Sugar and Sweeteners Outlook

Transcription

1 United States Department of Agriculture Electronic Outlook Report from the Economic Research Service SSS-236 Jan. 31, 2003 Sugar and Sweeteners Outlook Stephen Haley and Nydia R. Suarez USDA Increases Sugar Marketing Allotments Contents U.S. Sugar Year Ended, FY 2002 Current Year, FY 2003 Mexican Sugar & HFCS World Sugar Policy Review Contact & Links Tables Mexico: Sugar production and supply, and sugar and HFCS utilization Sugar production, supply,and distribution, for select countries, 2001/02 marketing year Web Sites WASDE Sugar Briefing Room The next release is May 30, Approved by the World Agricultural Outlook Board. Under authority granted in the Farm Security and Rural Investment Act of 2002, the U.S. Department of Agriculture (USDA) announced on January 10, 2003, that it was immediately raising the Overall Allotment Quantity (OAQ) for sugar marketing allotments by 500,000 short tons, raw value (STRV), to 8.2 million STRV. The resulting sector allocations for the 2002-crop are: * Beet sugar: million STRV * Cane sugar: million STRV Total million STRV The OAQ of sugar for a crop year is determined by subtracting the sum of million STRV and carry-in stocks of sugar (including inventory owned by the Commodity Credit Corporation) from the USDA s estimate of sugar consumption and reasonable carryover stocks at the end of the crop year. The OAQ is divided between refined beet sugar at percent of the overall quantity and raw cane sugar at percent of the overall quantity. According to the formula, the USDA added the sugar consumption estimate of 9.6 million STRV reported in USDA s January 10, 2003 World Agricultural Supply and Demand Estimates report (WASDE) and reasonable carry-out of 1.41 million STRV (14.5 percent of total use of million STRV). Subtracted from this total was the estimated carry-in of million STRV and the statutory million STRV. Not counted in the calculation was an estimated 200,000 STRV of raw sugar that was likely shipped in fiscal year (FY) 2002 to entities not required to report their sugar stocks to the USDA.

2 The USDA projects sugar production for FY 2003 at million STRV, an increase of 249,000 over the previous year. Cane sugar production for FY 2003 is projected at 3.94 million STRV, down 52,000 STRV from the previous year. Although production is projected to increase in Florida and Hawaii and stay about the same in Texas, these increases are more than offset by a projected production decrease in Louisiana of 247,000 STRV. FY 2003 beet sugar production is projected at million STRV, up 301,000 STRV from the previous year s total that was reduced by USDA s Payment-in-Kind (PIK) Diversion program. The USDA established the FY 2003 tariff-rate quota (TRQ) for imports of raw cane sugar into the United States at 1,117,195 metric tons, raw value (MTRV), or 1,231,497 STRV. This amount represents the level to which the United States is committed under the Uruguay Round Agreement. No allocation for Mexico under the terms of the North American Free Trade Agreement (NAFTA) has been announced. The USDA established the FY 2003 refined sugar TRQ at 37,000 MTRV, or 40,786 STRV. The refined sugar TRQ exceeds the minimum level of 22,000 MTRV to which the United States is committed under the Uruguay Round Agreement. As of January 3, 2003, raw sugar TRQ imports have totaled 223,324 MTRV. This amount is 20 percent of the total, and exceeds entries from the previous year for the same time period by nearly 37,000 MTRV. The USDA projects other program sugar imports outside the sugar TRQ for FY 2003 at 300,000 STRV. Other USDA import programs include the Refined Sugar Re-export Program, the Sugar-Containing Products Program, and the Polyhydric Alcohol Program. Non-program imports for FY 2003 are projected at 60,000 STRV. The USDA projects deliveries for domestic food and beverage use for FY 2003 at 9.6 million STRV. Before the November 2002 WASDE, the projection had been 9.8 million STRV. The projection was reduced after delivery data for September 2002 strongly indicated that sugar processors and refiners had increased deliveries above underlying demand requirements in order to reduce reported stocks before marketing allotments were put in place on October 1. The USDA projects sugar exports at 125,000 STRV. These exports occur under the Refined Sugar Re-export Program. The USDA also projects that deliveries made to domestic food and beverage manufacturers under the Sugar-Containing Products Re-export Program will total 170,000 STRV. The USDA projects FY 2003 ending stocks at million STRV, implying an ending stocks-to-use ratio of percent. On January 10, 2003, the USDA announced that it would immediately offer for sale its refined sugar inventory of 24,000 STRV, and also its remaining raw sugar inventory of 160,901 STRV. These actions will complete the disposition of over one million tons of sugar that USDA acquired during FY 2000 and Economic Research Service, USDA Sugar and Sweeteners Outlook/SSS-236/January 31,

3 U.S. Sugar Year Ended, FY 2002 On January 10, 2003, the U.S. Department of Agriculture (USDA) released its latest supply and use estimates for fiscal year (FY) 2002 and projections for FY Cane Sugar Production Crop campaigns ended in Louisiana, Florida, and Texas for a combined total of million short tons, raw value (STRV) through August, about 81,000 STRV less than the same period for the previous crop year. The Louisiana 2002/03 campaign began in mid-september and added an additional 46,399 STRV to the estimate for cane sugar production for FY The Hawaiian 2002 crop campaign began in February and totaled 195,386 STRV through September. Because the Hawaiian crop year is the same as the calendar year, the October-December portion of the 2001 campaign, totaling 55,185 STRV, is counted in FY Altogether, the final cane sugar estimate for FY 2002 is million STRV. Beet Sugar Production Beet sugar production for FY 2002 is estimated at million STRV. In the western beet sugar producing regions, production amounted to million STRV, down 19.7 percent compared with FY Beet slicing in the Great Plains and Idaho ended a month earlier compared with the previous year, basically due to fewer acres planted -- down 89,600 acres in the Far West and 75,400 acres in the Great Plains. The California April-August campaign saw about 9.3 percent fewer beets sliced than the campaign of the previous year. Sugar recovery in the western regions, however, was much higher than in the previous year--317 pounds per sliced ton compared with 284 pounds in FY Production in the eastern producing areas amounted to million STRV, down 10.7 percent compared with the previous year. The sugarbeet crop was 13.9 percent lower than the previous year s crop, basically due to poorer sugarbeet yields in Minnesota and North Dakota tons/acre compared with 21.7 tons/acre in FY The last full month of beet slicing was March, with only one processor slicing into the first part of April. Sugar recovery in the eastern regions, however, was a high 326 pounds per sliced ton, only 5 pounds less than the previous year. FY 2002 beet sugar production was affected by a poor start to the 2002 crop year sugarbeet harvest. (The September portion of the 2002 harvest is counted in FY 2002 and the rest is counted in FY 2003.) September beet sugar production was estimated at 188,341 STRV, more than 100,000 STRV less than September Trade The FY 2002 tariff-rate quota (TRQ) for imports of sugar was established at million metric tons, raw value (MTRV), or million STRV. For purposes of constructing the WASDE, actual TRQ arrivals that include late entries, early arrivals, and TRQ overfills are assigned to the fiscal year in which they actually arrived. The USDA estimates total TRQ imports at million STRV. Estimated imports are lower than the established total for several reasons. First, the total was reduced by the remaining balance of a Settlement Waiver of 14,175 STRV granted to the C&H Sugar Company. This Settlement Waiver permitted the company to import up to 100,000 tons of raw sugar during FY 2001 and 2002 after surrendering Certificates for Quota Eligibility (CQE) to the USDA for an equivalent amount of sugar. Second, the total was reduced by an exchange of CQE for sugar held by the Commodity Credit Corporation (CCC). In April, the CCC invited offers to exchange raw cane sugar that it owned for CQE; and in May, the CCC announced that bids for 115,116 STRV had been accepted in exchange for CQE representing 177,155 STRV. Third, a waiver was granted to Mexico for 19,200 metric tons of refined sugar that was unavoidably delayed in transit to the United States. The sugar will physically enter in FY 2003 but be charged against Mexico s FY 2002 TRQ. Fourth, the total was reduced because of U.S. Customs Service positive polarity adjustments of 11,038 STRV on sugar that entered in FY 2001 but was counted against the FY 2002 TRQ. Fifth, the total was reduced because of shortfalls of sugar that were allocated as part of the sugar TRQ but were not shipped. The shortfall includes 9,766 STRV of sugar not received from Mexico, 949 STRV of refined Economic Research Service, USDA Sugar and Sweeteners Outlook/SSS-236/January 31,

4 sugar not received from Canada, and a total 34,491 STRV of raw sugar not received from other countries that originally received TRQ allocations. Other USDA program imports sum to 296,000 STRV. These imports constitute sugar imported for the Refined Sugar Re-export Program, the Sugar Containing Products Re-export Program, and the Polyhydric Alcohol Program. Various refiners import molasses and sugar syrups for the purpose of extracting sugar (HTS ). An estimate of the sugar contained in these imported syrups is counted as an addition to the U.S. sugar supply. The estimate for FY 2002 was 38,544 STRV. The remainder of U.S. sugar imports are high-tier tariff imports, largely from Mexico, estimated at 42,226 STRV. Sugar exports under the Refined Sugar Re-export Program are estimated at 108,112 STRV, a decrease of 23.4 percent from the previous year. According to the U.S. Census Bureau, the major destinations for U.S. refined sugar exports included Mexico (17,500 tons), Syria (16,926 tons), Jamaica (16,154 tons), and Canada (14,712 tons). Deliveries Domestic deliveries for food and beverage use are estimated at million STRV, about 109,000 STRV less than FY 2001 deliveries. Although these deliveries are down from the previous year, it is very likely that underlying sugar demand was even lower than the WASDE delivery estimate indicates. Prior to the November WASDE, the delivery estimate had been 9.7 million STRV. Deliveries through August 2002 had totaled million STRV, about 331,000 STRV less than the previous year. Figure 1 shows that there was a large jump in deliveries in September. One time-series model used by the Economic Research Service (ERS) suggested that September 2002 deliveries could have been expected at 903,000 STRV, about 150,000 STRV less than what was counted as delivered. An examination of USDA s Sweetener Market Data for sugar deliveries to non-industrial endusers shows anomalies. Figure 2 shows monthly deliveries to the "For all other uses" category. Prior to September, monthly deliveries in this category averaged 19,600 tons. The September delivery estimate was just below 116,000 tons, nearly a six-fold increase. Figure 3 shows monthly deliveries for "Wholesale Grocers, Jobbers, and Dealers." The monthly average prior to Figure 1 Deliveries for domestic food and beverage use, FY 2001 and ,000 STRV 1,100 1,050 1, FY 2001 FY Oct Dec Feb Apr Jun Aug Source: USDA. Figure 2 U.S. sugar deliveries: "For all other uses" Short tons 140, , ,000 80,000 60,000 40,000 20,000 0 Source: USDA. Sugar deliveries Oct Dec Feb Apr Jun Aug Economic Research Service, USDA Sugar and Sweeteners Outlook/SSS-236/January 31,

