The U.S. Department of Agriculture today announced actions to manage the domestic sugar surplus, as required by law, while operating the sugar program at the least cost to the government.
“Record-breaking yields of sugar crops and a global surplus have driven down U.S. sugar prices and USDA is required to act to stabilize the domestic market. Today’s actions are designed to manage the sugar program while minimizing federal sugar program expenditures,” the department said.
First, USDA intends to buy sugar from domestic sugarcane or sugar beet processors and subsequently conduct voluntary exchanges for credits under the Refined Sugar Re-export Program. Exchanging sugar for credits reduces imports into the United States, and is designed to reduce the sugar surplus. It is a less costly option than loan forfeitures, USDA said.
“Since not less than 2.5 tons of import credits will be exchanged per 1 ton of sugar, there will be a minimum net reduction of 1.5 tons of sugar in the U.S. market per ton of sugar exchanged, making this a less costly option than forfeitures. USDA anticipates this action could remove around 300,000 tons of sugar from the U.S. market and cost approximately $38 million, subject to sequester, which is one-third the expected cost of forfeitures,” USDA said.
The department said it will continue to monitor current market conditions and projections to determine if additional actions are necessary.
Second, USDA said licensed refiners now have 270 days—rather than 90 days—to make required exports or sugar transfers under the Refined Sugar Re-export Program. This action increases the pool of available re-export credits. These temporary waivers “make no permanent change” to Re-export Program rules, the department said.
Today’s announcements build on previous actions taken by the department to stabilize the domestic sugar market.
At the start of fiscal year 2013, USDA announced at minimum allowable levels both the domestic Sugar Marketing Allotments and the U.S. World Trade Organization raw sugar import tariff-rate quota. On May 1, USDA announced two waivers of provisions in the Refined Sugar Re-export Program, temporarily permitting licensed refiners to transfer program sugar from their license to another refiner’s license through Sept. 30, and temporarily increasing their license limit from 50,000 metric tons raw value of credits to 100,000 metric tons raw value of credits, through Dec. 31, 2014.