[Federal Register Volume 59, Number 199 (Monday, October 17, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-25622]
[[Page Unknown]]
[Federal Register: October 17, 1994]
VOL. 59, NO. 199
Monday, October 17, 1994
DEPARTMENT OF AGRICULTURE
Commodity Credit Corporation
Sugar and Crystalline Fructose Marketing Allotments
AGENCY: Commodity Credit Corporation, USDA.
ACTION: Notice.
-----------------------------------------------------------------------
SUMMARY: This notice affirms the announcement made on September 29,
1994 by the Commodity Credit Corporation (CCC) that marketing
allotments have been established for sugar and crystalline fructose for
fiscal year 1995. The overall allotment quantity for sugar is 7,889
thousand short tons (TST). The beet sugar allotment is 4,355.5 TST
(55.2 percent), and the cane sugar allotment is 3,533.5 TST (44.8
percent). State cane sugar allotments and individual sugar beet and
sugarcane processor allocations are provided in this notice. The
marketing allotment for crystalline fructose is 159,757 short tons.
DATES: The allotments apply to marketings from October 1, 1994 through
September 30, 1995, unless subsequently suspended.
FOR FURTHER INFORMATION CONTACT: Robert D. Barry, Director, Sweeteners
Analysis Division, Agricultural Stabilization and Conservation Service,
room 3739, South Agriculture Building, U.S. Department of Agriculture
(USDA), P.O. Box 2415, Washington, DC 20013-2415; or FAX to 202-720-
8261; or telephone 202-720-3391.
SUPPLEMENTARY INFORMATION:
Background
Throughout its history the United States has been a net importer of
sugar. In order to support the domestic production of sugar beets and
sugarcane, Congress has mandated, continuously since 1981, that the CCC
provide price support for domestically produced sugar beets and
sugarcane. CCC has provided such price support by making nonrecourse
loans available, at minimum levels prescribed by Congress, to sugar
beet and sugarcane processors in accordance with the provisions of the
Agricultural Act of 1949, as amended (the ``1949 Act'') (See 7 U.S.C.
Sec. 1446g). In order to receive a price-support loan, an eligible
processor must agree to pay not less than the minimum price-support
levels specified by the CCC to all producers who deliver sugar beets or
sugarcane to such processor for processing. During fiscal year 1994,
three sugar beet processors declined to participate in the price-
support loan program, in part to avoid the minimum grower payment
requirements, and two other sugar beet processors defaulted on price-
support loans, resulting in 13,950 short tons of sugar pledged as loan
collateral being forfeited to the CCC.
The national average loan rates for the 1994 crop year (i.e., July
1, 1994 through June 30, 1995) have not yet been published but are
expected to be the minimum rates allowed by statute. The loan rate for
raw cane sugar is expected to remain at 18 cents per pound, and the
loan rate for refined beet sugar is expected to increase, under the
statutory formula, by up to 40 points from the 23.62 cents per pound
loan rate for the 1993 crop year. The increase of the beet sugar loan
rate means that market prices will have to increase correspondingly in
order to avoid risks of price-support loan defaults and the forfeiture
of sugar collateral in fiscal year 1995. Since the minimum grower
payments are a function of the loan rate, an increase in the loan rate
also increases pro rata the minimum grower payment levels. Without an
increase of refined sugar prices, more sugar beet processors may elect
not to participate in the price-support program, thereby undermining
the purpose of the program to support the prices received by sugar beet
growers.
Section 902(a) of the Food Security Act of 1985 (the ``1985 Act'')
requires that the President ``use all authorities available to the
President as is necessary to enable the Secretary of Agriculture to
operate the sugar program established under section 206 of the
Agricultural Act of 1949 at no cost to the Federal government by
preventing the accumulation of sugar acquired by the Commodity Credit
Corporation.'' Since the price-support levels mandated by Congress
generally are substantially above world market prices, import
restrictions have been primarily relied upon to maintain the domestic
price-support program at no cost to the Federal government. Currently,
additional U.S. note 3(a) to chapter 17 of the Harmonized Tariff
Schedule of the United States (HTS) authorizes the Secretary of
Agriculture to determine the total amount of sugars, syrups, and
molasses that may be entered at the low tier of tariffs under an import
tariff-rate quota which effectively limits sugar imports.
