Sugar Producers to USDA: Food Companies Crying Wolf

Published online: May 20, 2009 American Sugar Alliance
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WASHINGTON, D.C.-No food manufacturers are having problems finding sugar, and their calls for increased foreign sugar imports would oversupply the U.S. sugar market, harm struggling U.S. farmers, and be costly to taxpayers, the American Sugar Alliance (ASA) said in a letter to Secretary of Agriculture Tom Vilsack. "Any action to increase supplies is not only unnecessary but could be costly," ASA wrote. "Unnecessary because U.S. supplies are more than adequate; potentially costly to taxpayers because any downward pressure on sugar prices could result in commodity loan forfeitures." The 2008 Farm Bill instructs the USDA to avoid sugar loan forfeitures so taxpayer cost is not incurred. The letter pointed to falling raw and refined sugar prices as an indicator of an oversupplied, not undersupplied, market. And, any projections of tightening market conditions more than a year from now are far too preliminary to warrant an impulsive import increase, according to domestic sugar producers. For nearly a year, food manufacturers have lobbied the USDA to allow unneeded imports into the market in order to further depress sugar prices and increase their profits. Last September, these companies asked for as much as 1 million tons of additional sugar, making many of the same misguided predictions of future market shortages that they are making today. The USDA denied this request, and the food manufacturers' dire market forecast proved to be unfounded as sugar surpluses grew and sugar prices fell. Meanwhile, major food companies increased profits. "Had USDA enacted the import increase the food manufacturers had sought, our market would have been tragically oversupplied, more sugar farmers would be financially stressed, and loan forfeiture costs would be expected to soar," ASA's letter read. Sugar producers applauded the Department for its caution in dealing with the sugar market so far and urged government officials to remain cautious in the future, especially with the uncertainty that comes from unlimited quantities of Mexican sugar able to enter the U.S. under NAFTA. The letter concluded with an assurance from sugar producers that they would support import increases if there were an actual sugar shortage. "It is strongly in our interest to see U.S. sugar policy run smoothly and to ensure that all our cane sugar refiners and refined sugar buyers are adequately supplied." For a copy of the letter, or learn more about sugar policy, visit www.sugaralliance.org.