USDA Revises 2005-06 Sugar Allocations

WASHINGTON - Aug 19/05 - SNS -- The USDA's Commodity Credit Corporation (CCC) today announced state allotments and company allocations to reflect the 250,000 short ton, raw value (STRV) increase in the fiscal year (FY) 2005 Overall Allotment Quantity (OAQ) announced on Aug. 12, 2005.

In addition, CCC announced the reassignment of FY 2005 allocations among sugar beet and sugarcane processors and the reassignment of the expected unused cane sector allotment to CCC and imports. This action is expected to mitigate the shortage in the domestic sugar market this summer.

The Secretary today established the FY 2005 import tariff-rate quota (TRQ) for raw cane sugar at 1,193,804 metric tons raw value (MTRV) (1,315,944 STRV), an increase of 76,609 MTRV (84,447 STRV) above the level of 1,117,195 MTRV (1,231,497 STRV) previously established on July 16, 2004. The authority for modification of a quantitative limitation previously established for the raw cane sugar TRQ is in the Harmonized Tariff Schedule of the United States, Chapter 17, Additional U.S. Note 5.

CCC also announced the FY 2006 state cane sugar allotments and company allocations to reflect the 3,925,900 STRV cane sugar allotment, which is the cane share of the 8,600,000 STRV OAQ, announced on Aug. 12, 2005. CCC is not announcing the FY 2006 beet sugar company allocations at this time because of a pending administrative appeal that would affect the distribution of the beet sugar allotment among the sugar beet processors. CCC will announce the beet sugar company allocations no later than Sept. 30, 2005.

CCC also announced the reassignment of FY 2006 allocation among the cane states and cane processors and the reassignment of the expected unused cane sector allotment to imports.

The Secretary today increased the FY 2006 TRQ to 1,226,057 MTRV (1,351,497 STRV), an increase of 108,862 MTRV (120,000 STRV) above the level of 1,117,195 MTRV (1,231,497 STRV) established on Aug. 12, 2005. The additional TRQ quantity for FY 2005 and the FY 2006 TRQ will subsequently be allocated by the U.S. Trade Representative.

The additional beet allotment of 135,875 STRV was allocated by CCC to sugar beet processors using a two-step process. It was first distributed based on each beet processor’s established share of the beet allotment. Next, each company’s supply was compared to its new allocation level to evaluate the company’s ability to fulfill its revised allocation. It was determined that one beet processor had 25,000 STRV allocation that it would be unable to fill due to a production shortfall. This 25,000 STRV was allocated to companies with the greatest capacity to fill the portion of the deficit assigned to it. That is, any processor with less than an estimated 8 percent carryover, CCC’s estimate of the minimum carryover level, was not given a share of the 25,000-ton reassignment.

Based on the estimated level of total raw cane sugar supply compared to the revised cane sugar allotment, CCC determined that the cane sector would be unable to use 141,567 STRV of its new total FY 2005 allotment level of 3,811,775 STRV. This shortfall, as required by law, was first reassigned to CCC sugar sales. CCC sold 42,800 STRV of forfeited beet sugar in FY 2005; however, 25,680 STRV of these sales represented beet sugar forfeited to CCC in FY 2005 as part of a beet processor’s FY 2005 allocation. Thus, these 25,680 STRV were already counted toward the FY 2005 OAQ, leaving only 17,120 STRV of the cane shortfall to be reassigned to CCC.

The remaining 124,447 STRV of the FY 2005 cane sugar shortfall is reassigned to imports. NAFTA tier 2 imports from Mexico are reassigned 40,000 STRV, to reflect the quantity of Mexican tier 2 sugar estimated to have entered to date. CCC reassigned a portion of the cane shortfall to Mexican tier 2 imports because it has contributed to filling the void in domestic production. The remaining 84,447 STRV were reassigned to the raw sugar TRQ.

Last year, CCC declared that Puerto Rican processors permanently terminated operations because no sugar had been processed for two complete years. Since Puerto Rico is entitled to an allocation by law, the allocation of 6,356 STRV is reassigned to the mainland cane-producing states. Hawaii received none of the Puerto Rican reassignment because it is not expected to use all of its current cane sugar allotment. For any Puerto Rican mills to resume processing in the future, request for an allocation as a new entrant would be required.

There are several structural changes in the cane processor sector recognized in this release. First, CCC transferred the allocation of Jeanerette Sugar Company, Inc., which closed last year to Cajun Sugar Cooperative, Inc., M.A. Patout & Son, LTD, and St. Mary Sugar Cooperative, Inc.

Second, CCC transferred the allocation of Iberia Sugar Cooperative, Inc., which also closed last year, to Cajun Sugar Cooperative, Inc., M.A. Patout & Son, LTD, St. Mary Sugar Cooperative, Inc., and Louisiana Sugar Cane Cooperative, Inc.

Also in Louisiana, CCC transferred the allocation associated with the Cinclare sugar operations of Harry Laws & Co., Inc. to Alma Plantation L.L.C. which purchased its operations this year. Its allocation will be assigned under the name of Alma/Cinclare.

Finally, CCC combined the allocations of Atlantic Sugar Association, Inc., Osceola Farms Company and Okeelanta Corporation in Florida into one allocation under the name of Florida Crystals Corporation.

CCC determined that proportionate shares are not necessary in Louisiana in FY 2006 because the cane sector is not expected to fill its allotment.

Based on estimated level of FY 2006 raw cane sugar supply compared to the FY 2006 cane sugar allotment, CCC determined that the cane sector would be unable to use 120,000 STRV of its allotment. Since CCC is not expected to have any sugar inventory in FY 2006, the 120,000 STRV were reassigned to the FY 2006 raw sugar TRQ. If the domestic sugar supply shortfall increases in the future, either due to reduced domestic sugar supply estimates or increased demand estimates, CCC reserves the option of filling any future shortfall with sources of imported sugar other than the TRQ.