U.S.D.A. moves to increase sugar supply

by Ron Sterk
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WASHINGTON — The U.S. Department of Agriculture today raised the raw sugar tariff rate quota (T.R.Q.) “to provide an adequate supply of sugar without the need for significant imports under the unrestricted high-tier tariff,” while also increasing the overall allotment quantity (O.A.Q.) for domestic sugar marketing, both for the current 2010-11 marketing year.

The U.S.D.A. raised the 2010-11 (fiscal year 2011 ending Sept. 30, 2011) raw sugar T.R.Q. by 120,000 short tons, raw value, or about 8%, bringing the total to 1,676,497 tons. On April 12 the department raised the T.R.Q. by 325,000 tons from the original quota set Aug. 5, 2010, at the World Trade Organization minimum of 1,231,497 tons.

“The increase in sugar supplies is forecast to yield an ending FY 2011 stocks-to-use ratio of 15% and mitigate some of the summer 2011 sugar supply risk associated with late sugar beet plantings, uncertain Mexican imports and a tight world sugar market,” the U.S.D.A. said. The 120,000-ton increase was expected to yield a net increase of 110,000 tons due to normal T.R.Q. slippage.

In its June 9 World Agricultural Supply and Demand Estimates, the U.S.D.A. projected the year-end stocks-to-use ratio at 14.1%, compared with 13.3% last year.

Separately, the U.S.D.A. also increased the O.A.Q. for domestic beet and cane sugar marketing by 164,750 short tons, raw value, to provide U.S. producers with the 85% minimum market share required in the 2008 farm bill, which also required O.A.Q. increases be implemented in fixed proportions between beet and cane sectors, according to the U.S.D.A.

The beet sugar allotment was increased by 89,542 short tons, raw value, to 5,108,900 tons for 2010-11, and was redistributed from beet processors with surplus allocation to those with deficit allocation to release all blocked beet sugar stocks for sale, the U.S.D.A. said.

“This increase helps some beet sugar processors, who had inadequate allocations, to market all their supplies,” the U.S.D.A. said.

By law the cane sugar O.A.Q. was increased by 75,208 short tons, raw value, distributed between all cane states and processors, but cane sugar supplies were not adequate to fill the additional allotment. The U.S.D.A. said the resulting estimate of a 600,000-ton cane sugar allotment surplus must be reassigned to raw sugar imports, with 480,000 tons reassigned to Mexico imports already anticipated, and 120,000 tons reassigned to the aforementioned T.R.Q. increase.

All sugar cane states marketing allotments were reduced, with the total cane sector allotment decreased to 3,366,100 short tons, raw value, from 3,890,892 tons previously, the U.S.D.A. said. The allotment allows all domestic sugar supply to be marketed in 2010-11.

The reassignment and the larger beet sugar allotment became effective today.

Today’s actions do not affect duty-free sugar exports from Mexico to the United States under the North American Free Trade Agreement, projected by the U.S.D.A. at a record 1,514,000 short tons, raw value, in 2010-11.

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