DANA POINT, Calif. – February 24, 2014 – A top USDA official says he expects to avoid the “perfect storm” that resulted in the first sugar forfeitures in a decade and a net of $260 million in costs to taxpayers last year.
“We don’t think we will have to spend anything (in 2014),” explained Michael Scuse, USDA Under Secretary for Farm and Foreign Agricultural Services during an interview at the International Sweeteners Colloquium here.
His comments came just days after USDA’s Economic Research Service suggested, during the agency’s annual Outlook conference, that some of those same conditions which led to record North American production and imports could, indeed, happen this year. However, Scuse says his comments are based on a more recent analysis.
“The reality is that no one could project that we were going to have a record beet crop, we were going to have a record cane crop and Mexico was going to have a record cane crop in the same year,” Scuse explained about the 2013 crop year. He noted that any one thing – a hurricane, or an early freeze - would have knocked out production but nothing happened, resulting in record stocks in the U.S. and Mexico.
Last year, USDA took ten separate actions to minimize costs, including re-exporting product and triggering the Feedstock Flexibility Program under which sugar can be sold for ethanol production.
But Scuse does not believe similar actions will be required in 2014.
“If you look at what the stocks-to-use ratio is right now, it’s down under 15. When you get that low, we don’t believe there will be forfeitures.
“Mexico has been a big help for us, too,” he noted, while lauding Mexican officials for providing more accurate data in what has been a combined North American market since 2008 when the sugar provisions of the North American Free Trade Agreement kicked in.
“The information we are getting from Mexico is helping us now. That’s a game changer, by recognizing that this market is joined at the hip.”
Scuse says he does not expect to see a big increase in production south of the border and pointed out that the Mexican government is looking at more ethanol production and moving more of their product into the world market.
In other trade-related comments, Scuse said he expects negotiations on the Trans-Pacific Partnership – involving 12 countries – to be completed before the end of the year, even though some major issues remain.
The negotiations have been “very ambitious from the beginning,” he noted, while emphasizing that U.S. negotiators “are committed to an agreement that is in the best interest of us agriculture.
“We fully intend to hold Japan to its commitment to include all products and address non-tariff barriers,” Scuse said, while noting that all U.S. products, including sugar, must be part of the negotiations.
For more on how President Obama wants to streamline the export/import process, click here.
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