Not Everybody Thinks The U.S.-Mexico Sugar Deal Is So Sweet

Source: https://www.mediapost.com


The U.S. government says it got just about everything it wanted in a preliminary trade deal that would curtail Mexico’s “dumping” subsidized sugar north of the border but a sugar trade group claims there’s a loophole and has refused to endorse it yet. Manufacturers of sugary treats in the U.S., meanwhile, will see the price for that key ingredient rise, probably jacking up the retail price for that Oreo-filled ice cream concoction you crave.

“We have gotten the Mexican side to agree to nearly every request made by the U.S. sugar industry to address flaws in the current system and ensure fair treatment of American sugar growers and refiners,” Dept. of Commerce Secretary Wilbur L. Ross said yesterday at a joint press conference at the Chamber of Commerce in Washington, D.C., with Mexico’s economy minister, Ildefonso Guajardo, Vicki Needham reports for The Hill.

But U.S. sugar producers, citing a “loophole,” aren’t buying it.

“This loophole takes away the existing power of the U.S. government to determine the type and polarity of any additional sugar that needs to be imported and cedes that power to the Mexican government,” charges Philip Hayes, a spokesman for the Arlington, Va.-based American Sugar Alliance, in a statement that opens by praising Ross for making “progress” in negotiations with Mexico.

“Mexico could exploit this loophole to continue to dump subsidized sugar into the U.S. market and short U.S. refineries of raw sugar inputs,” the statement continues. The trade group says it will work with Ross “to see if that loophole can be effectively closed so that the basic provisions of the agreement are not undermined.”

Every deal takes its toll.

“Because the deal will raise the floor price for raw sugar, it will hurt cereal, beverage and candy makers, said Rick Pasco, head of the Washington-based Sweetener Users Association. Mr. Pasco estimated that U.S. raw sugar prices currently are about 80% above those elsewhere in the world, and Tuesday’s trade deal with Mexico would push that premium to 100%,” Anthony Harrup and William Mauldin report for the Wall Street Journal.

“‘If you’re a food company looking at long-term investment in the U.S. and you’re paying twice the world price, that’s got to be a consideration going forward,’ said Mr. Pasco, who said sugar-using companies support about 600,000 jobs in the U.S.,” the WSJ story continues.

Meanwhile, a trade group that represents a coalition of U.S. sugar buyers and other firms that are critics of the U.S. program said the deal favored the interests of U.S. sugar producers, and estimated the cost to the consumers in higher prices for food, drinks and confectionary at around $1 billion, reportReuters’ David Lawder and Chris Prentice.

“‘Today’s announcement is a bad deal for hardworking Americans, and exemplifies the worst form of crony capitalism,’ the U.S. Coalition for Sugar Reform said in a statement.

 “The negotiations were an attempt to settle an anti-dumping and anti-subsidy case brought by a coalition of cane and beet farming groups and ASR Group, the maker of Domino Sugar that is owned by the politically well-connected Fanjul family of Florida,” Lawder and Prentice continue.

“Meet the Sugar Barons Who Used Both Sides of American Politics to Get Billions in Subsidies,” posted last September by Guy Rolnik on Pro-Market, the blog of the Stigler Center at the University of Chicago Booth School of Business, provides insight into the Fanjul family.

“Sugar is a commodity, which means its price is set in big international markets and is supposed to be pretty much the same all over the world. But in the U.S., the price of sugar has been greater than in other parts of the world, sometimes two or three times more. This significant markup is the result of U.S. laws and regulations,” Rolnik points out.

Looking at the big picture, a deal would avert a problem for corn growers in the U.S. “Mexico has threatened tit-for-tat duties on U.S. high-fructose corn syrup if Washington imposed tariffs on its sugar — a move that alarmed the U.S. corn industry,” observe Jude Webber and Demetri Sevastopulo for Financial Times.

And on an even bigger scale, “trade experts have kept a close eye on the sugar dispute to gauge the approach that Washington could take in talks to renegotiate [the North American Free Trade Agreement]. Although President Trump has backed away from his threat to pull the United States out of that regional trade accord with Mexico and Canada, the administration has given few clues as to how hard a line it will take,” Elisabeth Malkin points out for the New York Times.