5 Figure 3 U.S. sugar deliveries: "Wholesale grocers, jobbers, and dealers" Short tons 300, , , , ,000 50,000 0 Source: USDA. Sugar deliveries Oct Jan 2002 Apr Jul Figure 4 Sugar in products, domestic and imported, FY Short tons 5,700,000 5,600,000 5,500,000 5,400,000 5,300,000 5,200,000 5,100,000 5,000,000 4,900,000 Sugar in imported products. Sugar delivered to industrial endusers Source: USDA, ERS, U.S. Census Bureau. Short tons 700, , , , , , ,000 0 September had been 196,000 tons. September with the hypothesis that certain processors or marketing agents were trying to reduce their sugar holdings prior to the imposition of marketing allotments on October 1, Sugar-Containing Products Imports The upward trend in the importation of sugar-containing products continued in FY ERS estimates that sugar contained in certain imported products reached a level of 593,148 tons in FY This represents an increase of 55,000 tons over FY Figure 4 shows that while deliveries to domestic industrial endusers continue to stagnate, sugar in imports continued their upward rise, in evidence since FY Prices March No.14 futures prices have ranged from cents a pound during the first 16 days of January. Current prices of cents a pound are down 0.50 cents a pound from a month ago but are 1.15 cents above a year ago. The nearby domestic No. 14 contract traded during December within a narrow range of 40 points averaging just under 22 cents a pound for the month. The outlook for a significant increase in 2002/03 U.S. beet sugar production relative to last year, sluggish commercial demand, uncertainty about U.S. sugar deliveries, favorable sugarcane crop prospects in Florida, and the government sugar sales have weighed on futures prices in recent weeks. March No. 11 world futures prices weakened to 7.4 cents a pound in early December, down 0.2 cent from a month earlier, and 0.4 cent below a year ago. Expectations for higher 2002/03 sugar production in the European Union and China, sluggish commercial demand, the outlook for increasing 2002/03 world sugar supplies, larger 2002/03 world sugar beginning stocks, lower than anticipated sugar imports by China, and higher sugar exports by Brazil have pressured futures prices in recent weeks. No. 11 world futures prices are likely to continue the downward trend in the next few months due to the outlook for record 2002/03 world sugar production, increasing global sugar export availability, lower Russian imports in upcoming months, and forecasts for a 2-4 million ton world sugar surplus. Current Year, FY 2003 Cane Sugar Production Cane sugar production for FY 2003 is projected at 3.94 million STRV, down 52,000 STRV or 1.3 percent from the previous year. Although production is projected to increase in Florida and Hawaii and Economic Research Service, USDA Sugar and Sweeteners Outlook/SSS-236/January 31,

6 stay about the same in Texas, these increases are more than offset by a projected production decrease in Louisiana of 247,000 STRV, or 15.6 percent. Florida cane sugar production is projected at 2.15 million STRV, which, if realized, would be a record. The National Agricultural Statistics Service (NASS) estimates Florida sugarcane acreage harvested for sugar at 442,000 acres and production of sugarcane for sugar at million tons, implying a yield estimate of 38.2 tons per acre, the highest since FY The harvest has benefitted from dry weather conditions. Sugar recovery through early January has been good, implying a season-average recovery rate projection of percent. Louisiana cane sugar production is projected at 1.34 million STRV. Field conditions were negatively affected by tropical storm Isidore and then by Hurricane Lili. Isidore flattened the sugarcane crop but losses from twisting and breaking of cane stocks were considered to be light. The chief problem was the arrival of Lili less than a week after Isidore with high winds and more rain that caused much flooding. Even after Isidore, the cane growing areas received more rain that made harvesting temporarily impossible and reduced the potential for good sugar recovery. In the end, although NASS reduced its sugarcane production estimate by only 2.3 percent from the pre-storm period to million tons, sugar recovery was projected to be at its lowest level since FY 1987, at 9.94 percent. The harvest has run into mid-january, with no indications of losses from freezes that can be a problem that time of year in Louisiana. Although NASS estimates a decrease in Texas sugarcane for sugar production of 286,000 tons (to million tons), Texas sugar production is projected at 175,000 STRV, about the same as last year. This year s smaller sugarcane crop has higher sucrose levels than the crop last year. It is expected that the sugar recovery rate will be in the neighborhood of the rates between FY 1999 and 2001, about 10.6 percent. Due to wet field conditions, the harvest through November has been running behind relative to other years but should pick up as the season progresses. Hawaii sugar production for FY 2003 is projected at 275,000 STRV. The Hawaiian harvest season, unlike mainland areas, follows the calendar year. Although NASS does not make a sugarcane area and production forecast for 2003 until August, it is expected that with normal weather conditions, production will be about the same in Kauai and increase more than 10 percent in Maui. Beet Sugar Production NASS estimates sugarbeet area planted for FY 2003 at million acres, up from last year by 57,400 acres. Most of the increase occurred in the Upper Midwest (41,000 acres) and Idaho (13,000 acres) in the Far West. Planted acreage is about the same as last year in the Michigan/Ohio region and in the Great Plains, where acreage expansion in Nebraska (8,400 acres) was offset by reductions in Wyoming (8,500 acres). Operations remained suspended at the processing plant in Moses Lake, Washington although it may resume operations in FY NASS forecasts sugarbeet area harvested at million acres, an increase of 117,400 acres compared with last year s total that was low because of the 2001 Payment-in-Kind (PIK) Diversion program. NASS forecasts sugarbeet production at million tons. The beet growing season did not start out well. In the Red River Valley, there were late spring frosts and wetter than usual conditions that harmed the beets. From the start, the Great Plains experienced hot and dry conditions, and there were irrigation restrictions. Both conditions contributed to a sugarbeet yield in the Great Plains of 19.1 tons per acre, the lowest level since the 1995 crop year. Conditions in other areas were not as poor, and by late summer, favorable weather conditions in the Red River Valley helped to improve crop prospects. The harvest in Idaho ran later than usual due to late ripening of the crop. FY 2003 beet sugar production is projected at million STRV. This assumes that 97 percent of harvested beets are sliced. The to-date sugar recovery for the 2002 crop year harvest, not counting sugar from desugared molasses, has been 266 pounds per sliced ton. On average, one could expect an additional rise in the recovery rate to 288 pounds per sliced ton by the end of the crop year. Assuming production of 280,000 STRV in September 2003 (this being part of next season s crop but included in FY 2003), and also accounting for sugar production from desugared Economic Research Service, USDA Sugar and Sweeteners Outlook/SSS-236/January 31,

7 molasses, the FY 2003 beet sugar production is projected to be million STRV. TRQ Imports On July 30, 2002, the USDA established the FY 2003 TRQ for imports of raw cane sugar into the United States at 1,117,195 MTRV (1,231,497 STRV). This amount represents the level to which the United States is committed under the Uruguay Round Agreement. No allocation for Mexico under the terms of the North American Free Trade Agreement (NAFTA) has been announced. Mexico, however, received a TRQ allocation of 7,258 MTRV as part of the regular raw sugar TRQ. The USDA established the FY 2003 refined sugar TRQ at 37,000 MTRV (40,786 STRV) for which the sucrose content, by weight, in the dry state, must have a polarimeter reading of 99.5 degrees or more. This refined sugar TRQ exceeds the minimum level of 22,000 MTRV to which the United States is committed under the Uruguay Round Agreement. As part of the refined sugar TRQ, there is an allocation for specialty sugar of 16,656 MTRV, of which 15,000 MTRV are reserved for organic sugar and other specialty sugars not currently commercially produced in the United States or reasonably available from domestic sources. As has become customary, allocations within the refined sugar TRQ have been made to Canada (10,300 MTRV) and Mexico (2,954 MTRV). As of January 3, 2003, raw sugar TRQ imports have totaled 223,324 MTRV. This amount is 20 percent of the total, and exceeds entries from the previous year for the same time period by nearly 37,000 MTRV. With the exception of allocations made to Canada and Mexico, the refined sugar TRQ has been largely filled. To date, only 308 MTRV of Mexican refined sugar has entered as part of the 2003 sugar TRQ. Non-TRQ Imports and Program Exports of Sugar and Sugar-Containing Products Other program sugar imports outside the sugar TRQ for FY 2003 are projected to total 300,000 STRV. Other USDA import programs include the Refined Sugar Re-export Program, the Sugar-Containing Products Program, and the Polyhydric Alcohol Program. Non-program imports for FY 2003 are projected at 60,000 STRV. This total includes 50,000 STRV of sugar contained in molasses imported for the commercial extraction of refined sugar (HTS ). High-tier tariff imports from Mexico are projected at 10,000 STRV. This amount represents expected entries occurring close to the U.S.-Mexico border. In the WASDE, the USDA relies on specific indications regarding high-tier NAFTA imports before projecting imports above basic trans-border import levels. Sugar exports are projected at 125,000 STRV. These exports occur under the Refined Sugar Re-export Program. The USDA projects that deliveries made to domestic food and beverage manufacturers under the Sugar-Containing Products Re-export Program will total 170,000 STRV. Domestic Food and Beverage Deliveries Deliveries for domestic food and beverage use for FY 2003 are projected at 9.6 million STRV. Before the November 2002 WASDE, the projection had been 9.8 million STRV. The projection was reduced after delivery data for September 2002 indicated that sugar processors and refiners had increased deliveries above underlying demand requirements most likely in order to reduce reported stocks before marketing allotments were put in place on October 1. Because FY 2002 food and beverage deliveries exceeded the October WASDE s estimate by over 200,000 STRV, and being unable to discern any fundamental change in demand conditions, the projection for FY 2003 was reduced by 200,000 STRV to its current projected level. Miscellaneous Adjustments for FY 2003 Normally, the USDA does not project statistical adjustments in the WASDE s miscellaneous category. It makes an estimate in the November WASDE after data for the completed fiscal year have been reported to the USDA by sugar processors, millers, and refiners. For FY 2003, this would not be until November The miscellaneous category is comprised of four primary components: refining losses, inventory adjustments, differences in raw sugar imports between totals reported by cane refiners and the U.S. Customs Bureau, and sugar shipments less receipts Economic Research Service, USDA Sugar and Sweeteners Outlook/SSS-236/January 31,

