs.

Recent domestic raw sugar futures prices were 31.1c per lb for raw sugar, down 25% from the winter peak of 42c but still 51% above the 2000-07 average price of 20.9c.

The futures price is more volatile than the price for refined sugar, which did not move upward as steeply during the winter and has not yet lost significant ground. The recent U.S. refined sugar price of 49c was off 8% from the peak and remained 83% higher than the 2000-07 average price of 26.8c.

Under the sugar program, sugar and sugar-containing products enter the United States under a tariff-rate quota (T.R.Q.s). A T.R.Q. allows a certain amount of sugar to be imported with a low tariff while setting a higher tariff for additional quantities. Under World Trade Organization rules and other free trade agreements, the United States is committed to minimum annual low-duty access amounts for certain sugars and sugar-containing products.

The U.S. sugar program establishes a minimum T.R.Q. of 1,139,195 tonnes (1,256,000 short tons) required under W.T.O. agreements. The program authorizes the Secretary of Agriculture to set still higher T.R.Q. levels when the administration concludes “domestic supplies of sugars may be inadequate to meet domestic demand at reasonable prices,” or in the case of an “emergency” if before April 1.

The 2009-10 T.R.Q. currently remains at the minimum. The T.R.Q. was raised 8% from the minimum in 2007-08 and 9% in 2008-09.

Despite the high prices and pressure from sugar user groups, the U.S.D.A. has not yet increased the quota for 2009-10.

“When quotas are set too low, prices skyrocket — as is happening right now,” said Cory Martin, A.B.A.’s senior manager of government relations. “The solution is an immediate, major increase in the import quota. U.S.D.A. should act now to help consumers and small businesses obtain the sugar they need.”

The A.B.A. also cited the Department of Commerce as implicating the sugar program in the loss of “thousands of good-paying domestic manufacturing jobs.”

“Current sugar policy is anti-consumer, anti-business and anti-jobs,” Mr. MacKie said. “Congress should change the policy, but until that happens, the Obama administration should do everything it can to minimize the harm to businesses and consumers.”

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