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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
  • 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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