Hawaiian Sugar Manual 1989

HAWAIIAN SUGAR MANUAL 1989

HD9104 H39 1989 HAWAIIAN SUGAR MANUAL 1989

A Handbook of Statistical Information PUBLISHED BY

ii HAWAIIAN SUGAR PLANTERS' ASSOCIATION

OFFICERS 1989 ·J.C.COUCH Chairman R. L. GRIFFITH Vice Chairman D. J HEINZ President-Director of the Experiment Station E. C. RAVNHOLT Vice President-Washington Representative R.D. WIEMER Secretary-Treasurer

BOARD OF DIRECTORS 1989 J. S. ANDRASICK W. D. BALFOUR, JR. J. W. A. BUYERS T. K. L. CHANG J.C.COUCH G. B.FRASER R. L. GRIFFITH J. H. HEWETSON F. S.MORGAN J. A. WILLIAMS

A~ociation & Experiment Station Headquarters 99-193 Aiea Heights Drive P. 0. Box 1057 Aiea, HI 96701 (808) 487-5561 (808) 486-5020 (FAX)

Washington Office 1511 K Street, N.W., Suite 723 Washington, D. C. 20005 (202) 628-6372 (202) 628-2918 (FAX)

iii HAWAIIAN SUGAR COMPANIES (Listed according to principal owners)

ALEXANDER & BALDWIN, INC. C. BREWER AND CO., LTD. HAWAIIAN COMMERCIAL & SUGAR HILO COAST PROCESSING co.· co. E. A. Kennett, Pres. & C.E.O. R. F. Cameron, Gen. Mgr. P.O.Box18 P. 0. Box 266 Pepeekeo, HI 96783 Puunene, HI 96784 Phone: 964-5511 Phone: 877-0081 KA'U AGRIBUSINESS CO., INC. McBRYDE SUGAR CO., LTD. R. B. Cushnie, President D. P. Scott, Vice Pres. & Gen. Mgr. P. 0. Box 130 P. 0. Box 8 Pahala, HI 96777 Eleele, HI 96705 Phone: 928-8311 Phone: 335-5333 MAUNAKEAAGRIBUSINESS CO.,INC.b AMFAC/JMB HAWAII,INC. E. A. Kennett, President KEKAHA SUGAR CO., LTD. P. 0. Box 68 L. A. Faye, Jr., Pres. & Mgr. Papaikou, HI 96781 P. 0. Box 549 Phone: 964-1011 Kekaha, HI 96752 OLOKELE SUGAR CO., LTD. Phone: 337-1472 D. B. Cataluna, President THE LIHUE PLANTATION CO., LTD. P. 0. Box 156 M. H. Furukawa, Pres. & Mgr. Kaumakani, HI 96747 2970 Kele St. Phone: 335-5337 Lihue, HI 96766 Phone: 245-7325 CASTLE & COOKE, INC. W AIALUA SUGAR CO., INC. OAHU SUGAR CO., LTD. G. B. Fraser, Pres. & Gen. Mgr. W. D. Balfour, Jr., Pres. & Mgr. P. 0. Box665 P. 0 . BoxO Waialua, HI 96791 Waipahu, HI 96797 Phone: 677-3577 Phone: 63 7-6284

PIONEER MILL CO., LTD. HAMAKUA SUGAR CO., INC. J.C. Hance, Pres. & Mgr. P. 0. Box 727 J. H. Hewetson, Vice Pres. & C.0.0. Lahaina, HI 96761 P. 0. Box 250 Phone: 661-0592 Paauilo, HI 96776 Phone: 776-1511

GAY & ROBINSON, INC.c W.S. Robinson, President P. 0. Box 88 Makaweli, HI 96769 Phone: 338-1012

• Sugarcane milling company cooperatively owned by United Cane Planters' Cooperative and ~fauna Kea Agribusiness Co., Inc. Mauna Kea Agribusiness Co., Inc., is a grower that delivers its cane to Hilo Coast Processing Co. c Gay & Robinson. Inc., is a grower whose cane is milled by Olokele Sugar Co., Ltd.

iv CONTENTS

HAWAII'S SUGAR INDUSTRY

Sugar in Hawaii ...... 1 Sugar Production for 1988 ...... 4 Sugar Lands ...... 5 Wages and Working Conditions ...... 5 Industry Organization .... ·...... 9 Hawaiian Sugar Planters' Association ...... 9 The Association ...... 9 The Experiment Station ...... 9 California and Hawaiian Sugar Company ...... 1O

