The Sweetener Users Association (SUA), which represents companies that use nutritive sweeteners and associations that represent them, wrote to the USDA to commend it on the move. It said it welcomed the setting of new tariff quotas and that it appreciated their timeliness.
“Your early announcement of the minimum tariff-rate quota for 2010/11 was timely and much appreciated by our members,” the SUA said in its letter to the agency. “…As you know, our members remain concerned about supply adequacy, both this fiscal year and next. We appreciate USDA’s statements that additional supply-enhancing steps may be needed and we concur in this judgment.”
US sugar stocks have hit unprecedented lows, and have been steadily creeping lower each year. Industrial users recommend a 15.5 percent stock to use ratio, but last year the ratio slipped below 12 percent.
The USDA set the tariff-rate quota at the minimum amount to which the United States is committed under its World Trade Organization agreement on July 30, but said it would closely monitor the sugar market on an ongoing basis and “appropriate adjustments will be made to sugar program parameters to ensure an adequate supply of sugar for the domestic market.”
US sugar policy was set with the 1981 Farm Bill and works on the principle that supply should not exceed demand. In order to achieve this, the government can restrict the amount of sugar that American sugar farmers can sell, restrict the amount that the US will buy to the level required by trade obligations, and divert excess sugar to ethanol production. The idea is that sugar prices should remain stable, but this has not been the case.
Mexican sugar is the only sugar which is not subject to import restrictions in the US, as it is protected by the North American Free Trade Agreement.