The Land of Enchantment served as the location for the 32nd International Sweetener Symposium on Aug. 3-5 in Santa Ana Pueblo, N.M.
Carolyn Cheney, the vice chair of the Sugar Cane Growers Cooperative of Florida and American Sugar Alliance chair for the past year, welcomed about 450 people to the annual symposium. This year’s event featured several speakers discussing an array of subjects under the broad theme “Striking the Right Balance: Sugar’s Trade, Policy and Consumption Issues.”
Shopping trends
“Sugar is under fire in the media,” said Courtney Gaine, vice president of scientific affairs for the Sugar Association.
“What’s concerning is that the U.S. dietary policies for sugar that are on the table right now are not evidence-based, but rather are emotions-based,” she said.
The anti-sugar movement is difficult to combat due to emotion-based obesity claims, Gaine said. She believes the Food and Drug Administration’s proposal to set a daily value for “added sugars” lacks scientific justification.
“It just doesn’t make sense when you look at the data,” Gaine said. “Sucrose cannot be the driver of obesity.”
Consumers are being overwhelmed with information about the food they purchase and eat every day.
“We’re witnessing a wellness trend in food that’s dominating the consumer conversation, with awareness and concern over sugar consumption growing,” said Matt Wilson, manager of global consumer insight for General Mills.
Wilson’s presentation showed that while 11 percent of consumers are making “a major effort to” avoid sugar, higher percentages of consumers are making “a major effort” to avoid other products: 26 percent for artificial sweeteners, 24 percent for high-fructose corn syrup and 21 percent for genetically modified organisms.
“This is eating like 1941—they want fresh food, minimally processed,” Wilson said.
“While there’s an increasing interest in natural sweeteners that overlaps with this wellness trend, indulgence is not declining,” Wilson added. “Having a few indulgence snacks throughout the week is part of a happy life.”
Cheryl Maduzia, vice president of research for the Acosta Sales and Marketing Consumers, said consumers want to eat “real food.”
Brand loyalty is being redefined by millennials, Maduzia added.
There are also more millennials now than baby boomers.
“Millennials are more likely to shop in channels other than supermarkets—they’re looking for a different experience—while older shoppers are more likely to shop in a traditional supermarket,” Maduzia said. “These trend shifts are game changers for the industry, presenting retailers and manufacturers alike with challenges and opportunities to best meet the needs of generational shoppers.”
Two-tiered sugar market?
The U.S. appears headed toward higher prices for cane sugar compared to beet sugar because consumers are concerned that sugarbeets have been genetically modified, said Craig Ruffolo, a vice president of McKeany-Flavell, a California commodity firm.
“We have a public relations problem for caloric sweeteners,” he said. “End users are asking for GM free—whether it’s right or wrong. Consumers are worried about what (genetic modification) means to their body.”
Sometimes consumers “do nothing,” and in other cases, they avoid the product, Ruffolo said.
But there is enough momentum behind the concern, he said, that “there may be a differential for cane over beet. We may have a two-tiered sugar market for the first time in history.”
Ruffolo said that the amount of the differential has not yet been established, but that he would estimate it at $2 to $3 per hundredweight.
U.S. sugar program working
While the program is proceeding adequately, sweetener users are complaining that prices are too high. Court cases and other issues also could create problems in the near future.
The 2014 farm bill continued the program, which sets floor prices for beet and cane sugar and gives U.S. growers the right to forfeit sugar to the government and be paid for it if prices fall below those levels. It also instructs the USDA to run the program at a “zero” cost basis.
That wasn’t possible in 2013 due to high levels of Mexican exports. Growers were paid $259 million after sugar prices dropped below the floor.
In response to U.S. threats of punitive duties, Mexico in December agreed to limit exports to the U.S. under suspension agreements that are scheduled to be in place for five years.
“I think that going forward we will have the ability to manage the program the way it is supposed to be managed,” said Michael Scuse, USDA under secretary.
Barbara Fecso, USDA director of dairy and sweetener analysis, said “the program should be easier to manage under the suspension agreement.”
Fecso also noted, “The suspension agreement is only in place as long as all parties agree it is better than having duties applied or if the International Trade Commission determines that imports from Mexico did not damage the U.S. sugar industry or someone violates the agreement.”
