{ "id": "R43998", "type": "CRS Report", "typeId": "REPORTS", "number": "R43998", "active": true, "source": "EveryCRSReport.com, University of North Texas Libraries Government Documents Department", "versions": [ { "source": "EveryCRSReport.com", "id": 588570, "date": "2016-04-13", "retrieved": "2020-01-02T15:53:33.876546", "title": "U.S. Sugar Program Fundamentals", "summary": "The U.S. sugar program provides a price support guarantee to producers of sugar beets and sugarcane and to the processors of both crops. The U.S. Department of Agriculture (USDA), as program administrator, is directed to administer the program at no budgetary cost to the federal government by limiting the amount of sugar supplied for food use in the U.S. market. To achieve both objectives, USDA uses four tools\u2014as reauthorized without change by the 2014 farm bill (P.L. 113-79) and found in chapter 17 of the Harmonized Tariff Schedules of the United States\u2014to keep domestic market prices above guaranteed levels. These are:\nprice support loans at specified levels\u2014the basis for the price guarantee;\nmarketing allotments to limit the amount of sugar that each processor can sell;\nimport quotas to control the amount of sugar entering the U.S. market;\na sugar-to-ethanol backstop\u2014available if marketing allotments and import quotas are insufficient to prevent a sugar surplus from developing, which in turn could result in market prices falling below guaranteed levels.\nTo supplement these policy tools in supporting sugar prices above government loan levels, while avoiding costly loan forfeitures, important administrative changes were adopted in late 2014. These included imposing limits on U.S. imports of Mexican sugar and establishing minimum prices for Mexican sugar imports, actions that fundamentally recast the terms of bilateral trade in sugar. A U.S. sugar refiner is pursuing a legal challenge to the U.S. government\u2019s finding that these changes have eliminated the harm to the U.S. sugar industry, so although this new regime is in effect, a measure of uncertainty about its future remains. \nUnder the U.S. sugar program, nonrecourse loans that may be taken out by sugar processors, not producers themselves, provide a source of short-term, low-cost financing until a raw cane sugar mill or beet sugar refiner sells sugar. The \u201cnonrecourse\u201d feature of these loans means that processors\u2014to meet their repayment obligation\u2014can exercise the legal right to forfeit sugar offered as collateral to USDA to secure the loan, if the market price is below the effective support level when the loan comes due.\nSugar marketing allotments limit the amount of domestically produced sugar that processors can sell each year. In a 2008 farm bill provision, retained by the 2014 farm bill, USDA each year must set the overall allotment quantity (OAQ) at not less than 85% of estimated U.S. human consumption of sugar. The OAQ is intended to ensure that permitted sales of domestic sugar, when added to imports under U.S. trade commitments, do not depress market prices below loan forfeiture levels for refined beet sugar and raw cane sugar.\nThe United States imports sugar in order to meet total food demand. The amount of foreign sugar supplied to the U.S. market reflects U.S. commitments made under various trade agreements. The most significant import obligation is the World Trade Organization (WTO) quota commitment, which requires the United States to allow not less than 1.256 million tons of sugar (almost all raw cane) to enter the domestic market from 40 countries. The United States also grants much smaller import quotas to nine countries covered by four free trade agreements. At the same time, a 2008 farm bill provision, also retained in the 2014 farm bill, directs USDA to manage overall U.S. sugar supply, including imports, so that market prices do not fall below effective support levels.\nIf market prices fall below levels guaranteed by the sugar program, USDA must administer a sugar-for-ethanol program in which it buys domestically produced sugar from the market and sells it to ethanol producers as feedstock for fuel ethanol. 