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U.S. Sugar

U.S. Sugar. Some Implications of Changes in U.S. Sugar Policy. Recent Policy Changes. NAFTA Free Access to Supplies from Mexico – At a Price 2008 Farm Bill Increasing Support Prices – Moving to a slightly higher priced supply

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U.S. Sugar

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  1. U.S. Sugar Some Implications of Changes in U.S. Sugar Policy

  2. Recent Policy Changes • NAFTA • Free Access to Supplies from Mexico – At a Price • 2008 Farm Bill • Increasing Support Prices – Moving to a slightly higher priced supply • TRQ Administration – Additional Restrictions to Regulatory Action • Conversion to Ethanol

  3. NAFTA – Open Access to Supplies from Mexico • NAFTA allows free movement from Mexico • Sugar must be drawn to the U.S. • Prices must rise in the U.S. to pay for the transportation and form conversion charges • $5 and up per cwt. • Bridging Two Markets • Quality and Form • Estandar and Refined • Packaging – 50 Kilo poly versus bulk and 50 lb bag • Movement between geographies • Transportation • Availability of conversion facilities • Governmental and External Influences • Cane Grower Supports – Reference Price for Cane • Exchange rate (Peso/Dollar) • Energy price

  4. 2008 Farm Bill - Changes in Pricing Structure • Level of price support increases • Year Raw Sugar Refined Sugar • 08/09 18.00 22.90 • 09/10 18.25 23.45 • 10/11 18.50 23.77 • 11/12 18.75 24.09 • 12/13 18.75 24.09

  5. 2008 Farm Bill - New Regulatory Restrictions on TRQ Administration • TRQ must be set at the minimum at beginning of year • Changes thereafter are restricted • Prior to April 1: • War or natural disaster • Domestic sources maximized • New requirement that cane refiner capacity be maximized • Refined imports thereafter • Problems of definition have caused some of these to enter as raw sugar

  6. Conversion to Ethanol • Still not implemented • Would prospectively remove forecast surpluses • How to define • Problems with variability of underlying parameters • Devil will be in the details • Important to have sugar taken from the US and not quota origins or the incidence will fall unfairly on importing cane refiners. • Broad Flexibility in form of sugar • Raw / Thick Juice • Refined / Syrups

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