Prior to enactment of the Food, Agriculture, Conservation, and
Trade Act of 1990 (the ``1990 Farm Act''), the only mechanism available
to the Secretary to regulate the domestic price of sugar was the
tariff-rate quota. But the continued use of a restrictive quota had a
devastating effect on U.S. cane sugar refiners and the economies of
exporting countries. To alleviate these negative effects, the 1990 Farm
Act provided the Secretary of Agriculture with authority to establish
domestic marketing allotments in order to maintain the price of
domestic sugar without reducing imports below the minimum level--1.25
million short tons, raw value--deemed needed to allow refineries to
continue efficient operations. On August 6, 1994, the Secretary of
Agriculture modified the existing tariff-rate quota period for imports,
from the period October 1, 1992 through September 30, 1994 to the
period October 1, 1992 through July 31, 1994, and announced a new quota
period from August 1, 1994 through September 30, 1995 and a total quota
amount of 1,322,978 metric tons, raw value (1,458,333 short tons).
Effectively, this action means a monthly average of quota imports that
will total 1.25 million short tons in FY 1995.
Establishment of Marketing Allotments
The Agricultural Adjustment Act of 1938, as amended (the ``1938
Act''), requires that, before the beginning of a fiscal year, the
Secretary shall determine if marketing allotments for the fiscal year
for sugar processed from domestically produced sugar beets or sugarcane
must be established based on estimates of consumption, reasonable
ending stocks, beginning stocks, and production. Specifically, section
359b(a)(1) of the 1938 Act requires that the Secretary make estimates
of the following:
(1) the quantity of sugar that will be consumed in the United
States during the fiscal year (other than sugar imported for the
production of polyhydric alcohol or to be refined and reexported in
refined form or in sugar containing products) and the quantity of sugar
that would provide for reasonable carryover stocks;
(2) the quantity of sugar that will be available from carry-in
stocks or from domestically produced sugarcane and sugar beets for
consumption in the United States during the year; and
(3) the quantity of sugar that will be imported for consumption in
the United States during the year (other than sugar imported for the
production of polyhydric alcohol or to be refined and reexported in
refined form or in sugar-containing products), based on the difference
between the sum of the quantity of estimated consumption and reasonable
carryover stocks and the quantity of sugar estimated to be available
from domestically produced sugarcane and sugar beets and from carry-in
stocks.
Section 359b(b)(1) of the 1938 Act provides for the establishment
of marketing allotments for domestically processed sugar for a fiscal
year, if imports of sugar, based upon these estimates, will be less
than 1,250,000 short tons, raw value.
The estimate of the quantity of sugar that ``would provide for
reasonable carryover stocks'' differs from the estimates of production,
consumption, and beginning stocks and from the estimate of actual
ending stocks, which are conventional predictions of supply and use
parameters, in that it is not a straightforward estimate of the
quantity of sugar that actually will be carried over at the end of the
fiscal year. By contrast, the estimate of ``reasonable'' ending stocks
is a policy determination of the quantity of unrestrained stocks that
is expected to result in market prices at least high enough to achieve
the goals of the no-cost price-support program for sugar beets and
sugarcane. Accordingly, the level of ending stocks which would be
``reasonable'' must reflect that quantity that is necessary to achieve
the price-support objectives of section 206 of the 1949 Act as well as
the ``no cost'' mandate of section 902(a) of the 1985 Act, without
reducing import access below 1.25 million short tons.
Similarly, the estimate of imports is not an estimate of the
quantity of sugar expected to actually be entered into the U.S. customs
territory during the fiscal year but rather the level of imports that
would be required to achieve the determined quantity of reasonable
ending stocks, based upon the statutory formula. Accordingly, the
import estimate indicates whether, in the absence of domestic marketing
allotments, the Secretary would be required to reduce the tariff-rate
quota amount to a quantity less than 1.25 million short tons in order
to achieve the desired level of reasonable ending stocks for
maintaining the price-support program at no cost.
Estimates of Sugar Consumption, Stocks, Production, and Imports for
Fiscal Year 1995
Pursuant to section 359b(a)(1) of the 1938 Act, the Secretary has
estimated the quantities of sugar consumption, stocks, production, and
imports in the United States (including Puerto Rico) for fiscal year
1995 as follows:
------------------------------------------------------------------------
TST, raw
value
------------------------------------------------------------------------
Consumption.................................................. 9,247
Reasonable ending (carryover) stocks......................... 1,278
Production................................................... 7,890
Beginning (carry-in) stocks.................................. 1,386
Imports...................................................... 1,249
------------------------------------------------------------------------
The current situation and outlook for sugar in fiscal year 1995
indicates that the probability of forfeiture of sugar pledged as
collateral for price-support loans would be high without allotments,
because estimated actual ending stocks are high and refined beet sugar
prices, which softened in mid-September, were likely to fall further
without allotments. Marketing allotments are expected to raise market
prices to levels which will provide effective price support and avoid
costs to the Federal Government. Any level of ending stocks at or above
1,279 TST determined to be ``reasonable'' would not trigger marketing
allotments and would very likely leave market prices depressed at
levels that would result in not achieving the price-support objectives
and cause forfeitures of sugar held as collateral under the price-
support loan program. A determination of reasonable ending stocks of
less than 1,279 TST would trigger marketing allotments, which would
have the effect of raising sugar prices by reducing marketings of sugar
in fiscal year 1995. Therefore, a level of unrestrained ending stocks
of 1,278 TST would be reasonable in light of the objectives of the
sugar program of assuring an adequate supply of sugar to the U.S.