Agriculture Secretary Sonny Perdue yesterday said the sugar agreement “sets an important tone of good faith leading up to the renegotiation.”

US-Mexico sugar deal may bode well for NAFTA renegotiation

Source: https://www.agri-pulse.com


The U.S. and Mexico were able to reach agreement on how to regulate Mexican sugar exports, and officials from both sides of the border are saying that’s a strong sign that the countries will be able to successfully renegotiate the North American Free Trade Agreement.

The agreement isn’t final yet – U.S. Commerce Secretary Wilbur Ross said the details will be finalized over the coming days – but the fact that the two countries worked together to solve the thorny issue of sugar trade appears to bode well for coming NAFTA talks.

Ildefonso Guajardo Villarrealm, Mexican Minister of Economy

“Assuming we can reach a definitive agreement, which I’m confident we can, this is the precursor to showing we can make … new arrangements between the two countries that are agreeable,” Ross said in a joint press conference Tuesday with Mexican Minister of Economy Ildefonso Guajardo Villarreal.

Guajardo said the past months of negotiating with Ross and his team have created a good atmosphere for future NAFTA talks.

“In terms of NAFTA … these past two and a half months of dialogue … have given us the opportunity to know each other better – to really get to develop a strong relationship,” Guajardo said. “That will be one of the best assets for coming negotiations of NAFTA.”

Beyond just the strengthening of ties between the two countries, Ross stressed that it was important to finish the sugar deal before NAFTA negotiations start.

“We wanted to get out of the way – and so did the Mexican government – this very contentious issue that has been polluting the relationship between the two countries for quite some time,” Ross said. “I think it’s important to get a very horrid issue like that out of the way before the big negotiations start.”

The enmity between the U.S. and Mexico over sugar has been growing for years. It was in 2008 that the U.S. lifted the cap on imports of Mexican sugar because of a NAFTA provision, but that didn’t last long. The U.S. accused Mexico of dumping sugar into the U.S. at below-market prices and in late 2014 Mexico agreed to new limitations in order to avoid retaliatory duties.

That so-called “suspension agreement” put a cap on the amount of Mexican sugar that could be exported to the U.S. and required that the amount of refined sugar coming in be capped at 53 percent. But renewed allegations of unfair trade led to the U.S. demanding a new suspension agreement that further tightens the amount of refined product that can come in.

The deal announced Tuesday requires that 70 percent of imports from Mexico be raw and allows the remaining 30 percent to be refined, among other new restrictions. The agreement also specifies that, for the most part, the raw sugar coming in from Mexico will have a purity level of at most 99.2 percent. Currently, it’s set at 99.5 percent, but U.S. refiners have argued that’s too high and can often be used by the food industry with either minimal or no further processing.

That was a hard restriction for Mexico to agree to, Mexican government sources told Agri-Pulse, because the 99.5 percent level is what Mexican producers are accustomed to. Much of the industry there will have to change to meet the lower level.

The agreement establishes much of what the U.S. sugar industry wanted from a new suspension deal, but representatives of refiners and producers are refusing to support the new pact.

That’s because 70-30 split between raw and refined sugar from Mexico would only be in effect for the initial quota that the USDA sets for the country at the beginning of the fiscal year.

Outside of the allocation for Mexico, the USDA every year sets an overall import quota for all other countries that want to export sugar to the U.S. That quota for raw sugar is set at about 1.2 million tons and cannot be raised until April 1. Afterwards, USDA can raise the quota based on domestic needs.

The new deal announced Tuesday gives Mexico the right to fill all of that additional quota if it can. Furthermore the 70-30 split and the 99.2 percent polarity restrictions do not apply to those additional imports.

