U.S. sugar policy: an exporter perspective

U.S. sugar policy: an exporter perspective

Presentation to the Farm Foundation conference onDomestic and Trade Impacts of U.S. Farm Policy:

Future Directions and Challenges

November 15, 2007Washington, D.C.

International Sugar Trade Coalitionwww.sugarcoalition.org

Barbados Barbados Agricultural Management Co., Ltd.Belize Belize Sugar Industries, Ltd.Dominican Republic International Sugar Policy Coordinating CommitteeEcuador FINAZUCARFiji Fiji Sugar Marketing Co., Ltd.Guyana GUYSUCOHaiti Haiti sugar industryJamaica Sugar Industry Advisory Committee of JamaicaMalawi Sugar Company of MalawiMauritius Mauritius Sugar SyndicateMozambique APAMOPanama Panama sugar industryPhilippines Sugar Alliance of the PhilippinesSaint Kitts and Nevis Saint Kitts Sugar Manufacturing Co., Ltd.Swaziland Swaziland Sugar AssociationTrinidad and Tobago The Sugar Manufacturing CompanyZimbabwe Zimbabwe Sugar Sales (Pvt.), Ltd.


ISTC membership

http://www.sugarcoalition.org/


Population: 163 millionGDP per capita: $1,400 (USA: $44,153)Sugar production: 6.3 million tons (all

cane)• 11% of agriculture• 1% of GDP (4x more than corn to

US)

ISTC at a glance



US sugar program

High pricesMinimum levels of access for imports Exporters share the benefitsUS major sugar producer, importer



US sugar legislation1789: revenue tariff1890: beet sugar subsidy1894: protective tariff1934, 1937, 1948: price supports, domestic

and import quotas1977, 1979: crop support1981, 1985, 1990, 1996, 2002: current

sugar program


How it works

Goal: price above loan rate- loan rate = 18¢ per lb. for raw

cane sugar- producers can forfeit their sugar

and keep the loan if the price is too low


How it works

• Goal: price above loan rate- loan rate = 18¢ per lb. for raw

cane sugar• No cost to the government

- supply management- import quotas



Import share


How it works



- supply management- import quotas: minimum level



Forty quota holdersArgentina Dominican

Republic Jamaica Peru

Australia Ecuador Madagascar Philippines

Barbados El Salvador Malawi South Africa

Belize Fiji Mauritius St Kitts & Nevis

Bolivia Gabon Mexico Swaziland

Brazil Guatemala Mozambique Taiwan

Colombia Guyana Nicaragua Thailand

Congo Haiti Panama Trinidad and Tobago

Costa Rica Honduras Papua New Guinea Uruguay

Cote d’Ivoire India Paraguay Zimbabwe

Italics denote ISTC member


How it works



- supply management- import quotas: minimum level - domestic marketing allotments


How it works• Goal: price above loan rate

- loan rate = 18¢ per lb. for raw cane sugar• No cost to the government

- supply management- import quotas: minimum level

- no controls on Mexico as of Jan. 1

- domestic marketing allotments- 85% share sought in Farm

Bill



CategoryCategory cents per poundcents per poundWorld average cost of

production 10.76 - 12.26

Value ranges for raw sugar, FY 2000 - FY 2005



CategoryCategory cents per poundcents per poundWorld average cost of


World price 7.53 - 10.46




CategoryCategory cents per poundcents per poundU.S. price 18.40 - 21.76

World average cost of production 10.76 - 12.26





CategoryCategory cents per poundcents per poundU.S. price 19.09 - 21.42

World average cost of production 10.76 - 12.26



Sell a little at a profit? Or a lot at a loss?



CategoryCategory cents per poundcents per poundAvg. world domestic

price* 22

U.S. price 19.09 - 21.42World average cost of




* 2004, wholesale (LMC International)



PRESS RELEASE

ACP countries express deep concern at EU Decision to terminate ACP-EU Sugar Protocol

Brussels, 28 September 2007 – African, Caribbean and Pacific (ACP) sugar producing countries today expressed their deep concern and outrage at the European Union’s (EU) decision to terminate unilaterally the long standing Sugar Protocol, which provides preferential access to the EU market for imports of ACP sugar....

The recent reform of the EU sugar regime will result in permanent losses of c. €250 million per year for these countries, where in some cases sugar contributes up to 20% of GDP....

Impact of EU sugar reform


Sugar employment - Philippines

1.3 workers per hectare per year 392,000 hectares of sugarcane 509,000 workers in the field

wages: about $4.00 a day With mills, refineries, etc. = 600,000

jobs42,000 jobs to serve US market



Farm size Farm size (hectares)(hectares)

Number of Number of farmsfarms % of farms% of farms % of % of

productionproduction0.1 - 5.0 47,000 76 215.1 - 10.0 6,000 10 10

10.1 - 25.0 4,000 7 1625.1 - 50.0 2,000 3 16

50.1 - 100.0 1,000 1 17> 100 < 1,000 1 21Total 61,000 100 100

Farm size - Philippines



Average farm size - Philippines and Brazil

Philippines 6 hectaresBrazil: independent

growers(30% of production)

54 hectares

Brazil: mills/distilleries

(70% of production)12,250 hectares



2007 Farm Bill

HouseRaises loan rate 1/2¢ per lb.Reserves up to 85% of market for domestic sugarCreates ethanol program

SenateRaises loan rate 1¢ per lb. over 5 yearsReserves up to 85% of market for domestic sugarCreates ethanol program


2007 Farm Bill

US sugar program: a stable and remunerative market for developing countries


Sources

Slide 3: ISTC population and GDP from World Bank (Atlas method); sugar production from national data.

Slide 9: Import share of US market from USDA, Farm Service Agency, Sweetener Market Data.

Slides 13-16: cost of production from Owen Wagner, “The US Sugar Program: Reform Pressures and Options,” paper delivered at International Food Policy Research Institute conference on Global Sugar Markets, June 1, 2007; world and US prices from USDA, Sugar and Sweeteners Outlook SSS-250, September 27, 2007; world domestic wholesale price from LMC International survey, “Retail and Wholesale Prices of Sugar around the World in 2004,” July, 2005.

Slides 19-20: Data supplied by Philippine Sugar Millers Association.

Slide 21: Data from Conselho dos Produtores de Cana-de-Açucar e de Alcool (Consecana) and Organização de Plantadores de Cana da Região Centro Sul do Brasil (Orplana).

Documents

U.S. sugar policy: an exporter perspective