The U.S. Department of Agriculture (USDA) announced an increase to the fiscal year 2016 Overall Allotment Quantity (OAQ) for domestic sugar, reassigned some of the projected surplus sugar marketing allotments among processors, and reassigned part of the surplus cane sugar marketing allotment to raw cane sugar imports. USDA recognizes that America’s beet sugar producers have made significant investments in a strong 2016 crop, but they continue to face uncertainty.
Based on the projections in the May 10, 2016 World Agricultural Supply and Demand Estimates (WASDE) report, USDA took this action as required by the Farm Bill in order to maintain an adequate sugar supply in an uncertain market. This uncertainty is in part due to inaction on GE labeling legislation and lack of consumer information about genetic technology.
USDA has reassigned 500,000 STRV (short tons raw value) cane sector domestic supply shortfall to imports. Of that, 300,000 STRV is reassigned to imports already expected to enter the United States; 140,000 STRV to an increase in the U.S. raw sugar tariff-rate quota from WTO quota holders; and 60,000 STRV to sugar expected to be imported from Mexico pending the approval of the Department of Commerce.
The overall fiscal 2016 U.S. raw sugar tariff-rate quota is now 1,371,497 STRV. The Office of the U.S. Trade Representative will allocate this increase among supplying countries. Raw cane sugar under this tariff-rate quota must be accompanied by a certificate for quota eligibility and may be entered by September 30, 2016.
USDA has requested that the U.S. Department of Commerce increase the FY 2016 Export Limit for Mexico by 60,000 STRV, under the provisions of the Agreement Suspending the Countervailing Duty Investigation on Sugar from Mexico (Dec. 19, 2014, 79 FR 78044). To ensure that this is the type of sugar for which there is an increasing demand in the U.S. market, and which also requires further processing, this additional sugar must have a polarity of less than 99.2 degrees.
Background:
Sugar program provisions require the Secretary of Agriculture to make adjustments to the OAQ based on quarterly re-estimates such that the OAQ is not less than 85 percent of domestic human consumption for the crop year. Accordingly, USDA today increased the fiscal 2016 OAQ to 10,093,750 (STRV), which is 85 percent of the 12,000,000 STRV estimate for domestic human consumption published in the May 2016 World Agricultural Supply and Demand Estimates report. Under the requirements of the sugar program, 45.65 percent (4,607,797 STRV) is allocated to cane sugar, and 54.35 percent (5,485,953 STRV) to beet sugar.
Per sugar program provisions, USDA reassigned cane allocation from two cane processors in Florida with surplus to another Florida cane processor that needed more allocation to market its higher than expected raw sugar supply (see table). Since this action did not eliminate the overall cane sector surplus allotment, 500,000 STRV is reassigned from domestic cane sugar allocations to raw cane sugar imports.
In addition, USDA reassigned beet allocations from certain U.S. beet sugar processors that lacked adequate refined beet sugar supply to other beet processors that needed more allocation to market their supplies. After this action, there was no surplus beet allotment to reassign to raw cane sugar imports.
USDA is closely monitoring sugar production, stocks, consumption, imports, and all sugar market and program variables on an ongoing basis. USDA may need to make additional adjustments to imports or domestic marketing allotments to ensure an adequate supply for the domestic market, avoid forfeitures, and prevent or correct market disruptions.
Click Here for FY 2016 Overall Beet/Cane Allotments and Allocations Chart.