8 among beet sugar processors, cane millers, and cane refiners. Relationships within and between these categories are often random and cannot be projected on a monthly basis with any reliability. Over a variable time-period, however, within-category sugar levels tend to converge to a number not statistically different from zero. A closer examination of the "shipments less receipts" category for the cane milling and refining sectors suggests a predictable relationship. For the most part, the "shipments less receipts" category for cane millers is comprised of shipments of raw cane sugar disbursed to cane refiners for further processing. The average monthly level for FY 1998 through 2001 was about 316,000 STRV. The "shipments less receipts" for cane refiners is mostly the receipt of raw cane sugar that has been shipped by the millers. The average monthly level for FY 1998 through 2001 was about -323,000 STRV. Although summing the "shipments less receipts" for the millers and refiners yields an average -7,000 STRV, this number cannot be statistically distinguished from zero. The implication is that, over time, the net "shipments less receipts" for the joint cane sugar sector converge to zero. FY 2002 data for sugar shipments less receipts in the cane milling and refining sectors began to show a pattern on which a projection in FY 2003 could be Figure 5 Net shipments less receipts of sugar for cane processors and refiners, FY 2002 STRV 300, , , , ,000 50, ,000 Source: USDA. Cane sector: Accumulated shipments less receivable Oct Dec Feb Apr Jun Aug made, and is seen in figure 5. Cane millers shipments began exceeding cane refiners receipts in April 2002 and continued an additional five consecutive months until September The cumulative total for FY 2002 net cane sector shipment less receipts was about 260,000 STRV. It is hypothesized that prior to the enforcement of marketing allotments, millers were shipping sugar to entities that were not required to report receipts to the USDA. It is expected that this sugar will find its way to refiners during FY In fact, the net "shipments less receipts" level for October 2002, the first month of the fiscal year, was -124,000 STRV. It is expected that the "re-balancing" will continue throughout the fiscal year. A conservative projection of -200,000 STRV is included in the WASDE to account for this phenomenon. Ending Stocks Projected ending stocks are the difference between projected total supply and projected total use. Total supply is constituted by beginning stocks, production, and imports, and is projected at million STRV. Total use is constituted by exports, deliveries, and miscellaneous adjustments, and is projected at million STRV. Accordingly, ending stocks are projected at million STRV, implying an ending stocks-to-use ratio of percent. As of the end of November 2002, the Commodity Credit Corporation (CCC) was holding 253,539 STRV of sugar; however, only 212,000 STRV of this sugar remained uncommitted. The uncommitted amount was split between refined sugar (24,000 STRV) and raw cane sugar (188,000). On January 10, 2003, the USDA announced that it would immediately offer for sale its refined sugar inventory of 24,000 STRV, and also its remaining raw sugar inventory of 160,901 STRV. The raw sugar offered for sale is less than reported uncommitted holdings, suggesting that some of the raw sugar is not of high enough quality for sale. The USDA noted that these actions will complete the disposition of over one million tons of sugar that USDA acquired during FY 2000 and Marketing Allotments The Farm Security and Rural Investment Act of 2002 (the 2002 Farm Act) requires that USDA operate the Economic Research Service, USDA Sugar and Sweeteners Outlook/SSS-236/January 31,

9 sugar program, to the maximum extent possible, at no-net cost to taxpayers, thus avoiding forfeitures to the CCC. The USDA announced in August 2002 that domestic marketing allotments would be in effect for the 2002 crop year with an overall allotment quantity (OAQ ) of million STRV, using the allotment formula guidelines in the 2002 Farm Act. The USDA noted at the time that considerable uncertainties affected market prospects and that the OAQ could be adjusted subsequently as circumstances warranted. The OAQ of sugar for a crop year is determined by subtracting the sum of million STRV and carry-in stocks of sugar (including CCC inventory) from the USDA s estimate of sugar consumption and reasonable carryover stocks at the end of the crop year. The OAQ is divided between refined beet sugar at percent of the overall quantity and raw cane sugar at percent of the overall quantity. On January 10, 2003, the USDA announced that it was immediately raising the OAQ by 500,000 STRV to 8.2 million STRV. The resulting sector allocations for the 2002-crop are: According to the formula, the USDA added the WASDE sugar consumption estimate of 9.6 million STRV and reasonable carry-out of 1.41 million STRV (14.5 percent of total use of million STRV). Subtracted from this total was the estimated carry-in of million STRV from the WASDE and the statutory million STRV. Not counted in the calculation was the 200,000 STRV of raw sugar that was likely shipped in FY 2002 to entities not required to report their sugar stocks to the USDA. The USDA noted that it will continue to closely monitor market performance and critical program variables throughout the year to ensure meeting program objectives and maintaining market balance. The USDA promised to consider further adjustments in the OAQ as conditions may warrant, and further reassured sugar-users and other consumers that it would consider increasing the FY 2003 sugar TRQ in order to assure adequate supplies of sugar at reasonable prices. * Beet sugar: million STRV * Cane sugar: million STRV Total million STRV Economic Research Service, USDA Sugar and Sweeteners Outlook/SSS-236/January 31,

10 Mexican Sugar and HFCS The USDA announced revised forecasts and estimates for Mexican sugar production, supply, and utilization on November 27, 2002 (table 1). Sugar production for 2002/03 is forecast at million metric tons, raw value (MTRV). Area harvested for sugarcane is projected at 605,000 hectares, down only slightly from last year. Sugarcane production is projected at 41.6 million metric tons, implying sugarcane yield at 68.8 tons per hectare, down 2.3 percent from last year. The decrease is primarily due to dry weather conditions that prevailed in Veracruz during most of the growing season. The harvest began the week of November 9. Sugar production through the eighth week of the harvest is estimated at 536,500 metric tons, tel quel, and milled sugarcane is estimated at million metric tons. The implied recovery rate is only 9.19 percent, much lower than the 9.59 percent same-period average recovery rate for the three previous harvests. Also, for the last three harvests, the recovery rate for the entire harvest season has averaged 15.6 percent higher than the rate through the eighth week. Applying this percentage to the current season would imply a final recovery of percent. In order to meet USDA sugar production projections, the final recovery would have to be percent, only slightly lower than last year s record recovery of percent. This leads one to expect a sharp upturn in sugar recovery as the harvest season continues, or the possibility of lower than projected sugar production. Table 1--Mexico: sugar production and supply, and sugar and HFCS utilization Fiscal year (Oct/Sept) / / 1,000 metric tons Beginning stocks 1,587 1,403 1, ,065 1,549 1,301 Production 4,642 4,818 5,486 4,982 4,979 5,220 5,166 4,999 Imports Supply 6,462 6,412 6,573 6,015 5,958 6,328 6,769 6,349 Disappearance Industrial consumption 2,217 2,102 2,162 2,157 2,144 2,146 2,545 2,746 Nonindustrial consumption 2,126 2,199 2,229 2,265 2,301 2,336 2,371 2,405 Other consumption Total 4,414 4,391 4,505 4,549 4,576 4,623 5,065 5,322 Exports Raw exports Refined exports Total , Total use 5,059 5,357 5,581 5,073 4,893 4,779 5,468 5,502 Ending stocks 1,403 1, ,065 1,549 1, Stocks-to-use HFCS consumption 2/ / Forecast. 2/ Dry weight. Source: USDA. Economic Research Service, USDA Sugar and Sweeteners Outlook/SSS-236/January 31,

