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USDA Announces Fiscal Year 2008 Sugar Program


The U. S. Department of Agriculture today announced the initial parameters for the fiscal year (FY) 2008 sugar program. Using the latest data available, USDA has established the FY 2008 overall allotment quantity (OAQ) at 8,450,000 short tons, raw value (STRV), to be consistent with the domestic market share allocated to domestic sugar beet and sugarcane processors, as required by the Agricultural Adjustment Act of 1938, as amended. USDA established the FY 2008 raw sugar tariff-rate quota (TRQ) at 1,231,497 STRV -- the United States minimum access commitment under the WorldTrade Organization (WTO). USDA established the FY 2008 refined and specialty sugar TRQ at 94,251 STRV, 70,000 STRV above the WTO Agreement required minimum of 24,251 STRV, to avoid restricting the robust domestic organic food market.

FY 2008 Sugar Outlook

The August 2007 World Agricultural Supply and Demand Estimates (WASDE) report indicates that FY 2008 sugar supply is expected to be short of FY 2008 sugar needs for a balanced market. The indicated ending stocks-to-use is 13.3 percent - below the traditional range for the U.S. sugar market. There is a significant shortfall within the domestic organic sugar market, where the WTO minimum import access used in the August WASDE is considerably below domestic market needs. USDA also notes that these early estimates of the FY 2008 domestic sugar market are subject to considerable adjustment, particularly the WASDE estimates of domestic sugar production and imports from Mexico.

FY 2008 Sugar Marketing Allotment Program

USDA has previously announced that domestic sugar marketing allotments will continue in effect for FY 2008 (see the July 31, 2007, USDA news release). Domestic sugar marketing allotments are required when imports, as defined by statute, are estimated to be below 1,532,000 STRV. The calculation of the FY 2008 OAQ is based on the estimate of domestic sugar food use (10,000,000 STRV) less the statutory market share allocated to imports (1,532,000 STRV). USDA rounded the result of this calculation to the nearest 50,000 STRV in recognition of the significant uncertainties surrounding the FY 2008 sugar market forecast at this time.

USDA established the FY 2008 OAQ at 8,450,000 STRV. The OAQ was allocated to the beet and cane sectors as follows:

* Beet Sugar: 4,592,575 STRV
* Cane Sugar: 3,857,425 STRV

This allocation is estimated to result in a surplus allotment of 70,000 STRV for the cane sector, all of which was reassigned to imports.

FY 2008 Raw Sugar TRQ

USDA today established the FY 2008 raw sugar TRQ at 1,231,497 STRV, the United States minimum access commitment under the WTO. Certain shipping pattern restrictions used in previous years are not being imposed because the overall TRQ is set at a lower level than in recent years.

FY 2008 Refined TRQ

The FY 2008 refined sugar TRQ is established at 94,251 STRV for which the sucrose content, by weight, in the dry state, must have a polarimeter reading of 99.5 degrees or more. This includes the United States minimum access commitment under the WTO, 24,251 STRV, and an additional specialty sugar amount of 70,000 STRV to accommodate a rapidly expanding organic food sector. Included within the WTO refined sugar TRQ is a minimum specialty sugar TRQ of 1,825 STRV.

USDA will administer the FY 2008 specialty sugar TRQ of 71,825 (1,825 + 70,000) STRV in five tranches. Because this is a first-come, first-served TRQ, tranches are needed to allow for orderly marketing throughout the year. The first, totaling 1,825 STRV, will open Oct. 24, 2007. All specialty sugars are eligible for entry under this tranche. The second tranche will open on Nov. 15, 2007, and be equal to 24,850 STRV. The remaining three tranches will each be equal to 15,050 STRV, with the third opening on Jan. 30, 2008; the fourth, on May 14, 2008; and the fifth, on Aug. 27, 2008. The second, third, fourth and fifth tranches will be reserved for organic sugar and other specialty sugars not currently produced commercially in the United States or reasonably available from domestic sources.

The authority for establishing the raw and the refined TRQs is the Harmonized Tariff Schedule of the United States, Chapter 17, Additional U.S. Note 5. The U.S. Trade Representative will subsequently announce the country allocations of these TRQs.

The estimated FY 2008 ending stocks-to-use ratio, as modified by today’s actions, is within the traditional range for the stocks-to-use ratio in the domestic sugar market. USDA notes that these sugar market estimates incorporate the sugar trade expected from the Mexico-United States agreement of July 2006 and full implementation of the North American Free Trade Agreement with Mexico on Jan. 1, 2008. Due to considerable uncertainties involving the sugar market estimates, USDA will closely monitor stocks, consumption, imports and all sugar market and program variables on an ongoing basis. During the year, appropriate adjustments will be made to the OAQ and TRQs as required to ensure an adequate supply for the domestic market, avoid forfeitures and prevent market disruptions.

Separately, USDA will, on an individual processor basis, announce initial FY 2008 cane state allotments and sugarcane and sugar beet processor allocations.

For further information regarding trade programs, contact Ron Lord, Foreign Agricultural Service, at (202) 720-2916, and for the domestic program, contact Dan Colacicco, FSA, at (202) 720-3451.


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