The ITC and the Commerce Department still have to issue final subsidy and antidumping determinations. Two cane refiners, Imperial Sugar and AmCane Sugar, have raised issues with the preliminary determinations.
The Commerce Department was scheduled to make its final ruling on Sept. 17.
The ITC is scheduled to vote Oct. 20, and the ITC is scheduled to issue a detailed report explaining its final injury ruling Nov. 2.
Greg Bruenig, vice president of operations for Clasen Quality Coatings Inc. and executive vice chair of the Sweetener Users Association, said that the Mexican case and the suspension agreements amount to a “stealth price support increase” for sugar.
Under the suspension agreement, he said, the wholesale refined price of sugar has risen from 26.cents to 35.1 cents per pound while the world refined price has declined from 20.8 cents to 19.3 cents.
Jack Roney, ASA chief economist, said that the U.S. wholesale price of 34 cents is lower than the developed country average of 41 cents, and that market prices for sugar have been flat for 30 years while general price inflation has been 120 percent since 1985.
Trade talks
The Obama administration will not weaken the U.S. sugar program in the Trans-Pacific Partnership negotiations, a key U.S. trade official told growers.
“We are not doing anything in TPP that will undermine the U.S. sugar program,” said Sharon Bomer Lauritsen, assistant U.S. trade representative for agricultural affairs and commodity policy.
She added, however, that providing additional market access to Australia and Canada is part of the negotiations with those countries.
Trade ministers in the TPP negotiations do not want to meet again until all 12 nations are ready to finalize the agreement, Lauritsen said.
Sweetener market outlook
Sugar prices have dropped to the lowest point since 2008, and most observers expect the trend to continue.
“The global sugar market is oversupplied,” said Maria Afonso, global sugar analyst for American Sugar Refining. “There is no doubt about that.”
She said some Brazilian economists expect Brazil’s economic recovery will be delayed until 2018.
Global sugar prices are running half the world average cost of producing sugar, yet production continues to grow.
Thailand, the world’s second biggest exporter, has expanded exports 70 percent since 2011 and has announced intentions to grow another 50 percent over the next five years.
“The near-term fundamental outlook for world prices is bleak,” Afonso said.
However the suspension agreements on sugar from Mexico have brought stability and predictability to domestic prices, she added.
Patrick Chatenay, a sugar policy expert from the U.K.-based company ProSunergy, predicts Europe’s new subsidies will help the region again become a net sugar exporter on the global stage and further depress global prices.
Subsidies have also increased in Brazil, India and other major producing countries, he said, as countries fight to maintain market share or protect domestic industries against the distorted world market.
Chatenay said that despite the low price on the global market, very little sugar is actually reaching consumers at that price.
U.S. producers are pushing a global Zero-for-Zero sugar policy where all subsidies and trade-distorting policies will be rolled back so the global price of sugar reflects production costs.
Michael McConnell, USDA agricultural economist, expects above average U.S. beet yields this season due to early planting and favorable precipitation and crop condition reports.
Heritage Action losing sway?
Former House Agriculture Committee Chairman Larry Combest lamented the too politicized and too polarized environment in Washington, D.C., but offered his harshest criticism for Heritage Action, the division of the Heritage Foundation that scores members’ votes.
Combest explained that the pattern in which Heritage Action is scoring votes is causing it to lose credibility.
Heritage Action scored votes on the farm bill six times, “more than any other issue that came before the House in the 113th Congress,” Combest said. “More than the debt ceiling. More than Keystone Energy. More than the budget. More than amnesty. More than mega appropriations bills. More than terrorism. More than abortion. And, get this, even more than Obamacare.”
This obsession with agriculture, particularly sugar policy, at the expense of larger issues that matter more to conservatives bewildered Combest.
“This is what I discovered,” he said. “Heritage Action has either got a strange obsession over U.S. farm policy or it is beholden to some really high-dollar contributors with a financial stake against farmers.”
The no-cost U.S. sugar policy is not worrying Americans, but Combest said you wouldn’t know that by Heritage Action.
“In the 113th Congress, Heritage Action was too busy bullying farmers and ranchers to have the time to score House members on votes to stop EPA’s Waters of the U.S. regulation,” said Combest, who serves as a consultant to ASA. “Heritage also didn’t have time to score House votes on EPA’s climate change regulations. There was no score on protecting gun rights. Heritage Action did not even have time to score House votes on protecting the border.”