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U.S. Sugar. Some Implications of Changes in U.S. Sugar Policy. Recent Policy Changes. NAFTA Free Access to Supplies from Mexico – At a Price 2008 Farm Bill Increasing Support Prices – Moving to a slightly higher priced supply

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U s sugar

U.S. Sugar

Some Implications of Changes in U.S. Sugar Policy


Recent policy changes
Recent Policy Changes

  • NAFTA

    • Free Access to Supplies from Mexico – At a Price

  • 2008 Farm Bill

    • Increasing Support Prices – Moving to a slightly higher priced supply

    • TRQ Administration – Additional Restrictions to Regulatory Action

    • Conversion to Ethanol


Nafta open access to supplies from mexico
NAFTA – Open Access to Supplies from Mexico

  • NAFTA allows free movement from Mexico

    • Sugar must be drawn to the U.S.

    • Prices must rise in the U.S. to pay for the transportation and form conversion charges

      • $5 and up per cwt.

  • Bridging Two Markets

    • Quality and Form

      • Estandar and Refined

      • Packaging – 50 Kilo poly versus bulk and 50 lb bag

    • Movement between geographies

      • Transportation

      • Availability of conversion facilities

  • Governmental and External Influences

    • Cane Grower Supports – Reference Price for Cane

    • Exchange rate (Peso/Dollar)

    • Energy price


2008 farm bill changes in pricing structure
2008 Farm Bill - Changes in Pricing Structure

  • Level of price support increases

    • Year Raw Sugar Refined Sugar

    • 08/09 18.00 22.90

    • 09/10 18.25 23.45

    • 10/11 18.50 23.77

    • 11/12 18.75 24.09

    • 12/13 18.75 24.09


2008 farm bill new regulatory restrictions on trq administration
2008 Farm Bill - New Regulatory Restrictions on TRQ Administration

  • TRQ must be set at the minimum at beginning of year

  • Changes thereafter are restricted

    • Prior to April 1:

      • War or natural disaster

      • Domestic sources maximized

      • New requirement that cane refiner capacity be maximized

      • Refined imports thereafter

        • Problems of definition have caused some of these to enter as raw sugar


Conversion to ethanol
Conversion to Ethanol Administration

  • Still not implemented

    • Would prospectively remove forecast surpluses

      • How to define

      • Problems with variability of underlying parameters

  • Devil will be in the details

    • Important to have sugar taken from the US and not quota origins or the incidence will fall unfairly on importing cane refiners.

    • Broad Flexibility in form of sugar

      • Raw / Thick Juice

      • Refined / Syrups


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