Opponents of sugar policy crying wolf about U.S. sugar supplies received some sobering news from the U.S. Department of Agriculture (USDA) today. The United States will have more than 1.8 million tons of leftover sugar at the end of this crop year, the most in more than a decade, according to the USDA's latest World Agricultural Supply and Demand Estimates.
"Big candy companies angling to gut no-cost sugar policy in the ongoing Farm Bill debate just lost theirmain talking point and scare tactic," noted Jack Roney, the director of economics and policy analysis for the American Sugar Alliance. "There's plenty of sugar in America thanks to our current sugar policy, and that's remarkable considering the shortages other countries have wrestled with." U.S. surpluses are a result of a strong domestic crop combined with higher-than-expected sugar shipments from Mexico and the fact that the United States is the world's biggest sugar importer.
Roney put the surplus estimates into perspective. "At the end of this year, there will be enough leftover sugar to give every man, woman, and child in the country nearly 12 pounds of surplus product on top of what they already consume," he said. "This stands in sharp contrast to claims of supply shortages made by industrial sugar users in their campaign to attack current sugar policy." The USDA reports surpluses in a stocks-to-use ratio, a number derived by dividing carryover stocks by total U.S. demand.
The most recent stocks-to-use ratio of 15.5 percent is the highest in many years, and it is identical to the astronomical figure for which food manufacturers have long lobbied. Roney noted that such a high surplus percentage should spell the end of an anti-sugar policy amendment expected to come up on the Senate floor this week.
Amendment sponsors and the food lobby contended that their proposal was needed to increase supplies and lower sugar prices. Since the USDA's announcement, sugar prices-which were already down 20 percent since the summer of 2010-have continued to fall.
Large surpluses could cause more problems for sugar producers beyond falling prices, according to industry officials. For example, sugar producers-not taxpayers-pay to store sugar for their customers, and every 100,000 tons of surplus product costs about $25 million to store.
In a letter sent to the USDA, the American Sugar Alliance noted that sugar producers would not "suggest any fixed stocks/use goal in your very capable management of U.S. sugar policy." However, the group pointed out that because of efficiencies achieved in recent years by producers, "this market can function efficiently and reliably on lower levels of pipeline stocks than may have been necessary years ago."
For more information about the American Sugar Alliance and U.S. sugar policy, visit www.sugaralliance.org