market while supporting domestic sugar beet and sugarcane growers and
also avoiding costs to the Federal Government. Accordingly, the
quantity of sugar needed to be imported into the United States during
the fiscal year in order to achieve such level of ending stocks would
be less than 1.25 million short tons, raw value, in the absence of
domestic marketing allotments.
Establishment of Marketing Allotments for Crystalline Fructose
Section 359b(c) of the 1938 Act provides that for any fiscal year
in which sugar marketing allotments are established, the Secretary
shall establish allotments for the marketing by manufacturers of
crystalline fructose manufactured from corn, at a total level not to
exceed the equivalent of 200,000 tons of sugar, raw value, during the
fiscal year.
Overall Allotment Quantity
Section 359c(b) of the 1938 Act provides that the Secretary shall
establish the overall allotment quantity of sugar by deducting from the
sum of the estimated sugar consumption and reasonable carryover stocks
for the fiscal year (1) 1,250,000 short tons, raw value and (2) carry-
in stocks of sugar. This formula yields an overall allotment quantity
for sugar of 7,889 TST, calculated as follows:
9,247 (consumption) + 1,278 (reasonable carry-over stocks) - 1,386
(carry-in stocks) - 1,250 = 7,889.
Beet Sugar and Cane Sugar Allotments
Pursuant to sections 359c (c) and (d) of the 1938 Act, the
Secretary must establish overall beet sugar and cane sugar allotments
by using percentage factors established in a fair and equitable manner
on the basis of past marketings of sugar, processing and refining
capacity, and the ability of processors to market the sugar covered
under the allotments. Section 359c(f) of the 1938 Act provides that the
cane sugar allotment shall be further allotted among the 5 States in
the United States in which sugarcane is produced (i.e., Florida,
Hawaii, Louisiana, Puerto Rico, and Texas) in a fair and equitable
manner on the basis of past marketings of sugar, processing capacity,
and the ability of processors to market the sugar covered under the
allotments. Section 359d(a) of the 1938 Act provides for the allocation
among processors of the State cane sugar allotments and the beet sugar
allotment after such hearing and on such notice as the Secretary by
regulation may prescribe, in such manner and in such quantities as to
provide a fair, efficient, and equitable distribution of the
allocations by taking into consideration processing capacity, past
marketings of sugar, and the ability of each processor to market sugar
covered by that portion of the allotment allocated to it. For purposes
of these divisions of the overall allotment quantity, past marketings
are based on the 1985-1989 crops, processing or refining capacity is
defined as the highest crop year production of the previous 5 years,
and ability to market is defined as the current crop year production
estimate.
The 1938 Act is silent on the specific weights that should be
assigned to each factor but directs that the allotments and allocations
should result in fairness, efficiency, and equity. CCC regulations
governing the marketing allotments provide for the three factors to be
weighted equally or as determined appropriate by CCC for the fiscal
year. Equal weights were assigned to each of the factors when
allotments were instituted in FY 1993. However, experience gained
during the administration of the FY 1993 allotment program made it
clear that the use of equal factor weights could result in a
disproportionate share of the negative impacts of allotments being
placed on a relatively few processors, while other processors who were
also expanding production would incur little or no negative impact. Due
to this disparate impact, the allotments in FY 1993 also resulted in an
increase in refined sugar prices to levels in excess of those needed to
achieve the price support and no-cost objectives of the sugar program.
This experience indicated that CCC should adjust the weighting of the
three factors in light of the data available in order to achieve the
statutory goals of fairness, efficiency, and equity in allocating
market shares and to avoid driving prices for consumers and industrial
users to excessive levels. The Council of Economic Advisers (CEA) and
the Office of Management and Budget (OMB) have also suggested that the
factors be weighted differently (e.g., weights of 10 percent for past
marketings, 30 percent for processing capacity, and 60 percent for
ability to market), based on the premise that sugar delivered to the
market by the most efficient processors will result in the lowest
prices for users and consumers.
