USDA adjusts sugar marketing allotment

WASHINGTON – USDA announced that the overall allotment quantity (OAQ) for domestic sugar is officially reduced from the 8.550 million tons announced on Aug. 13, 2003 to 8.250 million tons.

This action follows review of the latest estimates of sugar consumption, stocks, production and imports and formally eliminates the 300,000-ton portion of the original OAQ that was retained by USDA due to uncertainty surrounding consumption, production and stock estimates. The OAQ is the quantity of sugar estimated to be consumed during a crop year, plus a reasonable carryover, less 1.532 million tons and carry-in stocks, including stocks held by the Commodity Credit Corp.

The FY 2004 OAQ is now 8.250 million short tons raw value (STRV). The allocations for the beet and cane sugar sectors are:

-- Beet sugar 4,483,875 STRV

-- Cane sugar 3,766,125 STRV

-- TOTAL 8,250,000 STRV

USDA continues to closely monitor the current and expected market situation for sugar. There is some imbalance in the current marketing year as reflected in the difference between domestic production of 8.994 million STRV and the OAQ of 8.250 million STRV.

The Prospective Plantings report released on March 31 suggests that another imbalance likely looms for next year. Sugar production could again exceed domestic market requirements in FY2005, thus resulting in an increasing quantity of blocked stocks. Therefore, to provide the market with program information in a timely fashion, USDA is considering announcing the FY2005 OAQ in July, a month earlier than normal.

The Agricultural Adjustment Act of 1938, as amended, requires USDA to operate the program at no net cost to taxpayers, thus avoiding forfeitures of sugar under the price support program. USDA reminds all participants that the current sugar program, as designed by the 2002 farm bill, places the burden of storing surplus production on the domestic industry.

Should forfeitures occur, CCC will endeavor to return any inventory to the market as expeditiously as possible, in keeping with its policy to not hold stocks. As required in the 2002 farm bill, sugar held in CCC inventory must be deducted from estimated consumption and reasonable carryover when determining the OAQ.

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