“U.S. sugar farmers and producers are concerned that the agreement in principle contains a major loophole in the section dealing with additional U.S. needs,” said Phillip Hayes, a spokesman for the American Sugar Alliance. “Mexico could exploit this loophole to continue to dump subsidized sugar into the U.S. market and short U.S. refineries of raw sugar inputs. This loophole takes away the existing power of the U.S. government to determine the type and polarity of any additional sugar that needs to be imported and cedes that power to the Mexican government.”

Ross said he was disappointed that the deal doesn’t have the support of U.S. industry, but he said there is still time as details are worked out in the coming days.

“In the drafting process we will try to work on issues that will make it easier for American industry to come on board,” Ross said.

Hayes agreed that the next several days could be key.

“We will work with Secretary Ross in the coming days to see if that loophole can be effectively closed so that the basic provisions of the agreement are not undermined and USDA can effectively manage the sugar program,” he said.

It’s not just the sugar refiners and farmers who are not pleased with the deal. Food and candy manufacturers that depend on a plentiful and cheap supply of sugar for the bread, donuts, cookies, cakes and candy they produce, say the agreement will push up prices.

“Today’s announcement is a bad deal for hardworking Americans, and exemplifies the worst form of crony capitalism,” the Coalition for Sugar Reform said in a statement. “The agreement in principle does not address the fact that the price of sugar in this country is already 80 percent higher than the world price. In fact, it will result in higher prices, costing U.S. consumers an estimated $1 billion a year.”

The U.S.-Mexico agreement pushes up the reference price for Mexican raw sugar from 22.25 cents per pound to 23 cents per pound. The price for refined sugar will rise from 26 cents to 28 cents.

Big Sugar’s assault on the Everglades

Source: https://www.palmbeachpost.com


Some Americans are aware that the federal sugar program makes their food cost more. But few know this same program is causing environmental wreckage in Florida that their tax dollars will have to pay for.

The sugar program, known to its many critics as the “sugar racket,” is a tangle of price supports, which increase the cost of sugar in the United States, and tariffs and quotas on imported sugar, which keeps cheaper sugar from reaching our market.

“There’s probably no better example in U.S. history of a case of both legal plunder and crony capitalism that has been tolerated for so many years, and that has picked more money from the pockets of Americans” than the sugar program, says American Enterprise Institute economist Mark J. Perry, who has shown that “American consumers and domestic sugar-using industries have been forced to pay twice the world price of sugar for many generations.”

But it’s a great deal for the three Florida companies that produce nearly half of the country’s sugar supply: U.S. Sugar, the Sugar Cane Growers Cooperative of Florida and the Fanjul Corp., which has helped fund Sen. Marco Rubio’s political career, obliging him to support government subsidies he should philosophically oppose.

Beyond the economic harm done by the sugar program is the environmental damage to Everglades National Park, a 1.5 million acre wetlands preserve near Florida’s southern edge. According to the National Park Service, the Everglades are a “World Heritage Site, a Biosphere Reserve, and a Wetland of International Significance.” It is also the “largest subtropical wilderness in the United States,” the “predominant water recharge area for all of South Florida,” and home, as well, to almost 750 species of mammals, birds, reptiles and fish. In short, it’s a natural treasure.

As it turns out, federal policy has provided Big Sugar with a strong financial incentive to foul this wilderness.

“Federal farm policies damage the natural environment in numerous ways,” Cato Institute scholar Chris Edwards wrote last fall in “Downsizing the Federal Government.”

“Subsidies are also thought to induce the excessive use of fertilizers and pesticides, which can cause water contamination problems. Sugar cane production has expanded in Florida because of the federal sugar program … and the phosphorous in fertilizers used by growers causes damage to the Everglades.”

An effort to protect this sensitive region was initiated in 2000 through the Water Resource Development Act (WRDA), which authorized the Comprehensive Everglades Restoration Plan (CERP). Part of the restoration included construction of a reservoir that would hold Lake Okeechobee runoff. The objective was to stop the flow of those harmful agricultural nutrients into the Everglades, Florida’s rivers and eventually its beaches.

But critics say that the sugar industry has been a less-than-cooperative partner in the restoration effort.

