The U.S. Department of Agriculture has increased the fiscal year 2011 raw sugar tariff-rate quota (TRQ) by 120,000 short tons raw value (STRV).

The increase is expected to yield a net increase in imports of 110,000 STRV due to normal TRQ slippage. The increase in sugar supplies is forecast to yield an ending FY 2011 stocks-to-use ratio of 15.0 percent and mitigate some of the summer 2011 sugar supply risk associated with late sugar beet plantings, uncertain Mexican imports, and a tight world sugar market. This increase in raw sugar imports is also expected to provide an adequate supply of sugar without the need for significant imports under the unrestricted high-tier tariff.

In a separate action, USDA increased the overall allotment quantity (OAQ) for domestic sugar marketing by 164,750 STRV to provide U.S. producers with the statutory minimum market share of 85 percent. This OAQ action increased both cane and beet sugar allotments given the sector proportions specified in statute. The increased cane sugar allotment was greater than the domestic cane sugar supply. Thus, the surplus cane sugar allotment was reassigned from domestic sugarcane processors to raw sugar imports. This reassignment, as well as the enlarged beet sugar allotment, is effective June 21.

The individual company allocations that reflect the change in the OAQ are below. The Office of the U.S. Trade Representative will announce country allocations for the TRQ increase separately.

FY 2011 raw sugar TRQ increase

On August 5, 2010, USDA established the FY 2011 TRQ for raw cane sugar at 1,231,497 STRV (1,117,195 metric tons raw value, MTRV*), the minimum to which the United States is committed under the World Trade Organization (WTO) Uruguay Round Agreement on Agriculture.

On April 12, 2011, USDA increased the raw cane sugar TRQ by 325,000 STRV to a total of 1,556,497 STRV. Pursuant to Additional U.S. Note 5 to Chapter 17 of the U.S. Harmonized Tariff Schedule (HTS) and Section 359k of the Agricultural Adjustment Act of 1938, as amended, USDA today announced in the Federal Register an increase in the raw sugar TRQ of 120,000 STRV (108,862 MTRV), which brings the overall FY 2011 raw sugar TRQ to 1,676,497 STRV (1,520,892 MTRV). Raw sugar under this quota must be accompanied by a certificate of quota eligibility and may be entered under subheading 1701.11.10 of the HTS until September 30, 2011.

* Conversion factor: 1 metric ton = 1.10231125 short tons.

To review the revised 2011 crop year cane and beet sugar marketing allotments and processor allocations, go here.

FY 2011 reassignment of sugar marketing allotments

USDA’s Commodity Credit Corporation (CCC) latest review of domestic demand indicated that the OAQ had to be increased to provide domestic processors with the minimum 85 percent domestic market share, as required by the 2008 farm bill. This increase helps some beet sugar processors, who had inadequate allocations, to market all their supplies. Thus, the beet sector allotment was increased by 89,542 STRV to 5,108,900 STRV and redistributed from beet processors with surplus allocation to those with deficit allocation to release all blocked beet sugar stocks for sale. No beet sector allotment is reassigned to imports at this time.

The 2008 farm bill requires that any OAQ increase be implemented in fixed proportions between the beet and cane sectors. Thus, the OAQ increase resulted in a 75,208 STRV increase in the cane sugar allotment, which was distributed among the sugar cane states and processors. The resulting CCC estimate of a 600,000 STRV cane sugar allotment surplus must be reassigned to raw sugar imports. Here, 480,000 STRV is reassigned to Mexico raw sugar imports already anticipated, while 120,000 STRV is reassigned to the TRQ increase announced above.

All sugarcane states’ sugar marketing allotments are reduced, with the total cane sector allotment decreased from 3,890,892 STRV to 3,366,100 STRV. The new cane state allotments are: Florida, 1,464,666 STRV; Louisiana, 1,526,050 STRV; Texas, 147,138 STRV; and Hawaii, 228,246 STRV. The FY 2011 sugar marketing allotment program will allow all domestic supply to be marketed.

USDA will closely monitor stocks, consumption, imports, and all sugar market and program variables on an ongoing basis. Additional adjustments to import TRQs and domestic marketing allotments may be needed later in FY 2011 to ensure an adequate sugar supply for the domestic market to prevent market disruptions. Within the next few months USDA will announce the FY 2012 sugar tariff-rate quota, and whether the periods for entry of raw sugar under the FY 2011 and/or FY 2012 raw sugar TRQs will be extended.

The Federal Register notice is viewable online here.