U.S. SWEETENER AND SUGAR INDUSTRY

Sweetener Industry ...... 11 Sugar Industry ...... 11 Cane Sugar Production ...... 12 Beet Sugar Production ...... 15 Corn Sweetener Industry ...... 15 Sweetener Market ...... 15 U.S. Sugar Legislation ...... 18 U.S. Sugar Act ...... 18 U.S. Farm Act of 1981 ...... 18 Food Security Act of 1985 ...... 19 Farm Act Administration ...... 19

WORLD SUGAR INDUSTRY

Production, Trade, Consumption ...... 23 World Sugar Market ...... 24 World Sugar Surplus ...... 24 International Sugar Policy ...... 27 International Sugar Agreement ...... 27 General Agreement on Tariffs and Trade ...... 28

Glossary ...... 29

HAWAII'S SUGAR INDUSTRY

SUGAR IN HAWAII War II, labor shortages were eased by bringing in contract workers from Europe, Hawaii's sugar industry in 1985 North America, and Asia. Of the nearly observed its 150th year of commercial 385,000 workers that came, many raw cane sugar production. Sugar thousands stayed to become a part of production, more than any other activity, Hawaii's unique ethnic mix. helped create Hawaii as it is today. Pioneer sugar planters relieved water The first successful plantation was shortages in dry, leeward fields by build started at Koloa, Kauai, in 1835. Its first ing irrigation systems that included harvest in 1837 produced 2 tons of raw aqueducts (the first in 1856),artesian wells sugar, which sold for $200. Other (the first in 1879), and tunnels and pioneers, predominantly from the United mountain wells (the first in 1898). These States, soon began growing sugarcane on systems enabled the planters to grow the islands of Hawaii, Maui, and Oahu. sugarcane on more than 100,000 acres of Early sugar planters shared many arid land. problems - shortages of water and labor, The major trade barrier to Hawaii's trade barriers, and lack of markets for closest and major market for its raw sugar their sugar. Together with Hawaii's was eliminated by the 1876 Treaty of isolated oceanic location, these problems Reciprocity between the United States and created among the planters a spirit of the Kingdom of Hawaii. Through the cooperation that continues today. treaty, the U.S. received a coaling station Between 1852 and the end of World and Hawaiian sugar planters received

1988 Tons

JIJIJIJ Island S1~::i;e T!~ ::;;Jc1! T!~

1.11.11.11. Kaahuaui 41,904 23.6 227,831 24.6 ;;,,::;.;.,,,., 0 25,644 14.4 140,551 15.1 ttlt. III Maui 43,448 24.s 293,239 31.6 ::rninr ? Hawaii 66,697 37.5 266,574 28.7 .,,,,,,,,,::::::: :{' State Total 177,693 100.0 928,195 100.0 :::!!:f:!:]!::::_l_\.it...,.... 1:1:::i:::::::::::::::::::::\::t''\::i''':::,/L',:,,:,,,;,_,,,,,,,::::;:x,:,_,:,::::::::.:::::::::::::;.. ,:<:>:);::::;::;:;::::'\)\:<::::::·· .·:::: ...... Facts & Figures 0 Sugarcane is a "monoculture" in 0 Replacement of the sugar Hawaii. Some fields have been in industry's water system - all of continuous production for more which was built without any than 150 years. government subsidy - would cost 0 Hawaii is one of the few sugar- $1.25 billion. producing areas in the world where 0 The sugar industry provides more the crop age averages two years at than 20,000 direct and indirect jobs the time of harvest. in Hawaii. 0 The Hawaii yields of sugar are 0 Direct industry payroll costs, among the highest in the world, · including employee benefits, about 11.8 tons an acre in 1988 totaled $166.4 million in 1988. (5.9 tons on an annual basis). 0 Hawaii's cane field workers have 0 About 105,000 of Hawaii's the highest standard of living of 178,000 acres of sugarcane land any agricultural workers in the are irrigated; drip irrigation, where world, with daily earnings used, makes more efficient use of (including benefits) averaging water. $107.02 in 1988. 0 The industry's water system 0 Principal products of Hawaii's includes about 115 fresh and sugar industry are raw sugar, brackish wells and 24 7 reservoirs molasses, and electricity (primarily with a total capacity of 10.3 billion from biomass fuel). gallons, as well as 11 hydroelectric 0 Hawaii's sugar industry generates installations, 350 miles of major about 10 percent of all electricity ditches, and 120 miles of tunnels. produced in Hawaii. duty-free entry into U.S. markets for their capital through the exports of raw sugar sugar. This market was confirmed with and other farm products. However, with the u:s. annexation of Hawaii in 1898 the attainment of statehood in 1959 and after the Spanish-American War. the almost simultaneous introduction of From 2 tons of sugar in 1837, sugar jet airplanes, the tourist industry began to production increased to only 13,000 tons grow rapidly. Within a decade the tourist by 1876. But the treaty and annexation industry became the state's largest changed this dramatically. By 1898, economic activity. production had grown to 225,000 tons and Today, agriculture - together with by 1932 to one million tons. Since then, tourism, federal activities, and annual cane sugar production in Hawaii construction - remains one of Hawaii's has been around one million tons. largest economic activities. The stability Because Hawaii has few natural of the state's economy would be critically resources, most essentials such as food, disturbed by a sudden change or reduction fuel, machinery, and building materials in any of these economic sectors. must be imported. Thus, activities capable In 1987, state tourist industry of bringing new dollars into the economy revenues were estimated at $6.6 billion, are vital to Hawaii's balance of trade as federal defense spending at $1.9 billion, well as to the standard of living of its and agricultural revenues at $845 million. residents. In the agricultural sector, sugar For nearly a century, agriculture, industry revenues were $354 million; including sugar production, was the pineapple, $251 million; and diversified state's leading economic activity. It agriculture (including macadamia nuts, provided Hawaii's major sources of papaya, flowers, eggs, beef, and dairy employment, tax revenues, and new products), about $239 million.