“Since the 1990s,” The New Tropic reported last summer, “Big Sugar has been able to fend off state water clean-up requirements and routinely leave us, the taxpayers, to pick up the bill for Everglades restoration efforts.”

Big Sugar is certainly big, but its lobbying influence exceeds its weight class, as its successful obstruction of the Everglades plan shows.

Maybe this is because the “OPEC of sugar” funds its strong-arm lobbying efforts with the hefty profits it generates with the assistance of government policy. And with the price of sugar in the United States often twice as high as the global price, those profits are abundant — causing American consumers to pay an extra $1.4 billion for sugar in fiscal 2013, according to research from Heritage Foundation policy analyst Bryan Riley.

It would be well-deserved justice if Big Sugar was made to pay a substantial part of the Everglades’ restoration costs. Why not? The reservoir alone, which moved a small step closer to reality this spring when state lawmakers approved a measure to secure at least some of the needed land, will cost an estimated $1.5 billion to $2.4 billion.

Not often do free-market advocates and environmental activists become allies. But they can find common ground on this issue. A strong coalition advancing from both sides would be a potent political force for ending the sugar racket.

Lawmakers Worry About Sugar Prices and Renegotiate NAFTA Now

Source: http://www.aginfo.net


**A growing concern among U.S. lawmakers and food manufacturers that they’ll see the price of sugar go up if the sugar refining industry gets what it’s demanding from Mexico.

A group of 51 House members has signed onto a letter to Commerce Secretary Wilbur Ross not to go through with some proposals like raising the floor price for raw and refined sugar and funneling some raw sugar imports directly to specific refiners.

**Farm groups and farm-state lawmakers are increasingly looking at the renegotiation of NAFTA as if you were removing a bandage. If it has to be done, and the Trump administration has made clear it does, then it’s far better to get it done quickly.

Mexico, which spends about $19 billion per year to buy U.S. corn, soybeans, beef, pork, rice, milk and other commodities, is increasingly jittery about the viability of U.S. exports.

House Ag Chairman Mike Conaway says the sooner the countries can close the book on a new NAFTA, the better.

**The FDA has a tough job ahead, a job the food and agriculture sectors have struggled to accomplish: Convincing the public that biotech crops are safe.

The 2017 spending bill includes $3 million earmarked for FDA on a consumer outreach and education effort. The stated goal is to educate consumers “on the environmental, nutritional, food safety, economic, and humanitarian impacts of such biotech foods.”

The provision surfaced last year as Congress debated legislation to block state GMO labeling laws.

Sugar prices drop amid rising beverage cost

Sugar prices drop amid rising beverage cost By Chino S. Leyco While consumer groups and micro-enterprises warn that the proposed excise tax on sugar-sweetened beverages would raise the price of some sugary products, government data showed that …

Big Sugar makes sour impact on Everglades

Source: https://m.lasvegassun.com


Some Americans are aware that the federal sugar program makes their food cost more. But few know this same program is causing environmental wreckage in Florida that their tax dollars will have to pay for.

The sugar program, known to its many critics as the “sugar racket,” is a tangle of price supports, which increase the cost of sugar in the United States, and tariffs and quotas on imported sugar, which keeps cheaper sugar from reaching our market.

“There’s probably no better example in U.S. history of a case of both legal plunder and crony capitalism that has been tolerated for so many years, and that has picked more money from the pockets of Americans” than the sugar program, says American Enterprise Institute economist Mark J. Perry, who has shown that “American consumers and domestic sugar-using industries have been forced to pay twice the world price of sugar for many generations.”

But it’s a great deal for the three Florida companies that produce nearly half of the country’s sugar supply: U.S. Sugar, the Sugar Cane Growers Cooperative of Florida and the Fanjul Corp., which has helped fund Republican U.S. Sen. Marco Rubio’s political career, obliging him to support government subsidies he should philosophically oppose.

