U.S. Mulls Options As Sugar Refiners Face Supply Crunch02/23/2016
The U.S. government is considering boosting raw sugar imports as refiners face a supply crunch due to a trade spat with Mexico and rising cane demand as food makers use less genetically modified ingredients, company and government officials said.
The U.S. government is so worried about dwindling supplies that it is weighing options such as reallocating sugar to quota holders that have more sugar available, U.S. Department of Agriculture Under Secretary Michael Scuse said at an industry conference in Miami on Monday.
It was the first time the USDA has publicly expressed concern that the non-GMO trend could contribute to supply issues.
“We have a responsibility to maintain adequate raw supplies,” Scuse said, noting the agency would proceed cautiously.
It is not unusual for the government to adjust the tariff rate quota, or TRQ, which allows sugar to be imported from such countries as top producer Brazil and Australia.
But the fact the USDA is considering such steps underscores deepening concerns about the long-term impact of two major industry issues: the U.S. trade pact with Mexico that limits raw imports, and the shift by food manufacturers away from GMO ingredients that is threatening beet sugar farmers.
More than half of U.S. output comes from beet sugar, which is mostly produced from genetically modified seeds.
The trend away from GMO foods makes managing one of the world’s top sugar markets more difficult, Scuse said at the International Sweetener Colloquium.
“There are companies that are wanting to go to non-GMO sugar,” Scuse said. “It is going to cause a problem going forward.”
Earlier this month, the USDA cut its closely watched stocks-to-use ratio, an indicator of supply tightness or adequacy, to 12.8, below a target included in the Mexican trade deal.
Some refiners have also blamed the trade agreement for curbing access to raw supplies as Mexico’s millers ship more refined sugar direct to food manufacturers.
Imperial Sugar Co, one of the biggest U.S. refiners which is owned by Louis Dreyfus Commodities, has pressed the USDA to boost import quotas to above the 1.2 million short tons allocated for the 2015/16 crop year that runs through end-September, the company’s chief said at the conference.
The Sweetener Users Association (SUA) and ASR Group, the maker of Domino Sugar, have also asked the USDA for more raw supplies, SUA President Rick Pasco said.
Source: Ag Professional