American sugar growers will not be saved by producing the biofuel ethanol and the Doha round of farm trade talks has been a disappointment to the US sweetener industry, an official said Sunday.
Jack Roney, director of economics and policy analysis for the industry group American Sugar Alliance, told Reuters the sugar-to-ethanol program set up by Washington "will be able to keep the (US domestic sugar) market stable and balanced by shifting excess sugar to ethanol."
But he said at the start of the ASA's annual meeting here that churning out ethanol will not become the main chore of the US sugar industry. "Our business is making sugar for food," Roney said, adding the US Agriculture Department can provide excess sugar in the market to corn-based ethanol producers to "supplement their feedstock flow."
The ASA official said multilateral trade talks are still the way to go, but the current Doha round which is near collapse "is not going to help us." The US sugar trade has long been accused by critics of being a protected industry, but industry officials claim that other producers like top grower Brazil enjoy government support which distorts world sugar trade.
Roney estimated that three-quarters of the world's sugar is produced and exported by developing countries who will "do little to nothing on their subsidies and tariffs in the Doha Round."
"(It's been) very disappointing. We had hoped through the WTO to reduce the foreign subsidies that distort the world sugar market, but it's not going to happen in this round," explained Roney. The WTO talks collapsed in acrimony last week.
FARM COSTS EXPLODE, BUT FARM BILL WILL HELP: The top issue for US sugar growers would be the escalating cost brought on by steep spikes in oil prices, which is also the main ingredient in manufacturing fertilisers. While sugar prices are higher this year, the increases there do not even come close to matching the rallies seen in the grains market.
"Our biggest challenge is coping with skyrocketing input costs - fertilisers and fuels have doubled in the past year," said Roney. "Prices for other commodities have risen sharply to help keep pace, but not sugar. We have to hope for stronger sugar prices, which have risen only modestly this year, to help our beet and cane growers to survive," he added.
The No 14 domestic sugar contract used to prices US sugar prices have been trading around 22 to 24 cents, trading at a year high of 24.75 in July. In early February, the spot contract in the market traded at 18.78 cents. Worries that Mexican sugar be imported duty free to the US under a the North American Free Trade Agreement (NAFTA) have receded because of the USDA's ethanol program.
Roney said that since American farmers produce sugar at a lower cost than those in Mexico and the country is "a fast growing and attractive market and we look forward to exporting our sugar there." He added that the US sugar trade is "in the process of forming an Export Trading Company to facilitate our sugar exports to Mexico."
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