The nation’s food manufacturers are not in danger of running out of sugar despite their claims to the contrary, the American Sugar Alliance said in a letter to Agriculture Secretary Tom Vilsack Monday.
The Alliance said that rather than bring in supplies of raw sugar that were needed by food processors, allowing increased foreign sugar imports would oversupply the U.S. sugar market, harm struggling U.S. sugar producers and be costly to American taxpayers.
“Any action to increase supplies is not only unnecessary but could be costly,” Alliance officials wrote Vilsack. “Unnecessary because U.S. supplies are more than adequate; potentially costly to taxpayers because any downward pressure on sugar prices could result in commodity loan forfeitures.”
The letter said raw and refined sugar prices have been falling, an indicator of an oversupplied, not undersupplied, market. And, any projections of tightening market conditions more than a year from now are far too preliminary to warrant an impulsive import increase.
Food manufacturers have been lobbying the USDA to allow imports for more than a year. Last September, the companies asked for as much as 1 million tons of additional sugar, according to the Alliance.
USDA denied the request, and the “food manufacturers’ dire market forecast proved to be unfounded as sugar surpluses grew and sugar prices fell,” the Alliance said. “Meanwhile, major food companies increased profits.
“Had USDA enacted the import increase the food manufacturers sought, our market would have been tragically oversupplied; more sugar farmers would be financially stressed; and loan forfeiture costs would be expected to soar.”
Sugar producers thanked USDA officials for their caution in dealing with the sugar market so far and urged government officials to remain cautious in the future, especially with the uncertainty that comes from unlimited quantities of Mexican sugar able to enter the U.S. under NAFTA.
Alliance officials said they would support import increases if an actual shortage occurs. “It is strongly in our interest to see U.S. sugar policy run smoothly and to ensure that all our cane sugar refiners and refined sugar buyers are adequately supplied.”
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