[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