Sugar prices in the US have fallen more than 40% since last summer and are now at “dangerously low levels for producers who are facing ever-increasing input costs”, according to Jack Roney, an economist with the American Sugar Alliance (ASA).
Roney, writing in the association’s Sugar Beet newsletter, claims surplus stocks are suffocating the sugar market, owing to a combination of strong domestic production and “excessive imports triggered by a controversial USDA decision to boost supplies earlier this year”.
The surplus is bad news for overseas farmers, too, since the US is the world’s biggest sugar importer, he argues:
“In fact, the government of the Philippines recently announced it would delay a large sugar shipment to America in hopes of better prices down the line.”
According to USDA, producer prices for refined sugar fell another 4% in November, with two million tons of excess sugar currently overhanging the market.
US raw sugar prices are now in line with artificially low prices on the global dump sugar market
While US bakers and confectioners argue that they pay over the odds for sugar, making them less competitive and sending food manufacturing jobs overseas, the ASA claims candy makers pay less for sugar than counterparts in other developed countries, and have grown sales during the recession.
When you factor in transportation costs, US raw sugar prices “are now in line with artificially low prices on the global dump sugar market, which has been called the most distorted and depressed commodity market in the world”, claims Roney.
NCA: Reform of the archaic US sugar program is vital for candy companies across the US
However, the National Confectioners Association (NCA) argues that the US sugar program, which sets import quotas on sugar, enforces a minimum price for sugar in the US market, limits how much US sugar processors can sell, and forces USDA to buy surpluses and sell them to ethanol refineries, means US sugar prices are artificially high.
According to the Coalition for Sugar Reform, an alliance of food and beverage manufacturers and other groups, the sugar program (as outlined in the 2008 Farm Bill), reduced access to imports and distorted markets, causing sugar prices to spike to record highs in 2010 and 2011.
Artificially high prices in turn created an incentive for domestic growers to produce more sugar crops, explaining the current surplus, it claims.
“With supplies on the rise in both Mexico and the US, US refined sugar prices have fallen to around 32-34 cents per pound — still higher than the 28-cent average under the 2002 Farm Bill and roughly 50% higher than the world price. “
Speaking to FoodNavigator-USA earlier this week, NCA senior vice president communications and outreach Susan Smith said the NCA’s top lobbying priority next year is reform of the sugar regime.
She added: “Reform of the archaic US sugar program is vital for candy companies across the US.”
The American Sugar Alliance is a national coalition of sugarcane and sugar beet farmers, processors, refiners and suppliers.