The use of equal factor weights for FY 1995 would again restrain
marketings by rather few processors and would be inappropriate to
ensure a fair, efficient, and equitable sharing of both the burden and
benefits of marketing allotments. Equal factor weighting would also be
likely to have a much greater price impact than necessary to achieve
price-support objectives. CCC has determined that it would be most
appropriate, given the relevant statutory purposes and the expected
market impact, to provide greater weight on ability to market (50
percent versus 33.3 percent) and less weight on past marketings (25
percent) and processing or refining capacity (25 percent). The
estimated restraint on beet sugar marketings would decrease from
approximately 195,000 tons, under an equal weighting scheme, to 144,000
tons. Constraining marketings by this amount is expected to have the
necessary price impact to deter forfeitures and sufficiently support
sugar beet prices while not contributing unnecessarily to inflation and
not unduly restraining a small segment of the industry.
Establishment of Proportionate Shares
Section 359f(b) of the 1938 Act provides that whenever a State cane
sugar allotment is established and there are in excess of 250 sugarcane
producers in such State, other than Puerto Rico, the Secretary is
required to determine, for each such State allotment, whether the
production of sugar, in the absence of proportionate shares, will be
greater than the quantity needed to enable processors to fill the
State's allotment and provide a normal carryover inventory, and, if so,
establish proportionate shares for the crop of sugarcane that is
harvested during the fiscal year the allotment is in effect. There are
in excess of 250 sugarcane producers in Louisiana, and the production
of sugar, in the absence of proportionate shares, is estimated to be
greater than the quantity needed to enable processors to fill the
State's allotment and provide a normal carryover inventory.
Accordingly, proportionate shares must be established for sugarcane
farms in Louisiana.
Notice
Pursuant to sections 359b(b)(1) and 359b(c) of the 1938 Act, the
Secretary of Agriculture has established allotments for the marketing
of sugar processed from domestically produced sugar beets or sugarcane
and crystalline fructose produced from field corn during fiscal year
1995. In addition, the Secretary has made the following determinations:
1. The September 1994 estimate of the quantities of sugar
consumption, stocks, production, and imports in the United States
(including Puerto Rico) for fiscal year 1995 is as follows:
------------------------------------------------------------------------
TST, raw
value
------------------------------------------------------------------------
Consumption.................................................. 9,247
Reasonable ending (carry-over) stocks........................ 1,278
Production................................................... 7,890
Beginning (carry-in) stocks.................................. 1,386
Imports...................................................... 1,249
------------------------------------------------------------------------
2. The overall allotment quantity for sugar is 7,889 TST.
3. The percentage factors for the beet sugar and raw cane sugar
allotments are 55.2 percent and 44.8 percent, respectively. The
Secretary established the percentage factors for the beet sugar and
cane sugar allotments on the basis of past marketings of sugar (defined
as the average of marketings of sugar from the 1985 through 1989 crops,
excluding the highest and lowest years), processing and refining
capacity (defined as the highest year's production in the preceding 5
crop years), and the ability of processors to market the sugar covered
under the allotments (defined as the crop-year production estimate for
the fiscal year in which allotments are implemented). In order to make
the percentage factors fair, equitable, and efficient, the three
criteria were weighted 25 percent for past marketings, 25 percent for
processing and refining capacity, and 50 percent for ability to market.
The data used to determine the percentage factors are as follows:
------------------------------------------------------------------------
TST, raw value
----------------------------------------------
Beet sector Cane sector
------------------------------------------------------------------------
Past marketings.......... 3,430 3,341
Processing capacity...... 4,408 3,539
Ability to market........ 4,500 3,390
Average................ 4,210 (55.2%) 3,415 (44.8%)