2 HAWAIIAN SUGAR COMPANIES PRODUCTION FOR 1988 (Raw Value)

Total Tons Sugar Caneland Acres Production Per Company Acreage Harvested (short tons) Harvested Acre

ALEXANDER & BALDWIN, INC. (A&B) Hawaiian Commercial & Sugar Co. (Maui) 35,596 16,490 229,388 13.91 McBryde Sugar Co., Ltd. (Kauai) 11,296 5,637 57,859 10.26 TotalA&B 46,892 22,127 287,247 12.9sa

AMFAC/JMB HAW All, INC. (Amfac) Kekaha Sugar Co., Ltd. (Kauai) 8,375 3,855 52,867 13.71 The Lihue Plantation Co., Ltd. (Kauai) 14,744 7,115 65,329 9.18 Oahu Sugar Co., Ltd. (Oahu) 13,561 6,365 83,766 13.16 Pioneer Mill Co., Ltd. (Maui) 6,627 3,355 47,450 14.14 Total Amfac 43,307 20,690 249,412 12.05•

C,,BREWER AND CO., LTD. (Brewer) Ka'u Agribusiness Co., Inc. (Hawaii) 15,203 6,135 60,512 9.86 Mauna Kea Agribusiness Co., Inc. (Hawaii) 15,256 6,589 64,567b 9.80 Olokele Sugar Co., Ltd. (Kauai) 4,747 2,362 32,275 13.66 Wailuku Agribusiness Co., Inc. (Maui) 1,225 1,225 16,401c 13.39 Total Brewer 21,506 16,311 182,045 11.16"

CASTLE & COOKE, INC. Waialua Sugar Co., Inc. (Oahu) 12,083 5,044 56,785 11.26

HAMAKUA SUGAR CO., INC. (Hawaii) 34,383 12,521 133,205 10.64

GAY & ROBINSON, INC. (Kauai) 2,742 1,225 19,501d 15.92

HILO COAST PROCESSING CO. (Hawaii) e

UNITED CANE PLANTERS' COOPERATIVE 1,855 943 8,290b 8.79 (50 member growers, Hawaii)

TOTAL ALL COMPANIES 177,693 78,861 928,195 11.78

• Company average. bGrowers only; cane processed by Hilo Coast Processing Co. c Grower only; cane processed by Hawaiian Commercial & Sugar Co.; also, grower ended sugar ~perations in 1988. Grower only; cane processed by Olokele Sugar Co., Ltd. c Produced 72,857 tons of raw sugar for A&B, Amfac, and Brewer growers.

