U.S. sugar policy: an exporter perspective

1. International Sugar Trade Coalition www.sugarcoalition.org U.S. sugar policy: an exporterperspective • Presentation to the Farm Foundation conference on • Domestic and Trade Impacts of U.S. Farm Policy: • Future Directions and Challenges • November 15, 2007 • Washington, D.C.

2. International Sugar Trade Coalition www.sugarcoalition.org ISTC membership

3. International Sugar Trade Coalition www.sugarcoalition.org ISTC at a glance Population: 163 million GDP per capita: $1,400 (USA: $44,153) Sugar production: 6.3 million tons (all cane) • 11% of agriculture • 1% of GDP (4x more than corn to US)

4. International Sugar Trade Coalition www.sugarcoalition.org US sugar program High prices Minimum levels of access for imports Exporters share the benefits US major sugar producer, importer

5. 1789: revenue tariff 1890: beet sugar subsidy 1894: protective tariff 1934, 1937, 1948: price supports, domestic and import quotas 1977, 1979: crop support 1981, 1985, 1990, 1996, 2002: current sugar program International Sugar Trade Coalition www.sugarcoalition.org US sugar legislation

6. International Sugar Trade Coalition www.sugarcoalition.org How it works Goal: price above loan rate - loan rate = 18¢ per lb. for raw cane sugar - producers can forfeit their sugar and keep the loan if the price is too low

7. International Sugar Trade Coalition www.sugarcoalition.org How it works • Goal: price above loan rate • - loan rate = 18¢ per lb. for raw cane sugar • No cost to the government • - supply management • - import quotas

8. International Sugar Trade Coalition www.sugarcoalition.org Import share

9. International Sugar Trade Coalition www.sugarcoalition.org How it works • Goal: price above loan rate • - loan rate = 18¢ per lb. for raw cane sugar • No cost to the government • - supply management • - import quotas: minimum level

10. International Sugar Trade Coalition www.sugarcoalition.org Forty quota holders Italics denote ISTC member

11. International Sugar Trade Coalition www.sugarcoalition.org How it works • Goal: price above loan rate • - loan rate = 18¢ per lb. for raw cane sugar • No cost to the government • - supply management • - import quotas: minimum level • - domestic marketing allotments

12. International Sugar Trade Coalition www.sugarcoalition.org How it works • Goal: price above loan rate • - loan rate = 18¢ per lb. for raw cane sugar • No cost to the government • - supply management • - import quotas: minimum level • - no controls on Mexico as of Jan. 1 • - domestic marketing allotments • - 85% share sought in Farm Bill

13. International Sugar Trade Coalition www.sugarcoalition.org Value ranges for raw sugar, FY 2000 - FY 2005

14. International Sugar Trade Coalition www.sugarcoalition.org Value ranges for raw sugar, FY 2000 - FY 2005

15. International Sugar Trade Coalition www.sugarcoalition.org Value ranges for raw sugar, FY 2000 - FY 2005

16. International Sugar Trade Coalition www.sugarcoalition.org Value ranges for raw sugar, FY 2000 - FY 2005 Sell a little at a profit? Or a lot at a loss?

17. International Sugar Trade Coalition www.sugarcoalition.org Value ranges for raw sugar, FY 2000 - FY 2005 * 2004, wholesale (LMC International)

18. PRESS RELEASE ACP countries express deep concern at EU Decision to terminate ACP-EU Sugar Protocol Brussels, 28 September 2007 – African, Caribbean and Pacific (ACP) sugar producing countries today expressed their deep concern and outrage at the European Union’s (EU) decision to terminate unilaterally the long standing Sugar Protocol, which provides preferential access to the EU market for imports of ACP sugar.... The recent reform of the EU sugar regime will result in permanent losses of c. €250 million per year for these countries, where in some cases sugar contributes up to 20% of GDP.... International Sugar Trade Coalition www.sugarcoalition.org Impact of EU sugar reform

19. 1.3 workers per hectare per year 392,000 hectares of sugarcane 509,000 workers in the field wages: about $4.00 a day With mills, refineries, etc. = 600,000 jobs 42,000 jobs to serve US market International Sugar Trade Coalition www.sugarcoalition.org Sugar employment - Philippines

20. International Sugar Trade Coalition www.sugarcoalition.org Farm size - Philippines

21. International Sugar Trade Coalition www.sugarcoalition.org Average farm size - Philippines and Brazil

22. House Raises loan rate 1/2¢ per lb. Reserves up to 85% of market for domestic sugar Creates ethanol program Senate Raises loan rate 1¢ per lb. over 5 years Reserves up to 85% of market for domestic sugar Creates ethanol program International Sugar Trade Coalition www.sugarcoalition.org 2007 Farm Bill

23. International Sugar Trade Coalition www.sugarcoalition.org 2007 Farm Bill • US sugar program: a stable and remunerative market for developing countries

24. International Sugar Trade Coalition www.sugarcoalition.org Sources • Slide 3: ISTC population and GDP from World Bank (Atlas method); sugar production from national data. • Slide 9: Import share of US market from USDA, Farm Service Agency, Sweetener Market Data. • Slides 13-16: cost of production from Owen Wagner, “The US Sugar Program: Reform Pressures and Options,” paper delivered at International Food Policy Research Institute conference on Global Sugar Markets, June 1, 2007; world and US prices from USDA, Sugar and Sweeteners Outlook SSS-250, September 27, 2007; world domestic wholesale price from LMC International survey, “Retail and Wholesale Prices of Sugar around the World in 2004,” July, 2005. • Slides 19-20: Data supplied by Philippine Sugar Millers Association. • Slide 21: Data from Conselho dos Produtores de Cana-de-Açucar e de Alcool (Consecana) and Organização de Plantadores de Cana da Região Centro Sul do Brasil (Orplana).