Press Releases

FOR IMMEDIATE RELEASE                                    CONTACT:   Phillip Hayes
Monday, August 3, 2009                                                            435-604-3113

PARK CITY, Utah—2009 has proven to be a difficult year for U.S. Department of Agriculture (USDA) analysts charged with forecasting the U.S. sugar market.

That’s according to USDA economist Barbara Fecso, who presented today to the 26th International Sweetener Symposium.  Imports from Mexico were one of the biggest factors leading to this year’s market uncertainties, she told the group.

At this time last year, the USDA projected Mexican sugar shipments would reach 500,000 metric tons this crop year. Actual shipments are more than double that amount, 1.18 million tons.

The disparity is a direct result of a loophole in the North America Free Trade Agreement that allows Mexico to turn a handsome profit by sending the sugar it grows to America and then importing cheaper, subsidized sugar from other countries to meet its domestic needs.

“The USDA is in a very difficult position,” explained James Johnson, president of the U.S. Beet Sugar Association, who also appeared on the panel. “This NAFTA loophole has caused impossible-to-predict fluctuations in USDA sugar supply estimates over the past year.”

Johnson said this uncertainty created by Mexico is exactly why raw sugar prices received by sugarcane growers were in the cellar for much of the year, even though USDA supply estimates showed smaller surpluses than normal.

“The Department should be applauded for the caution it has exercised so far,” he said.  ‘They came under tremendous pressure from large food manufacturers last fall to flood the market with foreign sugar, and they used restraint and let the market take shape.  Had they not, needless surpluses would have led to millions in taxpayer costs.”

Last year, Congress passed a Farm Bill that directed the USDA to use such caution in preparation for unprecedented imports from Mexico.

Despite the lessons learned from last year, large food manufacturers are again aggressively lobbying USDA officials to allow as much as 1 million tons of additional sugar onto the U.S. market.  Such a move would undoubtedly lead to lower raw prices, which could create forfeitures on sugar producers’ operating loans and taxpayer expense, Johnson contends.

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