Beyond the economic harm done by the sugar program is the environmental damage to Everglades National Park, a 1.5 million acre wetlands preserve near Florida’s southern edge. According to the National Park Service, the Everglades are a “World Heritage Site, a Biosphere Reserve and a Wetland of International Significance.” It is also the “largest subtropical wilderness in the United States,” the “predominant water recharge area for all of South Florida,” and home, as well, to almost 750 species of mammals, birds, reptiles and fish. In short, it’s a natural treasure.

As it turns out, federal policy has provided Big Sugar with a strong financial incentive to foul this wilderness.

“Federal farm policies damage the natural environment in numerous ways,” Cato Institute scholar Chris Edwards wrote last fall in “Downsizing the Federal Government.”

“Subsidies are also thought to induce the excessive use of fertilizers and pesticides, which can cause water contamination problems. Sugar cane production has expanded in Florida because of the federal sugar program … and the phosphorous in fertilizers used by growers causes damage to the Everglades.”

An effort to protect this sensitive region was initiated in 2000 through the Water Resource Development Act, which authorized the Comprehensive Everglades Restoration Plan. Part of the restoration included construction of a reservoir that would hold Lake Okeechobee runoff.

The objective was to stop the flow of those harmful agricultural nutrients into the Everglades, Florida’s rivers and eventually its beaches.

But critics say that the sugar industry has been a less-than-cooperative partner in the restoration effort.

“Since the 1990s,” The New Tropic reported last summer, “Big Sugar has been able to fend off state water clean-up requirements and routinely leave us, the taxpayers, to pick up the bill for Everglades restoration efforts.”

Big Sugar is certainly big, but its lobbying influence exceeds its weight class, as its successful obstruction of the Everglades plan shows.

Maybe this is because the “OPEC of sugar” funds its strong-arm lobbying efforts with the hefty profits it generates with the assistance of government policy. And with the price of sugar in the United States often twice as high as the global price, those profits are abundant — causing American consumers to pay an extra $1.4 billion for sugar in fiscal 2013, according to research from Heritage Foundation policy analyst Bryan Riley.

It would be well-deserved justice if Big Sugar was made to pay a substantial part of the Everglades’ restoration costs. Why not? The reservoir alone, which moved a small step closer to reality this spring when state lawmakers approved a measure to secure at least some of the needed land, will cost an estimated $1.5 billion to $2.4 billion.

Not often do free-market advocates and environmental activists become allies. But they can find common ground on this issue.

A strong coalition advancing from both sides would be a potent political force for ending the sugar racket.

Subsidized sugar likely for AAY card holders

Source: https://www.thehindu.com


A fallout of the implementation of the National Food Security Act (NFSA) in the State, sugar will no longer be part of the subsidised food items supplied through the public distribution system (PDS) in the State. The impact may soon be felt in the open market, where the price of sugar is likely to skyrocket. The current price of sugar in the open market is around ₹45.

Moreover, there were reports of the Food and Agriculture Organization (FAO) forecasting a further increase in the global prices of sugar.

With the Centre taking away the sugar subsidy following the NFSA legislation, there has been no supply of sugar to the State since April.

Six States, including Kerala, had been receiving sugar from the Centre at a subsidised rate till March

Till now, the States had been purchasing sugar to be supplied through the PDS, from the open market at wholesale rates, to be sold through ration shops at a subsidised rate of ₹13.50 a kg to BPL families [The BPL category is now divided into Priority card holders and Antyodaya Anna Yojana (AAY) card holders or the poorest of the poor].

The Centre used to give a subsidy of ₹18.50 per kg to States. But with the allocation on sugar subsidy curtailed from the earlier ₹4,500 crore to just ₹200 crore in the Union Budget 2017-18, the Centre had sounded out the States early itself that it will not be supplying sugar any more to be sold through ration shops.

The BPL category is not defined under the NFSA, while it talks about the AAY, Priority and Non-priority categories.

The subsidy had to be scrapped as the classification of Priority category was almost double that of the earlier BPL category, entailing a financial burden that the Centre could no longer support.