3 SUGAR PRODUCTION These and other factors had detrimental effects on the industry's FOR 1988 performance despite sugar yields being among the highest ever achieved. For the Hawaiian raw sugar production in second year in a row, and only for the 1988 declined 5.3 percent from 1987 and third time in the past quarter century, the was 8 percent below the forecast made at production of raw sugar in Hawaii fell the beginning of the year. Most of the below one million tons. (The other year shortfall occurred on the islands of Hawaii when production was under one million and Oahu; production on the islands of tons was 1982, the wettest year, thus far, Maui and Kauai was only slightly down this century.) from the previous year. Also, for the second year running, Adverse weather conditions in Hawaii's sugar industry was unable to combination with certain farming report a reduction in unit costs of sugar practices affected production in 1988. or an increase in productivity. This has

Retail Price" Hawaii, Cost of Productionb ,.., I \ Hawaii, Returns to c 1, I ,....-, __ . Producers ('actual') / \ I I, \ I ,:~. . \ ) i\' /: ~ ' / I I ,: \ v . \ Ji ~ t ...... ~ -- --- :: _-A;,.-.~.:--·"~ ' ...."

Sources: 1960-76, USDA Agricultural Statistics; 1977-89, USDA Sugar and Sweetener Situation and Outlook Reports; HSP A. a U.S . price of granulated sugar sugar at retail. bHawaii cost of production (raw value basis) is the weighted average annual cost of producers who grow and mill sugarcane. Source: HSP A. (Note: From 1956 to 1971, the cost of transportation ofraw sugar and molasses was paid by the producers; since 1972 by C&H; thus the costs have been slightly lower than they would have been without the change, but returns have been reduced by the same amount) c Returns to Hawaii producers represents sales of raw sugar and molasses by C&H and do not include compliance payments made under the U.S. Sugar Act which terminated in 1974. Such payments averaged less than 0.5 cent per pound. They also do not include payments under the 1977 U.S. Program which amounted to 2.75 cents per pound for one crop only.

4 • prolonged the interruption of the industry's cost-cutting and productivity 1988 ISLAND LAND AREAS improvement program begun in 1981. Total That was a year in which uncontrolled Area Sugar entry of subsidized foreign sugar flooded Island Length Width Square Acres Acresb the U.S. market, causing an (miles) (miles) Miles• (xOOO) unprecedented pre-tax loss of $90 million Hawaii 93 76 4,038 2,584 66,697 for Hawaii's sugar producers. Maui 48 26 729 466 43,448 Through 1986, the per-acre yields of Oahu 44 30 608 388 25,644 sugar increased steadily to a record 12.5 Kauai 33 25 553 354 41,904 tons, per-ton production costs were Molokai 38 10 261 167 reduced by 15 percent, and the man-days Lanai 18 13 139 89 required to produce a ton of sugar were Niihau 18 6 73 46 cut 20 percent. In 1987, this trend Kahoolawe II 6 45 28 reversed direction. The per-acre yield of Minor Islands 4 2 sugar, for example, slipped to 12.3 tons. The per-acre yield declined to 11.8 Total 6,450 4,124 177,693 tons in 1988. Raw sugar production totaled 928,195 tons, 5.3 percent less than "Includes inland water. the 979 ,209 tons of 1987. bExcludes mill sites, roads, etc. Reduced sugar production directly affected the industry's unit costs of production. The rise in unit costs in the Sugar Lands last two years reflects the fact that overall The islands of Hawaii make up industry operating costs are fixed; costs America's fourth smallest state. The are about the same to grow, harvest, and islands are the tops of volcanic mountains. process an acre of cane regardless of Because of the rugged terrain and nature whether the yield of sugar, for example, is of the soils, only certain low lands near 9 or 14 tons per acre. coasts are tillable. The remaining land is On the plus side, the industry sold a in forest, pasture, conservation, and record amount of electricity, 439 million unusable land. kilowatt-hours, to Hawaii's utility Consequently, Hawaii's sugar companies. This was a 13 percent increase companies are located along the coastlines over 1987 sales of 384.4 million kilowatt of the four sugar-producing islands and hours. Although molasses production reach into the foothills and upward along declined to 271,070 tons from 288,901 mountain slopes. tons in 1987, higher prices increased In 1988, 177 ,693 acres were devoted revenues by more than $0.5 million. to sugarcane cultivation, with another The industry's financial outcomes 21,000 acres used for mill sites, private were affected little by market conditions. roads, irrigations systems, and other The 1988 average domestic prices for raw facilities. sugar were only slightly higher than in 1987 and remained near the market Wages and Working Conditions stabilization price of21.76 cents per Hawaii's sugar workers- both field pound provided by the 1985 Food and factory - are members of the Security Act. International Longshoremen's and The volatile but generally rising Warehousemen's Union (ILWU). A prices of the small amount of sugar traded contract negotiated with the ILWU, from on the world market did not have much February 1, 1988, through January 31, effect on domestic raw sugar prices. The 1991, includes wage rates that currently 5 percent decline in domestic beet sugar range from a minimum of$7.45 (Grade 1) production did not greatly affect domestic to $10.42 (Grade 11) per hour, with prices either. joumeyworkers and trades leadworkers in

