High-tier sugar imports establish relationships

SEATTLE — Cane refiners are now importing sugar at above-quota tariff rates so regularly that long-term relationships between sellers and buyers are being established, a key Agriculture Department official said here last week at the American Sugar Alliance’s International Sweetener Symposium.

“I don’t know if that is good. It attracts new business,” said Barbara Fecso, commodity analysis branch chief at the Agriculture Department’s Farm Production and Conservation Business Center. “Prices have been pretty good to the rest of the world, so they say let’s set up in the U.S.”

That, she added, raises the question of the purpose of the sugar program. The Agriculture Department is supposed to estimate the need for increased imports, but there are restrictions on that. “Cane refiners have gotten used to [high-tier imports] instead of waiting for USDA to take action,” Fecso said.

Under the sugar program established by Congress, USDA is supposed to maintain an adequate supply of sugar with reasonable prices while avoiding forfeitures by domestic producers because prices have fallen below statutory levels.

The program includes sugar quotas at low tariff rates. When the program was established, the assumption was that sugar imports under higher tariffs would be rare. But the situation has become complicated by U.S. dependence on Mexican sugar. The North American Free Trade Agreement called for unlimited imports from Mexico, but the Commerce Department found that Mexico was subsidizing sugar production and selling it cheaper in the United States than at home. The U.S. government would have imposed high punitive tariffs on Mexican sugar, but the U.S. and Mexican governments reached agreements to suspend those tariffs in exchange for limits on imports from Mexico. But in recent years, Mexico has not been exporting as much sugar as expected to the United States and cane refiners have turned to high-tier imports to keep their mills running.

Fecso noted that U.S. sugar consumption has been about the same since 1992, but the use of high fructose corn syrup has declined dramatically.

Randy Green of Watson-Green, and a consultant to the Sweetener Users Association, described Fecso as “a model civil servant but not the ultimate decisionmaker.”

Green said, “Policymakers appear comfortable with reliance on high-tier imports.”

Rob Johansson of the American Sugar Alliance noted, “The high-tier duty of 15.3 cents has become less expensive due to inflation.”