“We have not received any sugar since April. We had been holding the stock we received in March, which is now being supplied to both Priority and AAY card holders as per the existing guidelines. In future, however, the State will have to decide if it can bear the huge burden of buying sugar and selling it at a subsidised rate to 34 lakh families in Kerala,” says Babychen Mukkadan, all-India general secretary of the Retail Ration Dealers’ Association .

“We have now received a communication from the Centre that the sugar subsidy will be continued and limited to just the AAY category, which will receive one kg sugar per family,” Special Secretary, Civil Supplies, Mini Antony said.

Kerala has about 5.95 lakh AAY families. Approximately 29 lakh families in the Priority category who used to receive subsidised sugar through ration shops will now have to buy from the open market.

Govt breaks up exploitative prices

Source: https://www.thejakartapost.com


There’s a recurring phenomenon each year when the Ramadhan fasting month comes around: staple food prices pick up.

As people are familiar with the situation, they seem to take it for granted, assuming that a peak in demand will naturally increase prices.

However, this seemingly “general truth” does not apply to Trade Minister Enggartiasto Lukita, who believes the pattern is neither correct nor normal and speculators play a big role in pushing up prices.

Determined to change this, in early April the minister called on big producers and distributors of staple foods such as sugar, cooking oil and meat, to set reasonable price level for themselves as well as their consumers.

“I locked them in the auditorium [of the Trade Ministry] for three days and nights. We did this until we agreed on the set prices,” Enggartiasto recently told reporters.

Since then, the price of sugar and cooking oil has settled at Rp 12,500 (94 US cents) per kilogram and Rp 11,000 per kg, respectively, while frozen beef and Indian buffalo are sold for up to Rp 85,000 per kg and Rp 80,000 per kg, respectively.

The mutually agreed to price ceilings came into effect on April 10.

The move is designed to anticipate the fasting month in late May and the Idul Fitri festivities in late June as people in Indonesia, the world’s most populous Muslimmajority country, eat much more than usual to break their fast or cook special dishes during family gatherings.

The Trade Ministry has also joined forces with a food stability task force set up by the National Police along with related stakeholders, including the Agriculture Ministry, the Business Competition Supervisory Commission (KPPU) and state-owned logistics firm Bulog, to closely monitor food prices and avert food hoarding practices nationwide.

The effort seems to be generating the desired goal. At the beginning of Ramadhan, prices of staple foods climbed modestly, reversing trends seen in previous years.

Data from hargapangan.id shows that on Friday, the price of bulk cooking oil rose by only 2.5 percent to Rp 12,300 per kilogram, while the price of fresh meat was up 2.86 percent to Rp 32,350 per kg and the price of eggs was up by 4.23 percent to Rp 22,200 per kg. Garlic prices, meanwhile, slipped by 0.86 percent to Rp 51,600 per kg.

The price of frozen beef, for example, is now lower than last year when the price rose beyond Rp 120,000 per kg.

Up to Wednesday, Bulog claimed it had secured 33,000 tons of buffalo meat and 360,000 tons of sugar to distribute across the country.

Enggartiasto admitted that the still high price of garlic remained a concern and that this had been addressed through recent imports.

“I don’t say that relatively stable prices means that we’re 100 percent successful, but at least we’re seeing low inflation,” he said Wednesday.

Alleged hoarding practices by importers are said to be a cause of persistent high prices. The police are investigating these alleged practices in Jakarta, Medan and Surabaya.

In a separate development, the Central Statistics Agency (BPS) reported on Friday that monthly inflation stood at 0.39 percent month-on-month (mom), bringing the annual inflation rate to 4.33 percent year-on-year (yoy).

The inflation was primarily triggered by hikes in the prices of food commodities such as garlic, chicken eggs, chicken meat, rice and beef alongside other costs such as electricity, fuel, airline fares and cigarettes.

Coordinating Economic Minister Darmin Nasution acknowledged that May’s inflation was quite high and attributed this situation to volatile food components. He added that the government had found irregularities in the distribution of some food commodities, including garlic, with importers contributing to market distortions.

“Let the trade minister deal with them,” he said Friday.

Despite May’s inflation, Darmin said this year’s maximum inflation target, set at 5 percent, was still achievable by the end of 2017.