11 Sugar disappearance is forecast at million MTRV. Deliveries to non-industrial endusers are forecast at million MTRV. Most of the growth since last year (34,000 MTRV) is attributable to population growth. Deliveries to industrial endusers are forecast at million MTRV, up 201,000 MTRV from 2002 and 600,000 MTRV from Although part of this growth can be attributed to growth in income and population, most of the growth stems from reduced high fructose corn syrup (HFCS) consumption due to the 20 percent tax in force on soft drinks that use HFCS as a sweetening agent. This tax has been extended by both chambers of Mexico s legislatures for the whole of Figure 6 shows estimated sweetener use by the Mexican soft drink industry. Estimated use for the October/September 2001 fiscal year (FY) is 450,000 metric tons. The tax became effective in January 2002 and the effect on HFCS demand was immediate. Deliveries for FY 2002 took place mostly in the October through December 2001 period and are estimated at 112,500 metric tons. Deliveries for FY 2003 are forecast at zero. Remaining HFCS demand is forecast at 150,000 metric tons for industrial uses other than the soft drink industry (fig. 7). Remaining sugar disappearance is projected at 171,000 MTRV. This component is primarily sugar Figure 6 Estimated sweetener use in Mexican soft drink industry Metric tons 1,800,000 1,600,000 1,400,000 1,200,000 1,000, , , , ,000 HFCS Sugar Source: ERS. Figure 7 Estimated industrial sweetener use less soft drink manufacturing industry use, in Mexico Metric tons 1,200,000 1,000, , , , ,000 HFCS Sugar Source: ERS. contained in products that are exported to other countries. It includes sugar deliveries that comprise the Mexican PITEX program. This program allows domestically-produced sugar to be sold to food manufacturers at levels close to the world price. The normally would have to be imported by the food manufacturers. The manufacturers are required to export products that contain an equivalent amount of sugar within a 3-month period. The Mexican Government typically reports sugar delivered under the PITEX program as exported sugar. The USDA forecasts Mexican sugar exports at 180,000 MTRV. Although domestic disappearance is projected to be greater than production, stocks are expected to be drawn down by as much as 454,000 metric tons. Ending stocks at 847,000 metric tons would imply an ending stocks-to-use ratio of 15.4 percent, which is relatively low for Mexico. Mexico's share of the FY 2003 U.S. tariff-rate quota (TRQ) has been set at 10,212 MTRV. It is comprised of the following: (1) 7,258 MTRV under the World Trade Organization (WTO) raw sugar minimum access commitment; and (2) 2,954 MTRV of the 38,000 MTRV of the U.S. refined sugar TRQ. There has been no announcement regarding the TRQ component set out in the North American Free Trade Agreement (NAFTA). This component is based on Mexico s net surplus production status. The NAFTA Economic Research Service, USDA Sugar and Sweeteners Outlook/SSS-236/January 31,

12 formula for surplus status is Mexico s projected sugar production less projected consumption of sugar and HFCS, plus a possible adjustment for the previous year for realized components of the formula that differ from what was earlier projected. Based on USDA production and consumption projections, it would not appear that Mexico is a net surplus producer for FY In that case, the first two components described above would fully comprise Mexico s share of the U.S. sugar TRQ (10,212 MTRV). There had been speculation that the United States and Mexico were close to a resolution of their disputes over NAFTA sweetener provisions and that Mexico might receive as much as 300,000 MTRV access to the U.S. market in FY 2003 and perhaps beyond. The United States reportedly wanted access to be limited to mostly raw sugar and that there be a limit on the amount of sugar that could enter at the high-tier tariff. The United States also reportedly wanted import access into Mexico of 300,000 metric tons for U.S.-produced HFCS, plus an amount to match lost sales due to the Mexican tax on soft drinks that contain HFCS. However, the soft drink tax would have to be rescinded by the Mexican Chamber of Deputies. Settlement prospects are, therefore, unlikely in the near term. Economic Research Service, USDA Sugar and Sweeteners Outlook/SSS-236/January 31,

13 World Sugar Policy Review Western Hemisphere Argentina Because Argentina has been in a severe, comprehensive macroeconomic crisis, there is no financial system to support producers. Nonetheless, producers have benefitted from the collapse of the Argentine peso because of the increase in the perceived cost of imported sugar, especially from Brazil. Argentina imposes a 20-percent tariff on sugar imports. In addition, Argentina places a variable duty on imports from Brazil that amount to about $60 a ton. An export tax of 5 percent impedes sugar exports. Intermediate prospects restrict Argentine sugar production to satisfying domestic consumption needs (1.44 million), and preferential exports of about 110,000 tons to Chile and the United States. Brazil Brazil is the world s largest producer of sugarcane, sugar, and fuel alcohol (ethanol). Brazil s sugar and ethanol industries operate in an economy that has experienced large declines in government intervention, increased privatization, and reduced inflation. However, the economy has been burdened by high international debt, high internal interest rates, and a depreciating currency. Although for many years the Brazilian Government taxed its sugar exports in order to keep domestic sugar prices low, the Government no longer influences sugar production and exports. The sugar situation is more affected by the Government s policy toward alcohol. Brazil s interest in ethanol production began in the early 1970s when the high cost of petroleum imports spurred Brazil to develop alternative energy sources. The ethanol industry developed rapidly, mostly through the support and control of the Brazilian Government. The demand for ethanol has been divided between hydrous and anhydrous ethanol uses. In the early 1970s, Brazil favored the manufacture of automobiles that used 100 percent pure hydrous alcohol. The demand for hydrous ethanol peaked in 1989, and has been declining as the vehicles designed to use hydrous ethanol have worn out. Anhydrous ethanol is blended with gasoline for use in automobiles that normally use pure gasoline but can also use a blend (like most U.S. car engines). From the 1980s through the late 1990s, Brazil used about 65 percent of its annual sugarcane crop for alcohol and the remaining 35 percent for sugar. Huge alcohol stocks became a problem in 1998 and 1999, causing low ethanol prices. Untenable stock levels induced government and industry reforms. The Brazilian Government gave up most of its direct control over ethanol, including its monopoly over distribution. Brazilian ethanol producers founded "Brasil Alcool S.A.," an enterprise that manages large ethanol supplies through stocking of surpluses. The ethanol producers also founded the Brazilian Alcohol Exchange whose function was to centralize the domestic alcohol market and give the market more overall stability. These actions implied increases in sugar production and exports. The ratio of sugarcane used to produce sugar has therefore increased to about 49 percent due to the reforms. The Brazilian Government now chiefly influences ethanol sales and prices through regulation of the ethanol content in gasoline. It is likely that the main determinant of growth in sugar output and exports will continue to be government policies affecting the production and use of ethanol. These policies will be affected by trends in world prices of crude oil. Also important will be Brazil s policy toward environmental issues such as air quality that affect the demand for ethanol as a cleaner source of energy than gasoline. Chile Chile is a relatively low-cost producer of sugarbeets. Refined beet sugar production has averaged about 481,000 MTRV over the last 10 years. This production has provided about 66 percent of domestic consumption needs. According to the International Sugar Organization (ISO) for the period , Chile imported most of its sugar from Argentina (31.4 percent), Guatemala (29.4 percent), and Brazil (17.4 percent). USDA data show no Chilean sugar exports Economic Research Service, USDA Sugar and Sweeteners Outlook/SSS-236/January 31,

14 since 1984, and ISO data show exports less than 250 MTRV in 1999 and Chile provides support to its sugar sector through price bands. Price band levels are announced prior to the planting season in order to provide producers with information on the level of support they can anticipate. The goal is to promote domestic sugarbeet production and processing by discouraging sugar imports. The minimum import price is typically set above both world and Chilean prices. When world prices are below the floor of the price band, a surtax is applied on all sugar imports, based on the lowest quoted FOB price necessary to bring CIF/Santiago prices up to the price band floor. Reductions from the normal 7-percent import duty apply when world prices exceed the ceiling of the band. Price bands effective for the period April 1, 2003, through March 31, 2004, were set as follows: an import floor price of $375 per metric ton and an import ceiling price of $406 per metric ton. On December 11, 2002, the United States and Chile reached an agreement on free trade. The accord, which is subject to the approval of the U.S. Congress and legislative authorities in Chile, would eliminate tariffs in the first year on more than 85 percent of trade in consumer and industrial goods. After 12 years, there would be no duties on any traded product between the two countries. The USDA has stated that 75 percent of all U.S. farm goods will enter duty-free within 4 years, and all other duties will be gone after 12 years. The agreement also promises to reduce barriers for services, protect intellectual property rights, ensure regulatory transparency, and provide effective labor and environmental law enforcement, according to the Office of the U.S. Trade Representative. If enacted, the free-trade pact would be the first that the United States has had with a South American country. Colombia The Colombian Government established a Price Stabilization Fund in January Although the fund guarantees a producer price and has a mechanism for absorbing world price fluctuations, the price itself is close to world levels. In addition to the guaranteed price, the Colombian Government provides assistance to poor farmers who produce sugarcane for panela, a non-centrifugal sugar. These efforts concentrate on expanding the availability of credit, developing more productive and disease-resistant varieties of sugarcane for panela, and by providing extension services aimed at improving cultivation practices. Although sugarcane for panela yields have not improved much due to the program, there has been some improvement in farm income for panela producers. Colombian exporters of centrifugal sugar and panela receive export subsidies in the form of income tax rebate certificates (CERTS). These CERTS have a value equal to a percentage of the FOB export value. Since 1992, the CERTS have been set at 2.5 percent of the FOB value for centrifugal sugar and starting in January 2001, at 2.5 percent for panela, down from 4 percent. These export subsidies are not applied on sales to the United States because of the higher prices obtained under the U.S. sugar tariff-rate quota system. Under the terms of the Andean Community (Venezuela, Ecuador, Peru, and Bolivia), sugar imports from other Community countries are allowed duty-free entry into the Colombian market. Sugar imports from countries outside the Andean Community are discouraged through the application of the Andean Community s price band. The basic duty rate on imports of raw and refined sugar from non-andean Community countries is 20 percent. The variable surcharge calculation for sugar is based upon adjusted floor, ceiling, and reference price levels determined by the Andean Board of Directors. Under this system, import duties are levied on calculated reference prices. If the applicable reference price falls within the floor and ceiling price band, the import duty is calculated using the basic tariff rate applied to the reference price. When the reference price falls below the floor price, a surcharge based upon the difference between the floor price and the reference price is assessed. When the reference price exceeds the ceiling price, a reduction is made to the applied duty based upon the difference between the reference and the ceiling price. In September 2001, the Colombian Government mandated the use of alcohol in gasoline sold in cities with populations of more than 500,000 inhabitants. The time-frame for implementation of the law was 5 years. A serious problem for refiners is the high cost of producing alcohol -- it is estimated that the production cost for alcohol is three times that of sugar. Future investment in expensive refining equipment will depend on price commitments by the Economic Research Service, USDA Sugar & Sweeteners Outlook/SSS-236/January 31,

