The nation’s major sweetener buyers and some members of Congress are asking USDA to increase the import quota on raw cane sugar, arguing there’s been a shortage of conventional sugar to meet the growing demand for products free of genetically modified ingredients.
They’ve also referenced “unintended consequences stemming from a bilateral agreement between the U.S. and Mexico” as a reason for the apparent raw cane shortage.
According to the USDA Economic Research Service, raw cane prices have increased 3.8 percent through the first six months of the year relative to the previous year, while finished sugar prices dropped 11.4 percent during the same period.
Cane varieties are all conventionally bred, while U.S. beet sugar is almost exclusively produced from varieties that have been genetically modified to withstand glyphosate herbicide — though industry sources point out the GMO gene is removed entirely from the finished sugar.
In its April Sugar and Sweetener Outlook report, USDA ERS describes how “relatively large” beet sugar inventories have placed downward pressure on beet and cane refined sugar prices.
“Distinctions between the cane and beet sugar markets continue to be an important feature of the 2015-2016 U.S. sugar market,” the report stated.
Forty-five members of Congress signed a May 6 letter to USDA indicating cane sugar refiners have had difficulty finding adequate raw sugar supplies.
“The demand for cane sugar has been on the upswing because of growing interest in non-genetically engineered foods,” the lawmakers wrote.
Jack Roney, director of economics and policy analysis at the American Sugar Alliance, which represents both cane and beet sugar interests, explained the most direct cause of rising prices for raw cane sugar is that Mexico has been shipping more finished sugar and less raw sugar to the U.S. than expected, and cane refiners have lacked adequate supplies to process.
“To our disappointment, where we thought half of Mexican sugar would come in raw form to go to refineries, less than a third of Mexican sugar is going to cane refineries,” Roney said.
He explained both governments are now evaluating ways to enforce terms of a recent agreement they reached addressing Mexican sugar dumping on the U.S. market to achieve a better balance.
Duane Grant, a Rupert, Idaho, beet farmer and chairman of Snake River Sugar Cooperative, believes poor marketing by cane refiners has also contributed to a “slight” premium for cane sugar.
“What you’re seeing play out is the fact that cane refiners rushed to market at the beginning of this market year believing sugar prices would trend lower and sold their inventory of sugar early in the marketing year,” Grant said. “They now find themselves essentially sold out, and the beet folks are at the table picking up the business that is remaining.”
Luther Markwart, executive vice president of American Sugarbeet Growers Association, acknowledges some companies may be looking toward cane due to the forthcoming implementation of a GMO labeling law in Vermont, but he believes sweetener users are mostly using the issue as an excuse to import additional sugar.
“There’s beet sugar out there to be had,” Markwart said.
Source: www.capitalpress.com