U.S. sugar farmers worry about import plan
U.S. Department of Agriculture to boost effort to bring more sugar into America
By BECKY BOHRER
Associated Press
Tuesday, August 12, 2008 10:33 AM PDT
NEW ORLEANS — Southern sugar farmers, struggling with rising fuel and production costs, say the federal government’s decision to allow more foreign sugar into the United States to ensure adequate supplies is premature and could depress their prices.
The U.S. Department of Agriculture recently announced that as a precautionary measure, it was increasing imports of refined sugar by what’s expected to be a net-gain of 21⁄4 tons this year to avert any shortages that could arise with disruptions in production or refining.
The nation’s top cane producing states are in the middle of hurricane season with the verdict still out on Dolly’s toll on Texas’ crop. A Georgia refinery remains idled after an explosion this year, leaving the industry operating, analysts say, at near-capacity. And acreage planted to sugarbeets — another source of sugar — is far lower due to planting conditions and farmers farther north swapping traditional sugar acres for higher-priced crops such as soybeans.
But some trade groups and southern farmers dispute USDA’s assertion that there's a tight refined sugar market and question the government's getting involved before their harvest even begins.
“There’s nobody today that cannot find sugar if they want it,” says Steve Bearden, president and chief executive of Rio Grande Valley Sugar Growers in Santa Rosa, Texas.
Prices on the raw market have risen in recent months. But sugar cane farmers like Wallace Ellender say the increase has been all but zeroed out by rising costs of production, including fuel, fertilizer and labor. According to USDA, farmers spent $12.7 billion last year on fuel alone, 14 percent more than in 2006.
Nationwide, the average price of diesel was $4.537 a gallon Monday, $1.60 a gallon more than a year ago, according to AAA and the Oil Price Information Service. Ellender, who farms near Bourg, in southeast Louisiana, called USDA's decision “kind of a slap in the face to American producers.”
“Times are so critical to us, it’s a matter of survival,” he said, adding: “Our bankers are getting to be very nervous about loaning us money to make ends meet.”
He and other farmers worry that if USDA misjudges — if, say, production is better than expected or the sugar imported needs additional refining — the raw price will tank. The price had risen to nearly 24 cents a pound in July, more than 3 cents a pound higher than at the start of the year.
That’s still “far below price increases for other commodities,” according to the American Sugar Alliance, which called USDA’s decision a reaction to forecasts 14 months out and having the effect of casting “a cloud over a sugar industry that has been dealing with depressed prices and soaring input costs for some time.”
Not everyone agrees: Charles Schudmak, chief operating officer of the Cora Texas mill at White Castle, called USDA’s plan “very reasonable,” noting industry conditions and estimates that this will be a good — not great — production year, at least locally.