15 Government that would guarantee an adequate return on investments. Dominican Republic During the 1970s, there were 16 mills operating in the Dominican Republic, producing over 1.0 million STRV of raw sugar. The sugar sector has since deteriorated, with production in the last few years averaging below 500,000 MTRV. There are now only seven functioning mills, and one of those is not in operation. Access to the U.S. market through the U.S. tariff-rate quota is an important economic concern for the industry. Although the Dominican Republic has the highest share of the U.S. raw sugar TRQ, allocations of the TRQ have fallen in recent years to only 185,300 MTRV, down 48 percent from just 6 years ago. The current allocation amount, however, constitutes a high percentage of production and its importance is evidenced by the fact that the Dominican Republic chooses to import sugar from the world market in order to have enough sugar to meet domestic requirements and still meet the TRQ. Historically, the Dominican Republic Government has been a dominant force in the sugar industry. It owned the largest company, Consejo Estatal del Azucar (CEA), which in the 1970s operated 12 of the 16 mills and manufactured over 65 percent of the total production. Over time, the financial situation of these mills deteriorated. Some of the mills were closed, and in 1999, the remaining mills were privatized. Several laws regulate the sugar sector in the Dominican Republic. Law 491 controls the relationship between private cane producers and processors and sets the price for cane based on sugar content. Law 619 assigns regulatory functions to a government office called INAZUCAR. This agency sets local sugar prices along with the Secretary of Industry, regulates domestic and export marketing, and is responsible for distributing the U.S. tariff-rate quota among the local producers. For over 30 years, the U.S. sugar quota has been divided among the three producers according to a formula, which was established when the Government-owned mills were the dominant producers. According to the formula, the CEA was allocated percent of the quota; Central Romana, percent; and the Vicini Group, 7.9 percent. These percentages were changed infrequently (e.g. 1977, 1998) until the remaining CEA mills were privatized. Beginning in market year (MY) 2000, a new distribution pattern was announced: Central Romana, 43.5 percent; Consorcio Azucarero del Caribe, 26.6 percent; Vicini Group, 9.5 percent; Central Pringamosa, 7.6 percent; Consorcio Pringamosa, 6.1 percent; Consorcio Caña Brava, 3.7 percent; and Consorcio Azucarero Central, 3.0 percent. In the future, the allocations will be revised based on performance and should eventually be determined by a formula, which averages each producer's production over the most current 3-year period. The Government hopes that this will provide an incentive for producers to reduce costs as access to the U.S. sugar TRQ represents potential earning power. As part of its WTO ratification agreement the Dominican Republic established an in-quota tariff level for sugar of 20 percent for 23,000 metric ton imports, gradually increasing to 30,000 metric tons by the year Maximum out-of-quota tariffs were established at 100 percent, decreasing to 85 percent in As a result of import protection, retail prices for refined sugar range between 26 and 30 cents a pound, and wholesale prices for raw sugar range between 15 and 18 cents a pound. Guatemala Sugar policy in Guatemala is set and coordinated by the Sugar Board. The Sugar Board includes representatives from the Ministry of Economy, sugarcane producers, and sugar mills. The Board establishes production goals, sets sugarcane prices through a formula based on market sugar prices, and also allocates Guatemala s production of the U.S. sugar quota to the different sugar mills. The allocation to each mill is based on past production performance, previous quotas, and milling capacity. Because Guatemala exports about 75 percent of its production, producer prices are aligned with world prices. In 2001, the Guatemalan Government opened the market to sugar imports and established an import quota of 5,000 MT per year at 0 percent tariff. Import tariffs on sugar outside the quota are 20 percent. Economic Research Service, USDA Sugar & Sweeteners Outlook/SSS-236/January 31,

16 Jamaica Jamaica is a high-cost sugar producer whose industry is characterized by low productivity in both field and factory operations. Current production costs are estimated at $650 per metric ton, well above the $500 per ton realized in revenue. Problems are manifest in low crop yields, poor cane quality, labor-overstaffing at inflated costs, and lack of credit. After privatizing the industry in 1994, the Jamaican Government was forced to re-acquire the industry in 1998 after private firms were unable to manage and reform the industry. The Jamaican Government developed a 5-year plan for the sugar industry in The ultimate goals of the plan were to produce 220,000 metric tons of raw sugar at a cost of $420 a metric ton and to re-privatize the industry at positive, sustainable profit levels. In spite of good intentions, enumerated goals for the first 2 years of the plan were not met. One of the recognized goals was to systematically replant fields with higher yielding cane varieties. Jamaica s Sugar Industry Research Institute provides the necessary plant research and commercializes various high yield cane varieties. The problem is that replanting costs are estimated to vary between $1,313 and $2,013 per hectare. Small planters especially find it difficult to bear these high costs. As a result, re-planting, targeted at percent a year, was achieved on only 8 percent of the total area under cultivation for the 2000/01 sugar crop. High production costs are partially compensated for by high sales returns from preferential trade agreements. Jamaica receives an African, Caribbean, and Pacific (ACP) quota from the European Union (EU) equal to 129,000 MTRV or about 78 percent of average yearly sugar exports. Unit ACP sales into the EU are valued at euros per metric ton. Jamaica has also been able to depend on selling sugar into the EU market under the Special Preferential Sugar (SPS) arrangement, although future sales are threatened by competition from low-income sugar exporters shipping to the EU under the Everything But Arms (EBA) arrangement. In 2001, SPS sales to Portugal amounted to 36,000 MTRV. Jamaica also receives an allocation under the U.S. raw sugar tariff-rate quota program. Since FY 2001, TRQ allocations assigned to Jamaica have been set at 11,584 MTRV. Because most of Jamaica s sugar production is exported due to high unit returns, about 60 percent of domestic consumption needs are met by imports of mostly refined sugar. Since 1999, sugar has been imported under a two-tiered tariff system. Refined sugar for manufacturing purposes has entered duty-free, while refined sugar for the direct-consumption retail market has been subject to a 40-percent common external tariff (CET) plus a 63-percent stamp duty. Problems have arisen because sugar imported for manufacturing has been diverted into the higher-priced retail market. The Jamaican Government has proposed to replace the import regime with a licensing arrangement. The government would grant import licenses to large manufacturers and the Jamaica Cane Product Sales (JCPS), a central marketing agency for the sugar industry. Small- and medium-sized manufacturers would source refined sugar from the JCPS at a duty-free rate plus a marginal mark-up. The distribution of refined sugar for retail would also be the responsibility of the JCPS. Africa/Middle East Egypt Egypt produces both cane and beet sugar. Cane sugar is produced under monopolistic conditions by the publically-owned Sugar and Integrated Industries Company (SIIC). The SIIC is not an efficient enterprise--it can currently process only percent of the total available sugarcane crop and is forced to contract out some of its excess refining capacity to private importers of raw sugar to help stem financial losses. The Egyptian Government promotes sugarcane production because it provides needed rural employment opportunities for both farmers and processing workers in the area of upper Egypt. Because sugarcane competes for scarce water resources with other crops and uses, the government actively supports the development of high-yielding sugarcane varieties with the objective of decreasing the area planted to sugarcane. Nonetheless, the government establishes high prices for sugarcane that encourage area expansion. The established price for 2002 was 95 Egyptian pounds (LE) per ton, or about $ This price is expected to increase over 15 percent for the next crop year. Economic Research Service, USDA Sugar & Sweeteners Outlook/SSS-236/January 31,

