US sugar production braced for long-term damage

By Peter Stiff

- Last updated on GMT

Related tags Sugar Usda Us

The USDA has increased the levels of sugar that producers are
allocated to supply in a bid to avert total disaster following
hurricanes Katrina and Rita.

Large amounts of crop have been ruined in sugar producing states such as Louisiana, with potentially disastrous consequences developing in both the long and short term.

The recent hurricanes are said to have cost the states sugar cane producers in the region of $300m as much of this year's crop is destroyed and the long term damage done is beginning to unfold.

The immediate concern however is that initial allocations of production will not be met, meaning there will be an even greater deficit of sugar than predicted from the 2006 fiscal year. Supplies will thus be low and a number of different industries will be affected, confectionery of course being among them.

Susan Smith of the National Confectioners Association (NCA) told that the NCA "had been working with the US Dept of Agriculture throughout the month of August and into September on the already tight market situation for sugar."

These concerns have prompted the USDA to increase the levels of sugar that producers were allocated to supply. The agency has also confirmed that, as already intended, sugar will also be imported from Mexico.

US agriculture secretary Mike Johanns revealed in a press statement that, "should additional sugar be required, USDA will consider further expansion"​.

In addition the USDA has announced details of an Emergency Conservation Program worth $9m. These funds come after the initial $20m aid, which was sent after hurricane Katrina and are intended to help farmers regenerate their farmland.

Money is only available to those facing new environmental problems as a result of the hurricanes and is divided amongst several states, Alabama, Louisiana, Mississippi and Texas.

Producers from Louisiana are eligible for $4.5m and the sugar industry will be grateful. Louisiana produces 35 per cent of the US' sugar cane across 450,000 acres and has a potential crop of $700m.

It is the long-term affects of the hurricanes, however, that are most worrying. The American Sugar industry is facing hard times already, with decreased sugar consumption and prices an issue even before the recent hurricanes hit.

The industry was also only just recovering from hurricane Lili that hit the region in 2002.

In addition, the saltwater that Rita brought inland could prove highly damaging. Sugar crops are currently being deprived of the fresh water they require, while saltwater is continuing to further damage the crop.

Disrupted supplies are projected into the future, leading to further declines. Food manufactures will inevitably suffer both through their immediate supplies and through availability, quality and pricing in the future.

Related topics Commodities Cocoa & Sugar

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