LAFAYETTE, LA. – Jim Simon, manager of the American Sugar Cane League (ASCL), said the 2013 sugarcane crop was, from a production standpoint, one of the best in the 219-year history of Louisiana sugarcane farming despite two hard freezes during the harvest.
“The success of this crop is due to the excellent research program we have in Louisiana, the efficiency of our 11 sugar mills and the skill of our sugarcane farmers,” Simon said. “The Louisiana sugarcane farmer is among the best in the world.”
The 2013 crop produced 1.59 million tons of raw sugar from 409,000 harvested acres. The cane production per acre was 34.3 tons, which produced an average of 7,771 pounds of raw sugar per acre.
“While sugar production was good, the true measure of a successful crop rests ultimately with the financial performance of our industry,” Simon said. “To that end, despite the efficiencies of our farmers and millers, this one will rank quite low in profitability as sugar prices are at their lowest in 30 years and input costs are through the roof.”
Simon said domestic sugar market is oversupplied right now because of Mexican imports.
“The North American Free Trade Agreement (NAFTA) allows Mexico to ship as much sugar into the United States market as they want to,” Simon said. “The result is oversupply and depressed prices. How low? Early in 2012, the price for sugar was about 30 cents a pound. By the end of 2013, sugar prices returned to the 21 cents per pound range — the same price farmers got 25 years ago.”
Simon made his comments February 4 at the ASCL annual membership meeting at the Hilton Lafayette in Lafayette, La. The ASCL meeting was held in conjunction with the semi-annual meeting of the American Society of Sugar Cane Technologists (ASSCT).
The ASCL is comprised of Louisiana sugarcane growers and the state’s 11 sugar mills from the 23-parish area collectively known as the Sugar Belt.
Jack Roney, director of economics and policy analysis for the American Sugar Alliance, said the United States sugar market is oversupplied but not because of U.S. sugarcane or sugar beet overproduction. Roney laid the blame for depressed prices squarely at the foot of the NAFTA.
“Since NAFTA began in 1993, American sugar production acreage has gone down while Mexican acreage increased,” Roney said. “As Mexican production acreage increased, Mexican consumption has gone down and they’ve sent Mexican sugar into the U.S. without restriction, which hurts American farmers.”
Roney said the American market could have absorbed as much as 750,000 tons of Mexican sugar in 2013 without it having an adverse effect on the market, but Mexico shipped more than 2.1 million tons of sugar to the United States last year.
“That’s why sugar mills are forfeiting sugar to the government,” Roney said. “The Mexican market price was actually higher than the U.S. price, but they kept their price high by sending their sugar to the United States. Clearly, the Mexican government needs to be more rational in regards to their sugar market and NAFTA.”
“The Mexican government owns one-fifth of the Mexican sugar industry so when business is bad and a Mexican sugar mill is about to go out of business, the Mexican government says, ‘No.’ In the United States, when a sugar mill is about to fail, it fails. The truth is the American farmer and miller is not competing with the Mexican famer, they’re competing with the Mexican government.”
Roney did allow that the Mexican government was cognizant of the problems with their sugar industry.
“The Mexican government has pledged to send all of its sugar exports this year to the world market and not to the U.S. That’s wonderful. I hope they come through with that,” Roney said. “The Mexican sugar industry signed a letter urging the Mexican government to adopt some kind of price-stabilization program. Ultimately, we’re not trying to change NAFTA, we’re just trying to get the Mexican government to act more rationally.”
Posted on Fri, February 7, 2014