Sugar growers were reacting to the plight of the sugar market. After enjoying record high sugar prices in 2010, 2011 and 2012, the bottom fell out of the market in 2013 after one of the most productive growing seasons in history flooded the market with sugar.
The quantity of sugar coming from Mexico exacerbated the problem. Mexican imports keep rising since the United States opened its border to allow unlimited Mexican sugar to enter the country in 2008 under the North American Free Trade Agreement (NAFTA).
In 2008, Mexico produced about half the quantity of sugar as the U.S. In 2013, the two coun- tries were nearly equal as the U.S. produced 8 million metric tons of raw sugar, while Mexico produced 7 million. From 2011 to 2012 alone, Mexican sugar production rose 38 percent.
Last year was the first time since 2002 that sugar producers were forced to rely on govern- ment loans to recover losses on sugar sales. There is no sign that Mexico, which has maintained government control of a number of its sugar mills, has any intention of slowing its swelling sugar production.
On Feb. 13, the U.S. Department of Agriculture released its long-run projections for the U.S. farm sector for the next 10 years. Included in these projections are those for the U.S. sugar sector through 2023-24. The two primary influences on the U.S. sugar market in the projections are large supplies of sugar in Mexico available for export to the U.S. and continued low world sugar prices through 2019-20. These two influences increase the likelihood of USDA purchases of sugar for resale to ethanol producers through 2019-20.
The combination of Mexico’s improved sugar production prospects and declining sugar con- sumption make more Mexican sugar available for export. Annual exports to the U.S. market are expected to average 1.768 million tons, raw value (MTRV), or 1.949 million short tons, raw value (STRV). This projection contrasts with the estimated average for the first six years of the full implementation of the sweetener provisions of NAFTA at 1.364 million STRV. Over the long term, imports from Mexico are expected to constitute between 10.6 and 16.9 percent of annual U.S. sugar supply, or, on average, 12.8 percent. The corresponding average for the first six years after NAFTA implementation is estimated at 10.3 percent.
Easing Mexico’s impact on sugar prices is vital for the survival of the U.S. sugar industry. That’s why the Mexican import problem is the biggest challenge facing sugar growers. A look at this and other topics at the ASGA Annual Meeting starts on page 10.
Another subject of importance for sugar growers is GMO Answers, a central online resource for information on genetically modified organisms (GMOs) and how food is grown. Turn to page 16 for a primer on this subject. More attention will be paid to GMO Answers in future issues.