U.S. Sugar Farmers Found to be More Efficient than World Competitors

Published in the January 2012 Issue Published online: Jan 29, 2012 Phillip Hayes, ASA

Despite having some of the strictest labor and environmental standards, U.S. sugar producers are among the most efficient in the world. That's according to a study conducted by LMC International Ltd., a global commodity research firm based in Oxford, England.

Of the 95 sugar-producing countries or regions examined, the United States is more efficient than 75 of them, LMC found in its report, which was released during the International Sweetener Symposium in August.

Americans were found to be the world's most efficient beet sugar producers.

LMC updates global cost of production figures regularly, and the current U.S. ranking- 20th lowest cost of 95-is its best ever.

The findings weren't surprising to Jim Simon, general manager of the Louisiana-based American Sugar Cane League, who joined a representative from LMC for a panel discussion at the sugar industry's annual meeting.

"Louisiana is the birthplace of U.S. sugar production, and over the past few years we've had to overcome a lot of adversity, ranging from weather disasters to difficult market conditions," he said. "We've constantly improved our efficiency to stay in business."

Simon notes that the rebound in sugar prices since 2008 has enabled farmers to pay off debt and invest in new equipment that should spur continued efficiency improvements.

Jack Roney, an economist with the American Sugar Alliance, moderated the panel and put the findings into perspective.

"Critics suggest the U.S. sugar industry is not efficient because there are restraints on the amount of subsidized foreign sugar that can enter the country. This study proves we are among the world's most efficient and lowest cost producers," Roney said.

"Import restraints are in place in the U.S., as in most sugar-producing countries, because the world sugar market is polluted with substandard production practices, low labor and environmental standards, and huge trade distortions," he continued. "Many of these countries historically dump subsidized surpluses onto the world market for whatever price it'll bring."

America's no-cost sugar policy, Roney said, is needed to ensure that less efficient, subsidized foreign competitors don't run efficient U.S. producers out of business.

LMC measures efficiency by adding the cost of producing sugar in the field to the cost of extracting sugar from beets and cane at the mill. Production costs vary by seed variety and field practices, degree of mechanization, use of technology, and labor and environmental standards.

According to the LMC data, the United States has dropped from slightly above average cost in 2002/2003 to well below the world average in 2010/2011.

Editor's note: Hayes is the director of media relations for the American Sugar Alliance, he can be contacted through email at phillip@sugaralliance.org