17 Beet sugar is a less important source of domestically-produced sugar but it has been growing in importance. In 2000, it comprised 22 percent of total sugar production and it grew to 28 percent in The Egyptian Government promotes sugarbeet production in reclaimed lands. The price of sugarbeets is set by the government at a base rate of LE 77, or $16.67, a ton in 2002 for a sugar content of 16 percent. The price rises for increased sugar content, and a premium is paid for timely delivery to the processing facility. The Egyptian Government subsidizes sugar consumption under the national ration system. The government determines the selling price of 1 million tons of white sugar produced by public sector companies. Government mills sell the sugar to the Ministry of Supply at below cost, but does not pay interest on loans from the government they take out to pay the farmers. The 2002 selling price was LE 140 a ton, plus a 5-percent profit margin. One-half of the sugar is sold to the Ministry of Supply for distribution to ration cardholders. The Ministry of Supply sells sugar at LE 600 per ton or 60 piasters (1 LE = 100 piasters) per kg to ration card holders. The other half of the subsidized sugar is sold by two distribution companies belonging to the Ministry of Supply. They sell sugar to private sector companies which bag and re-sell the sugar at 130 piasters/kg. (Bulk sugar sells for about 115 piasters per kg.) Non-rationed sugar is available to consumers through government outlets at LE 1.30 (28 cents) per kg. The current retail price of sugar in private sector shops runs between LE 1.60 (34 cents) and LE 2 (43 cents) per kg. Egypt relies on imports to meet about one-third of its total sugar requirement. Since November 2000, sugar tariff rates have been 5 percent for raw sugar and 10 percent for refined sugar. Tariffs on other sugar in non-solid form such as syrups and molasses are 30 percent and the tariff rate for confectionary sugar is 40 percent. Egypt normally maintains strategic sugar stocks equal to about 60 days of direct consumption, or at about 335,000 mt. Stocks are held mainly by the SIIC, or at storage facilities belonging to the Ministry of Supply. Turkey Turkish production policy is based on legislation (the Sugar Act) made effective in April The Sugar Act assumes that domestic sweetener demand will be met by domestic production. The Act established a Sugar Board that, for the next 5 years, is charged with analyzing the outlook for sweetener supply and demand. Resulting projections are the basis for production quotas for both refined beet sugar and corn sweeteners. Individual processing plants are assigned quotas based on production levels for the three previous years. The "A" quota is set for domestic consumption. The "B" quota is set at 2 percent of the "A" quota and is intended as a reserve to meet emergency needs. The corn sweetener quota is limited to 10 percent of the "A" quota for refined beet sugar, although legislation allows this percentage to be increased to 15 percent under certain circumstances. Any sugar produced in excess of the "A" and "B" quotas constitute "C" sugar that cannot be sold domestically. "C" sugar must be sold in the world market at prevailing prices that are far below domestic prices. If a producer fails to fulfill an assigned quota by a significant amount, the quota will be reduced the following year. Beginning in MY 2003, the Turkish Government will no longer announce procurement prices for sugarbeets or ex-factory sugar prices. Plant owners are to negotiate sugarbeet prices with producers. Ex-factory prices for sugar are expected to be set in accordance with plant production costs. Retail prices are determined in the market. The Turkish Government imposes a duty of percent on the CIF value of sugar imports from countries in the European Union, and a duty of 138 percent on sugar from all other origins. Sugar can only be imported if the Turkish Foreign Trade Under Secretariat issues a license based on its evaluation of the supply and demand outlook. South Africa The South African Sugar Association (SASA) and the Department of Trade and Industry (DTI) executed a Sugar Agreement in An important element of the Agreement was a new cane payment system based on the "recoverable value" (RV) in sugarcane delivered to mills. The goal was to increase the incentive for growers to produce a better quality product, chiefly reducing the non-sucrose content of the juice extracted from sugarcane. Part of the objective was to reduce delays from the moment of Economic Research Service, USDA Sugar & Sweeteners Outlook/SSS-236/January 31,

18 harvesting to that of crushing. This implies incentives to improve the handling, transportation, and receipt of the cane. The estimated 2002 cane price was rand per ton, or about $11.26 per ton. The Sugar Agreement deregulated the pricing of sugar. Previously, the DTI was directly involved in setting the domestic sugar price, based on ex Durban with SASA responsible for transport cost to Durban. Under the new agreement, the domestic selling price is freed and is based on ex point of manufacture. Mills are responsible for the transport costs of export sugar to port areas. Under the terms of the Sugar Agreement, the SASA is no longer the single desk exporter of refined sugar. These exports, along with domestic sales and all other bagged sugar exports, are handled by the private sector. SASA retains single desk exporter status for bulk raw sugar exports. A new sugar duty formula was instituted in 2000 with the intention of making the sugar industry more responsive to the world sugar price and the rand/dollar exchange rate. Under the old system duties were based on changes in the domestic price; however, now duties are based on the difference between the world price and a set reference price. The base is calculated using a 10-year average of the world price plus a 20-percent premium to compensate for protectionist policies in most sugar-producing nations. It is adjusted when there is a $20 deviation in the 20-day moving average of the world price. The duty was increased by 67 percent at the end of July 2002 to 1,312 rand per ton ($125 per ton) when the price fell to $214 a ton from the $ 238 a ton base in April. South Africa is a member of the Southern African Customs Union (SACU) that includes Botswana, Lesotho, Namibia, and Swaziland. The SACU provides for import access of sugar, most of which is allocated to Swaziland under an agreement reached in 1998 between the South African and Swazi sugar industries. The agreement limits Swazi sugar sales to an undisclosed amount, estimated to be 260,000 mt. In February 2000, the SACU countries reached a sugar agreement with the Southern African Development Council (SADC), whose members include Mozambique, Zambia, and Zimbabwe (the chief sugar producer). The agreement gives the SADC countries non-reciprocal sugar market access into the SACU for a 5-year period. Africa/Middle East Russia Most sugar processing plants in Russia have been privatized. The plants tend to be owned by various financial firms and sugar trading companies that have formed several powerful holding groups within the industry. These holding companies develop raw material resources by investing in sugarbeet production, renting land, purchasing equipment, and implementing more effective management practices. In an unusual twist, beet processors and sugarbeet producers interact through barter arrangements. The sugarbeet producers pay sugar processing fees through an exchange of a proportion of their crop. Arrangements are common where processors supply producers with agricultural machinery to facilitate timely planting, tillage, and harvesting of the sugarbeets. Because there is no legal basis for owning land in Russia, the companies investing in sugar production are taking high risks. There are few foreign investors in the domestic sugarbeet industry. Because the Russian Government cannot offer significant support to the industry, it assists the industry primarily through border measures. It has maintained a sugar import tariff-rate quota and a seasonal duty system since July For the 2002 quota year, the sugar TRQ was established at 3.65 million tons. The TRQ was seasonal, with entries for the first 6 months set at 3.35 million tons, and entries for the remaining months set at 0.3 million tons. The in-quota tariff rate was 5 percent but no less than euros per kilogram. The base over-quota tariff was set at 40 percent for both raw and white sugar but not less than 0.12 euros per kilogram for raw sugar and 0.14 euros per kilogram for white sugar. The over-quota seasonal tariff was 50 percent but not less than 0.15 euros per kilogram for raw sugar and 0.18 euros per kilogram for white sugar. On July 15, 2002, the Russian Government announced the sugar TRQ for For the first 6 months of the year, the import tariff on raw sugar is 0.2 euros per kilogram, and for the remaining months, it is 0.23 euros per kilogram. For white sugar, the corresponding tariffs are 0.24 euros per kilo for the Economic Research Service, USDA Sugar & Sweeteners Outlook/SSS-236/January 31,

19 first 6 months, and 0.27 euros per kilogram for the rest of the year. The 2003 TRQ was increased to 3.95 million tons of raw sugar. Imports from developing countries under the Russian system of preferences are subject to tariffs of euros per kilogram for the entire year. Quota rights were specified to be sold to Russian importers at public auctions, and distributed in 158 allotments of 25,000 tons each. The minimum price for any lot was set at 700,000 euros. There is a prohibition on the free resale of lots. Lots can go back on the block at a repeat auction later in the year. A pre-condition of participation in the auction is a 100-percent deposit of the sum expected to be spent on lots. The first auction was held on September 25, Although 51 companies took part, only 10 companies bought more than 8 lots. The average price per lot was $ a ton. The difference between the TRQ lot price and the out-of-quota tariff rate was estimated at less than $10 per ton. Ukraine The Ukrainian Government sets a minimum purchase price for sugarbeets and for refined sugar at the wholesale level. The sugarbeet purchase price for MY 2003 is UAH 165 ($31) per ton. The minimum wholesale refined sugar price is UAH 2,370 ($447) per ton. Sugar prices are often lower than the mandated minimum levels, however. Part of the problem is that refineries often reimburse producers and other raw product sellers with refined sugar as a barter payment. The producers sell the sugar outside established controls, presenting competition to the refiners and wholesalers that helps drive the refined sugar price below the minimum level. Another part of the problem is that a severely constrained budget does not allow for sufficient government intervention buying at the minimum price level. The Ukrainian Government, through its Ministry of Agricultural Policy, attempts to control sugar production through the assignment of quotas. The 2002 "A" quota, intended for domestic uses, was set at 1.8 million tons and was allocated to Ukraine s functioning 138 factories. The "B" quota, intended for export, was set at 98,000 tons and allocated to 21 of the factories. In spite of the intent, it is likely that the "B" sugar does not leave the Ukraine, further increasing domestic sugar supplies and depressing prices. In the past, the Ukrainian Government has attempted to control sugar imports through a tariff-rate quota. In market year (MY) 2001, the raw sugar TRQ was set at 260,000 tons. The in-quota tariff was 5 euros per ton. No TRQ was announced for either MY 2002 or MY 2003; however, the over-quota tariff has been set at 50 percent but not less than 300 euros per ton. Traders evade the high import duties by importing through Ukraine s Free Economic Zones (FEZ). This type of importing involves its own set of expenses that far exceed the in-quota tariffs that would be paid under a sugar TRQ system. Sugar smuggling from Russia, Moldova, and Belarus remains a problem-- sources indicate that up to 200,000 tons entered illegally in MY Smuggled sugar puts further downward pressure on prices, forcing sales below the minimum fixed prices. Central Asia India Each year the Indian Government establishes a minimum support price for sugarcane. For MY 2001/02, the support price was set at 620 Rs ($12.78) per ton and the 2002/03 support price has been set at 645 Rs ($13.24) per ton. The national price assumes a base recovery rate of 8.5 percent. Price premiums are applied for recovery rates in excess of the base. For MY 2002/03, Rs 7.60 a ton is added to the base support for every 0.1 percent increase in the recovery rate. State governments augment the national support price by an additional percent. In MY 2001/02, the effective support price per ton was 975 Rs ($20.10) in Uttar Pradesh, 1,075 Rs ($22.16) in Haryana/Punjab, and 765 Rs ($15.77) in the southern states. The high cane prices are estimated to account for nearly 65 percent of the cost of production, driving total Indian sugar productions to an estimated $ a ton. All sugar mills are required to supply a portion of their production as "levy sugar" at below market prices. The levy sugar is sold by the Indian Government through its public distribution system (PDS) to consumers below the poverty line. The mills are further required to sell the balance of their sugar ("free sugar") at market prices subject to periodic Economic Research Service, USDA Sugar & Sweeteners Outlook/SSS-236/January 31,

