U.S. Sugar Corp.'s planned exit from sugar production isn't expected to impact the price of sugar and consumers at the checkout counter will scarely notice.
Although prices of commodities such as rice and corn are skyrocketing, the wholesale price of sugar in the United States was no higher in the first quarter this year than it was 10 years ago -- about 26 cents a pound. On Wednesday, a 10-pound bag of Publix brand sugar was selling for $4.29 at the supermarket or around 43 cents a pound.
Experts and producers see no price hike on the near horizon because of a unique U.S. sugar program that allocates quotas on domestic production and imports to balance supply and demand.
Currently there is an excess supply of sugar from both domestic and imported sources.
''With all that surplus floating around, their problem is how to keep the price of sugar from collapsing,'' Olson said.
The South Florida Water Management District agreed to pay U.S. Sugar $1.75 billion for 187,000 acres of land, a state-of-the-art sugar mill, a citrus processing plant and other assets in an effort to restore the Everglades.
U.S. sugar is expected to continue its operations for the next six years under the deal announced Tuesday.
''I really don't see how [the deal] affects the price of sugar in the short run,'' said Dennis Olson, a senior policy analyst at the Institute for Agriculture and Trade Policy in Minneapolis.
When U.S. Sugar's land is taken out of production, other sugar-producing areas around the country could produce more.
There is little extra capacity in South Florida, however.
''All of the land that can be farmed in the Everglades Agricultural Area is currently being farmed,'' said Barbara Miedema, spokeswoman for the Sugar Cane Growers Cooperative of Florida, which has 48 grower members in Palm Beach County. ``We are limited by the availability of land.''
Sugar prices are kept relatively stable under a U.S. sugar program that allocates quotas on both domestic production and imports and is intended to prevent large surpluses that could depress prices or shortages that could send them soaring.
About 40 countries have import quotas that allow them access to the U.S. market and earn the same sugar price as U.S. domestic producers.
Taxpayers do not directly subsidize sugar production, as they do corn, wheat and other commodities. Producers can forfeit their sugar crops to the government if prices plummet below costs, which has happened only once in recent decades.
Any shortfall in U.S. sugar production can be made up by opening the import spigot as was done after Hurricane Katrina damaged sugar harvests in Louisiana.
Under international trade agreements, the United States must import at least 1.5 million tons of sugar each year.
Sugar quotas also have been raised under trade agreements such as the Central American Free Trade Agreement, while all tariffs on sugar trade between the United States and Mexico were erased on Jan. 1 under the North American Free Trade Agreement.
U.S. sugar beet farmers, meanwhile, have held part of their product off the market because they produced more than allowed by the U.S. Department of Agriculture.
Experts also predict sugar prices will be stable in the medium-term.
''If anything is going to change, it will change up or down in the next farm bill,'' said Gaston Cantens, spokesman for Florida Crystals, a West Palm Beach company that has 180,000 acres of land and two sugar mills.
The current farm bill, which goes into effect in October, lasts for five years.Miami Herald
