An interview with Steven Hines, director of marketing with United Sugars Corp., provides answers about sugar availability, the short-term Farm Bill, GMOs and imports.
CI: Are there any concerns about having enough sugar supplies for the coming year?
Hines: No, the market is well supplied. In fact, if there is excess supply, some imports that would be allowed under the tariff rate quota (TRQ) will probably not enter the United States. The TRQ holders in these countries will choose to sell their sugar into the world market instead, which would reduce sugar stocks in the United States and bring the market back toward balance.
CI: Does the short-term extension of the Farm Bill have any real near-term impact on sugar policies, supply?
Hines: The prior Farm Bill covered the sugar crop that was harvested last fall and that we are currently marketing through September of 2013. The one-year extension covers the sugar crop that will be planted next spring and marketed through September of 2014.
And yes, the one-year extension will impact the sugar market. The Farm Bill limits the amount of imports that can enter the United States by limiting the USDA’s ability to increase the tariff rate quota (TRQ) prior to April 1 of each year. It also provides mechanisms such as non-recourse loans and the bio-energy feedstock flexibility program to assure that sugar prices are maintained above minimum levels.
CI: What’s the status of legal action involving GMO sugar beets? How has this controversy affected the sugar beet community, industrial users?
Hines: In mid-July, the USDA ruled to allow unrestricted planting of Monsanto’s GMO sugar beets. Since there is no protein in refined sugar, the sugar produced from GMO sugar beets is identical to the sugar produced from conventional seeds. Also, because there is less herbicide applied to the crop, there are significant energy savings and environmental benefits in using GMO seeds.
CI: What effect has NAFTA and bilateral agreements had on sugar coming into the United States? Is tonnage growing?
Hines: NAFTA, CAFTA-DR and free-trade agreements with Columbia, Peru, Singapore, Bahrain and Jordan certainly allow more sugar to enter the United States from these countries. But the USDA can make smaller increases in the TRQ to offset these imports. The problem occurs when the minimum TRQ — plus these imports — is more than needed to supply the United States. In this case, the domestic raw sugar price will move toward the price of world raw sugar. As this gap decreases, foreign suppliers will increasingly choose to sell their raw sugar into the world market instead of exporting it to the United States. This is the situation we find ourselves in right now.