20 quotas in order to maintain price stability in the market. The Indian Government has instituted reforms of the levy sugar distribution system since The required levy sugar proportions have been progressively reduced: to 30 percent from 40 percent as of January 1, 2000, to 15 percent as of February 1, 2001, and to 10 percent as of April 1, In order to provide more marketing flexibility to the mills, the government has changed the free sale sugar quota release mechanism from a monthly to a quarterly basis starting in January 2002, with a requirement that 50 percent of the quota must be utilized in each half of the year. The government has agreed to the creation of a sugar futures exchange that will give the three major sugar trading companies the right to begin trading in MY 2002/03. The Indian Government is reportedly planning the complete removal of the levy requirement and sugar release mechanism once futures trading commences. Thereafter, the government would presumably procure sugar from the market for subsidized sale through the PDS, and would allow futures trading to stabilize market prices. India uses trade policy to support domestic production. It applies an import tariff of 60 percent, plus a countervailing duty of Rs 850 a ton. The government further restricts imports by imposing the levy requirements and market release quotas on imported sugar. In order to reduce large price-depressing stocks of sugar, the government in 2001 removed quota restrictions on sugar exports. The government provides various incentives for sugar exports. These include exemptions from levy requirements and periodic sales quota restrictions and from domestic excise taxes (Rs 850 a ton). The government provides internal transport subsidies from mills to export ports of about $12-$13 per ton. Pakistan There exist many doubts for long-term prospects for sugarcane production in Pakistan. The primary problem is a shortage of irrigation due to poor resource management and planning. Since the irrigation system was completed, demand has increased more than 50 percent while storage capacity has decreased by one-third due to silting. Even with the adaption of new irrigation techniques, Pakistan would need to alter cropping patterns significantly to conserve scarce water resources by shifting out of water-intensive crops like sugarcane. In spite of dim prospects, the Pakistan Government continues to encourage sugarcane production. It regularly announces a support price prior to planting. The support price acts as a minimum guaranteed price, it being set higher than the world price but below market-determined domestic prices. Over the last couple of years, the support price has been set at about 50 percent of the market price (about PRs 23, or 20.8 cents, per kilogram in September 2002). Even with the adaption of new irrigation techniques, Pakistan would need to alter cropping patterns significantly to conserve scarce water resources by shifting out of water-intensive crops like sugarcane. The Pakistan Government imposes an import tariff on raw and refined sugar to protect domestic mills and growers. In its budget passed in June 2002, the tariff rate was at 25 percent. Domestic millers indicate that their cost of producing refined sugar is about $320 a ton, whereas the landed price of raw sugar in Karachi is about $220 a ton. East Asia China Production Policy. China s agricultural policy is guided by the twin objectives of restructuring the nation s agriculture to meet the challenges by World Trade Organization (WTO) membership and of improving farm incomes. Generally, the government has been encouraging farmers to switch from land-intensive crops (grains) into high-valued cash crops. For sugarcane, government policy promotes production where it is already a major crop and discourages it where it is less important and where there are alternative crops. In particular, it is expected that Chinese sugarcane production will become more concentrated in the provinces of Guangxi and Yunnan. Because of wide-spread poverty in these provinces, government officials consult with refineries in setting minimum procurement prices of sugarcane. The minimum prices are based on costs of producing sugarcane plus a profit margin determined by consideration of other cropping alternatives. Increases in unit sugarcane payments are linked to increases in sugar prices. In 2002, cane prices were required to increase $0.60 a ton for every $12 a ton Economic Research Service, USDA Sugar & Sweeteners Outlook/SSS-236/January 31,

21 increase in the market price for sugar, above a base price of $325 a ton. The refining industry has been restructured in anticipation of increased competition from imports. Ownership of most state-owned refineries has been converted into either a foreign joint venture, a joint-stock corporation (with the government retaining significant shares), or a private company. New ownership patterns have resulted in work force rationalization. The government has also promoted mergers among refiners and more vertical integration. The same policy aspects affect Chinese beet sugar production. Sugarbeet area planted increased in MY 2002 due to expansion in provinces where sugarbeets are already a dominant crop (Xinjiang, Heilongjiang, and Jilin), more than offsetting declines where sugarbeets are less important (Shanxi and Hebei). Beet area expansion has resulted from lower projected prices for alternative crops because of increased competition resulting from WTO entry. This has been especially true in Xinjiang due to lower projected cotton prices and in Heilongjiang due to projected lower and more volatile grain prices. Also important has been the government s policy of closing small, unprofitable sugarbeet processing factories where economies of scale cannot lower average costs when production increases. Chinese production policy is likely to face challenges. It is estimated that about 70 percent of processors costs are from raw material prices (that is, sugarcane and sugarbeets). Although the government now allows sugar prices to be market-based, mandating minimum producer prices transfers the cost of supporting producers to processors and refiners. The restructuring of the processing and refining industries has removed the government from the direct costs of support. Consumption Policy. The Chinese Government has tried to increase demand for sugar by controlling the supply of artificial sweeteners. Due to high sugar prices, nearly all of the increase in sweetener demand, especially by the soft drink industry, is being filled by artificial sweeteners. Artificial sweeteners are routinely used in standard consumer products rather than being limited to diet foods. The artificial sweeteners include saccharine, cyclamates, aspartame, steviosides, liquiritoside, and sorbitol. All together, consumption of these artificial sweeteners is displacing sugar consumption by over 4 million tons a year. The Chinese Government ordered the closing of nine out of 14 saccharine factories in 1999 and has tried to limit yearly domestic saccharine sales to 3,000 tons and aspartame and stevioside sales to 200 tons each. Although production in excess of domestic quotas is supposed to be exported, domestic saccharine sales are estimated in excess of the domestic quota for the five factories. Additionally, there are many other illegal factories producing artificial sweeteners that have contributed to the consumption of artificial sweeteners instead of sugar. The small-scale and widely dispersed nature of the food manufacturing industry makes it difficult to monitor domestic sales. Trade Policy. Under the terms of its entry into the WTO, China agreed to establish a tariff-rate quota system for sugar imports. The initial TRQ was set at 1.64 million tons of sugar, with an in-quota ad valorem rate of 20 percent. The access quantity rises to million tons in 2003 and million tons in Eligible importers include: (1) state-owned enterprises; (2) central enterprises with state reserve functions; (3) enterprises with good import records for general trade in 2002; and (4) sugar enterprises with the capacity to process 600 tons of raw sugar daily. Although the Chinese Government made this minimum access commitment, it has decided to re-export the equivalent of over 600,000 tons of the quota after it has been refined domestically. This policy helps the domestic refining industry while protecting the domestic market, seemingly counter to the intent of the WTO access requirement. The Chinese Government also counts against the TRQ commitment sugar imports of 450,000 tons from Cuba. Indonesia The Government of Indonesia established a new sugar trade policy in September It restricted imports of sugar to three state-owned plantations, but only when ex factory sugar prices are above Rp 3,100 per kg (or about 16 cents a pound). This pricing level is considered to be the breakeven point for domestic producers. The imported sugar is intended for further processing by the state-owned plantations and cannot be sold to the public or to other processors. Also, the Economic Research Service, USDA Sugar & Sweeteners Outlook/SSS-236/January 31,

22 government imposed new standards for raw sugar with the stated intention of protecting consumers from consuming raw sugar. This requirement will benefit the local refining industry and may increase the demand for refined sugar. Beyond trade policy measures, Indonesian sugar producers do not benefit very much from government policies. The Indonesian sugar sector is characterized by outdated farm practices, high input prices, lack of fertilizer during the cane growing season, and insufficient access to credit. Smuggling of sugar into the country has been a persistent problem, although the government has required import licenses and monthly reporting prior to the new trade policy described above. Japan The Ministry of Agriculture, Forestry, and Fisheries (MAFF) sets guaranteed minimum prices for domestically-produced sugarbeets and sugarcane. For MY 2002, the minimum sugarbeet price was 17,040 yen ($131) per ton, and the minimum sugarcane price was 20,370 yen ($157) per ton. The MAFF also sets a high target price for raw sugar that is paid to sugar processors to compensate them for the high price they must pay for domestically-produced sugarcane. In 2001, the target price was 151,800 yen ($1,168) per ton of raw sugar. The MAFF in turn provides a subsidy to sugar refiners to compensate them for the difference between the domestic price of raw sugar and the target price of domestically-produced raw sugar. The subsidy is paid by the Agriculture and Livestock Industries Corporation (ALIC), a government-owned firm. The subsidy comes primarily from funds collected from a surcharge on imports of sugar and corn intended for fructose production. The remainder of the subsidy comes from Japan s national budget. Recent year-end data indicate that the refiners subsidy has cost about 90 billion yen, or about $692 million. The surcharge on imports provided about 77 billion yen, or about 85 percent of the total. The ALIC purchases all raw sugar imports from importing companies at an average import price and then resells it back to them at a predetermined resale price. The prices are revised quarterly. The difference between prices constitutes the import surcharge that is meant to compensate domestic refiners for the purchase of domestically-produced raw sugar. In July-September 2001, the average import price was 32,580 yen ($251) per ton, and the resale price was 59,960 yen ($461) per ton, implying a surcharge of 27,380 yen ($210) per ton. The Japanese Government controls the volume of raw sugar imports. Each quarter the MAFF calculates a raw sugar import volume target for each import company. The MAFF imposes a secondary surcharge on companies that exceed their target in any particular quarter. Recent reports indicate that the secondary surcharge is equal to 23,309 yen ($179) per ton. In spite of the surcharge on raw sugar, technically the tariff on raw sugar imports has been zero since April There is, however, a prohibitive tariff set on imports of refined sugar. The tariff is pegged at 21.5 yen per kilogram, along with an additional surcharge of yen per kilogram. For MY 2001, the tariff and surcharge on refined sugar imports sum to $414 per ton. The Philippines Under the WTO, the Philippines has a 2003 minimum access commitment level of 59,780 tons. In 2002, the Philippines set sugar import duties at 50 to 65 percent. In 2003, both the in-quota and over-quota rates are set at a uniform rate of 50 percent. Although under the Association of Southeast Asian Nations (ASEAN) Free Trade Area-Common Effective Preferential Tariff (AFTA-CEPT), all ASEAN members are committed to reduce tariffs on imported commodities to 0 to 5 percent, the AFTA council has allowed the Philippines to delay tariff reduction for sensitive agricultural products, including sugar, until The future of sugar production in the Philippines depends on the completion of a program to redistribute land to peasant farmers at 0.5 hectares each in the prime sugar area of Negros Oriental. The remaining land to be redistributed is a substantial 1.1 million hectares. Areas already redistributed to small farmers now constitute the least productive sugar lands in the Philippines. Thailand Thai sugar production is divided into three quotas. Quota A consists of 1.85 million tons of plantation Economic Research Service, USDA Sugar & Sweeteners Outlook/SSS-236/January 31,

