The Hagstrom Report

Agriculture News As It Happens

Navigation

Managing sugar supply from Mexico a top issue for U.S. sweetener industry

COEUR D’ALENE, Idaho — Barbara Fecso, the Agriculture Department economist who helps manage the U.S. sugar program, is also a runner who uses her daily jogs around the National Mall in Washington to observe other people.

Fecso told sugar growers here last week that she has encountered people in the last few months whose situations have helped her figure out how she should manage the program, as unpredictable amounts of Mexican sugar become a bigger factor in the U.S. supply and Mexico buys increasing amounts of U.S.-produced high-fructose corn syrup.

First she saw a man reading a book on a bicycle, which she determined requires a “balancing act.” Then she saw a blind woman running by holding hands with a man, which she noted “requires faith.” Finally she saw a man running in women’s clothes and decided that she should “avoid the danger” of getting too close to him.

The message in her August 7 speech to the American Sugar Alliance International Sweetener Symposium, Fecso said, was that sugar growers and sweetener users should realize that to meet the congressional mandate of supplying Americans with sugar while avoiding price drops that would allow U.S. producers to forfeit their sugar is a balancing act that requires faith and avoidance of danger.

Dan Colaccio, the director of dairy and sweetener analysis at the Farm Service Agency, added in a separate presentation that even though candy companies and other sweetener users have urged USDA to allow more tariff-free imports earlier in the year to keep prices down, the agency has decided it must manage the supplies “cautiously” to avoid the forfeitures under which the government would have to pay cane and beet growers for their sugar.

During the symposium, a series of speakers cited the uncertainty of how much sugar would flow from Mexico as the biggest issue in the management of the program and sugar prices in the coming year.

Fecso noted that under the sugar program, which was last reauthorized in the 2008 farm bill, domestic producers are supposed to supply up to 85 percent of U.S. sugar needs, and that the United States is required to import about 13 percent of its supply from countries other than Mexico under various trade agreements.

That leaves about 2 percent “that can float,” including sugar from Mexico, which has the right under the North American Free Trade Agreement to send an unlimited amount of sugar to the United States tariff-free.

In technical terms, managing the program has meant trying to maintain a 14.5 percent stocks-to-use ratio for sugar and making decisions on when to allow additional sugar into the United States tariff free, and how much to allow.