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The U.S. Department of Agriculture (USDA), as program administrator, is directed to administer the program at no budgetary cost to the federal government by limiting the amount of sugar supplied for food use in the U.S. market. To achieve both objectives, USDA uses four tools\u2014as reauthorized without change by the 2014 farm bill (P.L. 113-79) and found in chapter 17 of the Harmonized Tariff Schedules of the United States\u2014to keep domestic market prices above guaranteed levels. These are:\nprice support loans at specified levels\u2014the basis for the price guarantee;\nmarketing allotments to limit the amount of sugar that each processor can sell;\nimport quotas to control the amount of sugar entering the U.S. market;\na sugar-to-ethanol backstop\u2014available if marketing allotments and import quotas are insufficient to prevent a sugar surplus from developing, which in turn could result in market prices falling below guaranteed levels.\nTo supplement these policy tools in supporting sugar prices above government loan levels, while avoiding costly loan forfeitures, important administrative changes were adopted in late 2014. These included imposing limits on U.S. imports of Mexican sugar and establishing minimum prices for Mexican sugar imports, actions that fundamentally recast the terms of bilateral trade in sugar. Two U.S. sugar refiners have initiated a legal challenge to the U.S. government\u2019s finding that these changes have eliminated the harm to the U.S. sugar industry, so although this new regime is in effect, a measure of uncertainty about its future remains. \nUnder the U.S. sugar program, nonrecourse loans that may be taken out by sugar processors, not producers themselves, provide a source of short-term, low-cost financing until a raw cane sugar mill or beet sugar refiner sells sugar. The \u201cnonrecourse\u201d feature of these loans means that processors\u2014to meet their repayment obligation\u2014can exercise the legal right to forfeit sugar offered as collateral to USDA to secure the loan, if the market price is below the effective support level when the loan comes due.\nSugar marketing allotments limit the amount of domestically produced sugar that processors can sell each year. In a 2008 farm bill provision, retained by the 2014 farm bill, USDA each year must set the overall allotment quantity (OAQ) at not less than 85% of estimated U.S. human consumption of sugar. The OAQ is intended to ensure that permitted sales of domestic sugar, when added to imports under U.S. trade commitments, do not depress market prices below loan forfeiture levels for refined beet sugar and raw cane sugar.\nThe United States imports sugar in order to meet total food demand. The amount of foreign sugar supplied to the U.S. market reflects U.S. commitments made under various trade agreements. The most significant import obligation is the World Trade Organization (WTO) quota commitment, which requires the United States to allow not less than 1.256 million tons of sugar (almost all raw cane) to enter the domestic market from 40 countries. The United States also grants much smaller import quotas to nine countries covered by four free trade agreements. At the same time, a 2008 farm bill provision, also retained in the 2014 farm bill, directs USDA to manage overall U.S. sugar supply, including imports, so that market prices do not fall below effective support levels.\nIf market prices fall below levels guaranteed by the sugar program, USDA must administer a sugar-for-ethanol program in which it buys domestically produced sugar from the market and sells it to ethanol producers as feedstock for fuel ethanol. A source of controversy over the sugar program is the balance it strikes between the interests of the sugar industry and sugar users.", "type": "CRS Report", "typeId": "REPORTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/R43998", "sha1": "496545d847dc7ec53f4f07123162274790e18aac", "filename": "files/20160406_R43998_496545d847dc7ec53f4f07123162274790e18aac.html", "images": null }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/R43998", "sha1": "48b3f12fb5f2d9b76375fe4ca8dcf6c89a2ce49b", "filename": "files/20160406_R43998_48b3f12fb5f2d9b76375fe4ca8dcf6c89a2ce49b.pdf", "images": null } ], "topics": [ { "source": "IBCList", "id": 217, "name": "Agricultural Trade" }, { "source": "IBCList", "id": 641, "name": "Farm Bill and Agricultural Policy" } ] }, { "source": "EveryCRSReport.com", "id": 444961, "date": "2015-05-05", "retrieved": "2016-04-06T19:07:09.574742", "title": "U.S. Sugar Program Fundamentals", "summary": "The U.S. sugar program provides a price guarantee to producers of sugar beets and sugarcane and to the processors of both crops. The U.S. Department of Agriculture (USDA), as program administrator, is directed to administer the program at no budgetary cost to the federal government by limiting the amount of sugar supplied for food use in the U.S. market. To achieve both objectives, USDA uses four tools\u2014as reauthorized without change by the 2014 farm bill (P.L. 113-79) and found in chapter 17 of the Harmonized Tariff Schedules of the United States\u2014to keep domestic market prices above guaranteed levels. These are:\nprice support loans at specified levels\u2014the basis for the price guarantee;\nmarketing allotments to limit the amount of sugar that each processor can sell;\nimport quotas to control the amount of sugar entering the U.S. market;\na sugar-to-ethanol backstop\u2014available if marketing allotments and import quotas are insufficient to prevent a sugar surplus from developing, which in turn could result in market prices falling below guaranteed levels.