23 white sugar meant for domestic consumption. Quota B sugar consists of 800,000 tons of raw sugar and is meant to meet long-term export commitments. Pricing and marketing is the responsibility of the Thai Cane and Sugar Corporation, an organization of millers, producers, and the Thai Government. Quota C is for export sales. Export rights are assigned to seven export companies 6 months prior to the crushing season. Mills are required to fulfill the A and B quotas before exporting C quota sugar. The transaction value of cane between growers and millers is based on the sucrose content of cane measured by the Thai Commercial Cane Sugar System. The final sugar cane revenue received by the farmer is derived from a revenue sharing system in place since 1982/83. It is based on a base or initial price paid by millers to farmers upon delivery, adjusted annually in line with the world market prices, and a season average price, calculated at the end of the growing season, that determines a final producer price. The Thai Government sets initial and final producer prices for sugarcane. (The initial price for MY 2003 was set at 450 baht (about $11.00) per ton, down from the MY 2002 price of 530 baht per ton.) If the final price is greater than the initial price, the supplement is paid to growers; if the final price is less than the initial price, the Thai Government compensates the mills for the difference through the Cane and Sugar Fund. Also, the Thai Government, through the fund, provides a credit program under which producers can borrow an amount equivalent to their advance payment from the mills at below market interest rates, at 7 percent for MY Under WTO commitments, the Thai Government establishes a tariff-rate quota for sugar imports. For MY 2003, the TRQ is set at 13, tons and will rise to its final bound level of 13,760 tons in The within-quota tariff is 65 percent, and over-quota rate is 95 percent in MY The over-quota rate drops to its final bound level in MY 2004 of 94 percent. Oceania Australia Prior to 1997, area planted to sugarcane in the Australian state of Queensland (the main producing state) was historically determined by a very regulated system. The Queensland Sugar Corporation (QSC) would annually set the maximum amount of sugar that each mill could deliver and receive the No. 1 pool price. Any sugar over this level was sold exclusively onto the export market. Also, from 1992 to 1997, the Australian Government imposed a specific import tariff of A$55 per ton on raw and refined sugar. In 1996, the Australian Government and the Queensland Government started a review of the Australian sugar industry s marketing structure and the sugar import tariff. The review was conducted within the context of the National Competition Policy whose aim was to make Australian industries more competitive. The Sugar Industry Review Working Party s recommendations included: removal of the tariff on imports of sugar into Australia; elimination of the pool price differential; pricing domestic sugar at export parity; and retention of a single desk selling of raw sugar on the export and domestic markets. All of these recommendations were subsequently adopted. Area planted to sugarcane in Queensland is now controlled by industry and mill representatives. Under this new system, growers wanting to increase their sugarcane production area must make application to the Cane Production Board, who in conjunction with the millers, assesses the application against environmental criteria as well as mill capacity. In the minor producing States of New South Wales and Western Australia, explicit legislation governing area expansion is less important; their sugar industries are now effectively deregulated. Sole acquisition rights in Queensland means that the QSC sells raw sugar to domestic refiners. Although these same sole acquisition powers exist in New South Wales, the refineries and mills are owned by the sugarcane growers co-operative. Recent Developments. Since 1999, Australia s sugar industry has been severely affected by low prices, disease outbreaks, and extreme weather conditions such as cyclones, floods, and droughts. Low grower returns prompted the Australian Government to commission a report into the Australian sugar industry entitled the "Independent Assessment of the Sugar Industry" in February The report was published in June 2002 and made a number of recommendations and focused on areas such as access Economic Research Service, USDA Sugar & Sweeteners Outlook/SSS-236/January 31,

24 to export markets, diversification, environment, research, and assisting producers to exit the industry. In response to the report, the Australian Government offered a sugar industry assistance package totaling A$150 million over a 4-year period, with around A$100 million to be raised by a levy on domestic sugar sales and the balance to be provided by the Australian Government and the Queensland state government. The package offers a range of measures including income support, interest rate subsidies on new loans, regional projects, and an exit assistance package for producers wishing to leave the industry (estimated at A$45,000 per farmer). The package relies on the cooperation between the Federal government and the Queensland state government in amending legislation that currently prohibits industry from adopting structural changes. The relief program was approved by parliament in December Reportedly it will be funded by A3 cent per pound levy over the next 5 years. As emphasized by the Australian Government, no levies would be applied to export sales; rather, the levy will apply to an estimated 939,000 tons of domestic sugar, including imports but exempting raw sugar used for refined exports. Economic Research Service, USDA Sugar & Sweeteners Outlook/SSS-236/January 31,

25 Table 2--Sugar production, supply, and distribution, for select countries, 2001/02 marketing year 1/ Human Region/ Beginning Beet sugar Cane sugar Total sugar Raw Refined Total Raw Refined Total domestic Other dis- Total dis- Ending Country stocks production production production imports imports imports Supply exports exports exports consumption appearance appearance stocks ---1,000 metric tons--- Western Hemisphere Argentina ,600 1, , , , Brazil ,400 20, ,260 8,400 3,200 11,600 9, , Chile Colombia ,300 2, , , , Dominican Rep Guatemala ,910 1, ,980 1, , Jamaica African/Middle East Egypt ,040 1, , , , Turkey 865 1, , , , , South Africa ,542 2, , ,235 1, , Eastern Europe Russia 3,100 1, ,630 4, ,800 9, , ,940 2,130 Ukraine 256 1, , , , , Central Asia India 11, ,340 20, , , ,455 13,000 Pakistan ,421 3, , , , East Asia China 1,004 1,274 6,598 7,872 1, ,392 10, , , Indonesia 1, ,700 1,700 1, ,500 4, , ,400 1,215 Japan , ,429 2, , , Philippines ,900 1, , , , Thailand ,397 6, ,968 2,450 1,840 4,290 1, , Oceania Australia ,610 4, ,249 3, ,447 1, , / Marketing year as defined by each country. Source: USDA. Economic Research Service. USDA Sugar and Sweeteners Outlook/SSS-236/January 31,

26 Contacts and Links Information Contacts Stephen Haley (202) Nydia R. Suarez (202) Subscription Information Subscribe to ERS notification service at to receive timely notification of newsletter availability. Printed copies can be purchased from the USDA Order Desk by calling (specify SUB-SSS-4033). Yearbook Tables Tables from the Sugar and Sweeteners Yearbook are available in the Sugar and Sweeteners Briefing Room at They contain the latest data and historical information on the production, use, prices, imports, and exports of sugar and sweeteners. Related Websites WASDE, Sugar Briefing Room, Agricultural Outlook Forum 2003 Arlington, Virginia February 20-21, 2003 Mark your calendar USDA's 79th Agricultural Outlook Forum An open market for issues and ideas Watch for details at To receive program updates by send requests to The U.S. Department of Agriculture (USDA) prohibits discrimination in all its programs and activities on the basis of race, color, national origin, sex, religion, age, disability, political beliefs, sexual orientation, or marital or family status. (Not all prohibited bases apply to all programs.) Persons with disabilities who require alternative means for communication of program information (Braille, large print, audiotape, etc.) should contact USDA's TARGET Center at (202) (voice and TDD). To file a complaint of discrimination, write USDA, Director, Office of Civil Rights, Room 326-W, Whitten Building, 14th and Independence Avenue, SW, Washington, DC or call (202) (voice and TDD). USDA is an equal opportunity provider and employer. Economic Research Service, USDA Sugar and Sweeteners Outlook/SSS-236/January 31,

27 New ERS Magazine to Debut in February 2003 The Economic Research Service will introduce a new magazine in February 2003 at the Agricultural Outlook Forum. The new ERS flagship publication will appear both in print and on the internet, five times annually. Its "beat" will be the full range of ERS research and analysis. It will replace all three current ERS magazines Agricultural Outlook, FoodReview, and Rural America. Each issue of the new magazine will be a window on ERS work, offering a sample of topics from across the spectrum of the agency's program. Agriculture, trade, and policy will get equal billing with food safety and nutrition, natural resources, and rural development. The Internet edition, to be updated with new articles and data between scheduled publication dates, will link readers directly to more detailed analysis on specific topics covered in the magazine. The market outlook reports and briefing rooms published on the ERS website will continue to be the major source of detailed data, information, and analysis on specific commodities, agricultural trade, farm income and finance, and many other topics. Data that have been published in appendix tables in Agricultural Outlook magazine will be available on the ERS website and updated 10 times per year. The new magazine will support the ERS goal of delivering reliable, relevant information targeted to decision makers in the public and private sectors, and will educate readers about the breadth and depth of the agency's work. For more information on the magazine and to sign up for notification of updates, go to Economic Research Service, USDA Sugar and Sweeteners Outlook/SSS-236/January 31,