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USDA agrees to extra sugar imports to stem shortage

By Lorraine Heller , 07-Dec-2005

The US Department of Agriculture (USDA) has announced it will allow extra sugar imports into the country in an effort to prevent market shortages after hurricane damage to sugarcane crops, delayed sugar beet harvests, disruptions in refinery activities and transportation problems have severely restricted the nation's sugar supply.

 

An extra 450,000 tons of sugar will be imported in fiscal year 2006, composed of 150,000 tons refined sugar and 300,000 tons raw sugar, said the USDA this week.

The announcement comes just a few weeks after the nation's sugar food manufacturers that use sugar appealed to the USDA to allow for more imports in order to avoid a continued "desperate scrambling for available supplies." Yet the Sweetener Users Association (SUA) had called for an extra one million tons, more than twice the amount conceded to by the USDA.

"It is highly likely that a further increase in raw and refined tariff rate quotas (TRQs) will be necessary in order to supply the market adequately. Simply adding the most recent 450,000-ton quota increase to the November estimate of ending stocks still yields a supply-to-use ratio below 11 percent, markedly lower than the level of stocks this September, when supply availability constraints caused severe turmoil in the market," said the SUA in a letter to the USDA yesterday.

Indeed, the USDA said it "recognizes that more sugar than the quantity provided for by this action may be needed in this fiscal year to balance the market." However, it was unable to comment on what actions might be taken in the future due to "market sensitivity."

Sugar is one of the few commodities to still be subject to import quotas, meaning it cannot automatically enter the US market. This is the second time in recent months that the USDA is responding to industry concerns by allowing for an increase in domestic and imported sugar supplies to offset shortages.

Indeed, tightened sugar supplies have contributed to price increases for the commodity. The wholesale price for beet sugar is currently around 42 cents per pound, compared to last year's price of 23 cents.

"Without additional imports, prices will remain high and there could be problems in meeting supply needs. In some cases products may not even be able to reach the market," a spokesperson from the National Confectioners Association (NCA) had told FoodNavigator-USA.com.

"It is not in the long-term interest of any part of the sugar industry- producers, refiners or industrial users- to have continued market instability of the kind we've experienced in recent months," said NCA president Larry Graham in a statement last month.

"We continue to believe that further substantial TRQ increases are necessary in order to assure that markets are adequately supplied," concluded the SUA in its letter to the USDA yesterday, adding that currently, "the market for refined sugar is particularly tight."

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