------------------------------------------------------------------------
4. The beet sugar allotment is 4,355.5 TST.
5. The cane sugar allotment is 3,533.5 TST.
6. The State cane sugar allotments are:
------------------------------------------------------------------------
TST, raw
value
------------------------------------------------------------------------
Florida.................................................... 1,687.380
Hawaii..................................................... 773.180
Louisiana.................................................. 869.856
Puerto Rico................................................ 71.397
Texas...................................................... 131.650
------------------------------------------------------------------------
7. Proposed marketing allocations for fiscal year 1995 for
domestically produced beet sugar and raw cane sugar by U.S. sugar beet
processors and sugarcane processors are as follows:
------------------------------------------------------------------------
Thousand
short
tons, raw
value
------------------------------------------------------------------------
Overall beet/cane allotments
Beet sugar................................................ 4,355.5
Cane sugar (including Puerto Rico)........................ 3,533.5
-----------
Total................................................. 7,889.0
State cane sugar allotments:
Florida................................................... 1,687.380
Hawaii.................................................... 773.180
Louisiana................................................. 869.856
Puerto Rico............................................... 71.397
Texas..................................................... 131.650
-----------
Total cane sugar...................................... 3,533.463
Beet processors' marketing allocations:
Amalgamated Sugar Co...................................... 847.446
American Crystal Sugar Co................................. 1,039.146
Great Lakes Sugar Co...................................... 49.983
Holly Sugar Corp.......................................... 702.416
Michigan Sugar Co......................................... 253.173
Minn-Dak Farmers Co-op.................................... 205.148
Monitor Sugar Co.......................................... 148.851
Savannah (ADSEP DIV)...................................... 28.286
So. Minn. Beet Sugar Co-op................................ 293.585
Spreckels Sugar Co........................................ 319.306
Western Sugar Co.......................................... 468.198
Total beet sugar...................................... 4,355.538
-----------
Cane processors' marketing allocations:
Florida:
Atlantic Sugar Assoc...................................... 139.110
Growers Co-op. of FL...................................... 278.868
Okeelanta Corp............................................ 295.868
Osceola Farms Co.......................................... 188.340
Talisman Sugar Corp....................................... 127.750
U.S. Sugar Corp........................................... 657.444
-----------
Total Florida......................................... 1,687.380
Hawaii:
Hamakua Sugar Co.......................................... 77.805
Hawaiian Commercial & Sugar Co............................ 221.827
Hilo Coast Processing Co.................................. 46.001
Ka'u Agribusiness Co...................................... 52.067
Kekaha Sugar Co........................................... 55.292
Lihue Plantation Co....................................... 51.750
McBryde Sugar Co.......................................... 37.830
Oahu Sugar Co............................................. 73.818
Olokele Sugar Co.......................................... 48.165
Pioneer Mill Co........................................... 42.992
Waialua Sugar Co.......................................... 65.633
-----------
Total Hawaii.......................................... 773.180
Louisiana:
Alma Plantation........................................... 38.327
Caire & Graugnard......................................... 7.421
Cajun Sugar Co-op......................................... 57.401
Caldwell Sugars Co-op..................................... 33.229
Cora-Texas Mfg. Co........................................ 66.015
Dugas & Leblanc........................................... 40.236
Evan Hall Factory......................................... 45.468
Glenwood Co-op............................................ 33.478
Harry Laws & Co........................................... 29.278
Iberia Sugar Co-op........................................ 38.739
Jeanerette Sugar Co....................................... 45.969
Lafourche Sugars Corp..................................... 41.936
Louisiana Sugarcane Co-op................................. 60.270
M.A. Patout & Sons........................................ 99.484
Raceland Sugars........................................... 57.058
Savoie Industries......................................... 38.810
St. James Sugar Co-op..................................... 40.099
St. Mary Sugar Co-op...................................... 43.656
Sterling Sugars........................................... 52.982
-----------
Total Louisiana....................................... 869.856
Puerto Rico:
Coloso.................................................... 22.899
Mercedita................................................. 18.039
Plata..................................................... 12.831
Roig...................................................... 17.628
-----------
Total Puerto Rico..................................... 71.397
Texas:
Rio Grande Valley Sugar Growers........................... 131.650
------------------------------------------------------------------------
8. The overall allotment in fiscal year 1995 for the marketing of
crystalline fructose manufactured from corn is 159,757 short tons.
Allotments will be established for the two U.S. manufacturers of
crystalline fructose, and they will be notified of such allotments by
certified mail.
9. There are in excess of 250 sugarcane producers in Louisiana, and
the production of sugar, in the absence of proportionate shares, is
estimated to be greater than the quantity needed to enable processors
to fill the State's allotment and provide a normal carryover inventory.
Therefore, as required the Agricultural Adjustment Act of 1938, as
amended, proportionate shares on acreage of sugarcane that may be
harvested in Louisiana for sugar or seed are established for the 1994
crop of sugarcane, in an amount equal to 108.57 percent of each farm's
sugar acreage base.
Signed at Washington, DC this 12th day of October, 1994.
Bruce R. Weber,
Acting Executive Vice President, Commodity Credit Corporation.
[FR Doc. 94-25622 Filed 10-12-94; 2:57 pm]
BILLING CODE 3410-05-P