Hawaii’s sugar industry is being hit hard by low sugar prices, which have dropped below 21 cents per pound for the last 10 months from October 2003 to July 2004. The low price has already caused one sugar producer in Michigan to forfeit 16,000 tons of sugar to the Commodity Credit Corporation (CCC) at the end of July.
The primary reason for the falling prices is the biggest users of sugar—bakery, cereal, and candy manufacturers—are buying less US made sugar.
These large food manufacturers are taking advantage of the North American Free Trade Agreement (NAFTA) to get their
hands on cheaper sugar from Mexico and Canada. They do this by importing products that contain a lot of sugar.
Since 1999, these food manufacturers have been cutting their orders for domestic sugar while steadily increasing their use of
sugar containing cereal and cocoa preparations and bakers’ wares imported from Mexico and Canada. In 2004, these industrial
sugar users may obtain as much as 20 percent of their sugar in this way, or around 700,000 tons.
Over 187 US companies have applied for licenses to import sugar containing products. This list starts with ADM Cocoa and
ends with Zachary Confections. In between are probably the names of every large food company in the United States, such as: Birds Eye, Brach’s, Con Agra Grocery Products, Continental Mills, Del Monte, General Mills, Hershey, Kellog Company, Kraft, Nestle, Pepsi, and Quaker Oats.
USDA study
A September 2003 study by Stephen Haley of the US Department of Agriculture tried to estimate the amount of sugar
being imported into the US in sugar containing products. In 2002, Haley’s data showed US food manufacturers reduced their
orders for domestic sugar by 432,000 tons. At the same time, they imported products that contained some 500,000 tons of
sugar—an almost pound-for-pound substitution.
These confectionery, processed foods, and multiple-use manufacturers have been steadily increasing their imports of sugar
containing products ever since NAFTA was passed in 1995. It took a few years, but by 1999 these food manufacturers were
getting 10-11 percent of their sugar in sugar containing products from Mexico or Canada and they began cutting back on their
orders for US made sugar.
The latest data in Haley’s report were for 2002, which showed these manufacturers were getting 15.6 percent of their
sugar from NAFTA sources. If their use of foreign sugar increases at the same rate, it could be around 19-20 percent today, which is continuing bad news for US and Hawaii sugar producers.
Haley’s report, “Measuring the Effect of Imports of Sugar-Containing Products on U.S. Sugar Deliveries,” can be found at:
www.ers.usda.gov/publications/SSS/sep03/sss23701/sss23701.pdf
Data on US sugar deliveries to industrial users can be found in Table 21 at:
www.ers.usda.gov/data/sdp/view.asp?f=specialty/89019/
Data tables
The following chart shows the increasing use of sugar containing products by food manufacturers after NAFTA was passed in 1994. In 2002, 15.6 percent of the sugar used by these manufacturers came from sugar containing products such as sugar confectionery (HTS code 17.04), cocoa preparations, cereal preparations and baker’s wares, and miscellaneous edible preparations. The percentages for 2003 and 2004 are projections. ◆