\nTo supplement these policy tools in supporting sugar prices above government loan levels, while avoiding costly loan forfeitures, important administrative changes were adopted in late 2014. These included imposing limits on U.S. imports of Mexican sugar and establishing minimum prices for Mexican sugar imports, actions that fundamentally recast the terms of bilateral trade in sugar. Most recently, two U.S. sugar refiners are pressing for the withdrawal of these changes, so although this new regime is in effect, there is a measure of uncertainty about its future. \nUnder the U.S. sugar program, nonrecourse loans that may be taken out by sugar processors, not producers themselves, provide a source of short-term, low-cost financing until a raw cane sugar mill or beet sugar refiner sells sugar. The \u201cnonrecourse\u201d feature of these loans means that processors\u2014to meet their repayment obligation\u2014can exercise the legal right to forfeit sugar offered as collateral to USDA to secure the loan, if the market price is below the effective support level when the loan comes due.\nSugar marketing allotments limit the amount of domestically produced sugar that processors can sell each year. In a 2008 farm bill provision, retained by the 2014 farm bill, USDA each year must set the overall allotment quantity (OAQ) at not less than 85% of estimated U.S. human consumption of sugar. The OAQ is intended to ensure that permitted sales of domestic sugar, when added to imports under U.S. trade commitments, do not depress market prices below loan forfeiture levels for refined beet sugar and raw cane sugar.\nThe United States imports sugar in order to meet total food demand. The amount of foreign sugar supplied to the U.S. market reflects U.S. commitments made under various trade agreements. The most significant import obligation is the World Trade Organization (WTO) quota commitment, which requires the United States to allow not less than 1.256 million tons of sugar (almost all raw cane) to enter the domestic market from 40 countries. The United States also grants much smaller import quotas to the nine countries covered by four free trade agreements. At the same time, a 2008 farm bill provision, also retained in the 2014 farm bill, directs USDA to manage overall U.S. sugar supply, including imports, so that market prices do not fall below effective support levels.\nIf market prices fall below levels guaranteed by the sugar program, USDA must administer a sugar-for-ethanol program in which it purchases domestically produced sugar from the market and sells it to ethanol producers as feedstock for fuel ethanol production.", "type": "CRS Report", "typeId": "REPORTS", "active": true, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/R43998", "sha1": "931f98d84f2457402ebfc32f777351d35257a6f5", "filename": "files/20150505_R43998_931f98d84f2457402ebfc32f777351d35257a6f5.html", "images": null }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/R43998", "sha1": "b006ab639a646278893c6c303d179d119b40543e", "filename": "files/20150505_R43998_b006ab639a646278893c6c303d179d119b40543e.pdf", "images": null } ], "topics": [ { "source": "IBCList", "id": 217, "name": "Agricultural Trade" }, { "source": "IBCList", "id": 641, "name": "Farm Bill and Agricultural Policy" } ] }, { "source": "University of North Texas Libraries Government Documents Department", "sourceLink": "https://digital.library.unt.edu/ark:/67531/metadc817177/", "id": "R43998_2015Apr22", "date": "2015-04-22", "retrieved": "2016-03-19T13:57:26", "title": "U.S. Sugar Program Fundamentals", "summary": null, "type": "CRS Report", "typeId": "REPORT", "active": false, "formats": [ { "format": "PDF", "filename": "files/20150422_R43998_b24f4fafc6b49b35afadcc2e488e6ec851412799.pdf" }, { "format": "HTML", "filename": "files/20150422_R43998_b24f4fafc6b49b35afadcc2e488e6ec851412799.html" } ], "topics": [] } ], "topics": [ "Agricultural Policy", "Foreign Affairs" ] }