Bank Central Asia’s (BCA) chief economist David Sumual said imports of food commodities could help maintain a good supply and tame prices in the short- and medium term. However, in the long term, improved production will be the ultimate solution, he said.

“We should improve longterm food productivity because in terms of quantity, our domestic production of commodities such as garlic, is still low,” David said.

Sugar might not taste so sweet this monsoon. Time to sell?

Source: https://www.moneycontrol.com


A poor monsoon in 2016 helped propel the market higher as sugar prices received the next booster dose. From a low of Rs 2,165 per 100 kg in July 2015 sugar prices crossed the Rs 4,000 mark by February 2017. Will this rally continue?

Sugar stocks have been trending upward since the second half of 2015 when the first indication of a crop failure was visible. A poor monsoon in 2016 helped propel the market higher as sugar prices received the next booster dose. From a low of Rs 2,165 per 100 kg in July 2015 sugar prices crossed the Rs 4,000 mark by February 2017.

Sugar producers participated in the rally giving multi-bagger returns during this period. Stocks like Dwarikesh Sugar shot up from a low of Rs 23 in August 2015 to a high of Rs 504.90 recently — an appreciation of 22 times.

The key question is whether the party is likely to continue in future or is it over?

A simple answer is a lot depends on monsoon. Sugar as an agriculture crop is a water guzzler. It has unarguably the most sensitivity to monsoon.

Initial estimates suggest that we are headed for a normal monsoon. US Department of Agriculture (USDA) has predicted that India’s sugar production in FY17-18 would touch 25.8 million tonnes, a jump of 18 percent over last year. Indian agriculture bodies are expecting the number to be around the 25 million mark. In both the cases sugar supply is likely to exceed sugar demand of 24 million tonnes.

Sugarcane acerage in the current year has already touched 46.5 lakh hectares as of last week vs 43.9 lakh hectare last year.

Higher acerage is also on account of government introducing an 11 percent increase in Fair and Remunerative Price (FRP) for the upcoming season. This was necessitated by the government as sugar output had dropped to a seven-year low of 20.3 million tonnes in FY16-17. The problem with these government incentives is that they are hard to remove. FRP has been increased from Rs 130 per quintal in FY09-10 to Rs 255 presently. Irrespective of the monsoon FRP remains at elevated levels.

Unlike fertiliser and subsidised petroleum products, sugar industry bears the high input costs. They are unable to pass on these costs and have to absorb them or take a hit on their profitability.

Thus, if 2017-18 happens to be a good year for sugarcane crop, the industry will have to absorb the cost at a time when the price of sugar would be down. A double-whammy for the industry.

Sugar industry posted profits for the first time in seven years as sugar prices rose. But despite higher profits, the industry has not paid back the farmers, in the main sugarcane growing states of Uttar Pradesh and Maharashtra. Any drop in sugar prices is likely to result in the problem aggravating further.

To make matter worse global sugar production is also likely to be a bumper one. USDA has forecasted that world sugar production would rise to 180 million tonnes on higher account from Brazil, India, China, European Union and Thailand.

For the first time in three years world sugar inventory is likely to increase as demand is also likely to come down marginally to 171.6 million tonnes, a drop of 0.3 million tonnes. Many countries in the developed world have imposed a ‘sweet tax’ to check rising cases of obesity. Also, companies in China are increasingly using cane syrup in the final product as compared to sugar.

Headwinds are clearly visible for the sugar sector and if monsoon is normal this year, there is little reason to hold on to sugar stocks.

Council Hopeful National Budget Will Further Promote Interests of Consumers

by jet newspaper

With the 2017-2018 National Budget announcement date nearing, the Council is hoping that the government will again consider the concerns of Fijian consumers in its budget priorities.

We have seen from the past budget announcement that the Government always delivered a balanced budget where consumer needs were considered among st other priorities.

We hope this year’s budget announcement will once again focus on high cost of living to bring relief to the consumers.

more here – http://www.thejetnewspaper.com/2017/0…