5 CANE SUGAR PRODUCTION IN HAWAII FROM 1908 THROUGH 1988 (Short Tons)

BY-PRODUCTS SUGARCANE PRODUCTION SUGAR PRODUCED Pounds Raw Sugar Megawatt (96°) Made Hours Tons Tons Raw Tons Per Shott Tons Elecuicity Tot.al Acres Average Tons Tons Refined Sugar Cane Mola11ea Sold For Public Cane Yield Cane Con vetted Tons Tona of Calendar Per Per Ton Cane Land 0 to 96° value Equivalenl Cane Production" Conaumption yur" Acre Sugar Acres Harveatedb Per acre Production 545,738 510.048 270 5.14 7.42 201,641 106,127 38.2 4,050,000 1908-1909 4,122,000 529,940 495,282 257 1909-1910 4.81 7.78 2()1),469 110,247 37.4 112,796 41.0 4,623,000 582,196 544,120 252 1910-1911 5.16 7.94 214,312 258 216,345 113,866 41.4 4,711,000 607,863 568,109 1911-1912 5.34 7.75 520,249 250 7.99 215,741 113,548 39.1 4,445,000 556,654 1912-1913 4.90 624,165 583,345 250 5.54 8.01 217,470 112,700 44.4 5,000,000 1913-1914 650,970 608,397 251 5.75 7.96 239,800 113,164 45.8 5,184,393 1914-1915 4,859,424 596,703 557,679 246 1915-1916 5.17 8.14 246,332 115,419 421 117,468 44.4 5,220,000 654,388 611,591 251 1916--1917 5.57 7.98 247,476 240 246,813 119,785 40.5 4,855,804 582,192 544,117 1917-1918 4.86 8.34 567,465 256 7.81 239,844 119,679 39.6 4,744,070 607,174 1918-1919 5.07 560,379 523,730 251 4.91 7.98 247,838 114,105 39.2 4,473,498 0-. 1919-1920 546,273 510,547 235 4.83 8.53 236,510 113,056 41.2 4,657,222 1920-1921 5,088,062 618,457 578,010 243 1921-1922 4.98 8.23 228,519 124,124 41.0 114,1 82 39.9 4,559,819 554,199 517,954 243 1922-1923 4.85 8.23 235,134 6(:IJ,097 253 231,862 111,581 50.7 5,661,000 715,918 1923-1924 6.42 7.91 730,000 248 8.06 240,597 120,632 522 6,297,000 781,000 1924-1925 6.47 804,644 752,020 248 6.58 8.07 237,774 122,309 53.1 6,495,686 1925-1926 831 ,648 777,258 238 6.68 8.41 234,809 124,542 56.1 6,992,082 1926--1927 7,707,330 920,887 860,661 239 1927-1928 7.00 8.37 240,769 131,534 58.6 129,131 57.7 7,447,494 925,140 864,636 248 1928-1929 7.16 8.05 239,858 239 242,761 133,840 58.7 7,853,439 939,287 877,858 1929-1910 7.02 8.36 951,467 240 8.33 251 ,533 137,037 61.9 8,485,183 1,018,047 1930-1931 7.43 1,057,303 988,155 239 7.57 8.38 251,876 139,744 63.4 8,865,323 1931-1932 1,063,605 994,045 248 7.34 8.05 254,563 144,959 59.1 8,566,781 1932-1933 - - 127,317 118,990 - 1933 (10/1-12/31) - - - - 240 252,237 134,318 59.5 7,992,260 959,337 896,596 1934 7.14 8.33 922,309 231 8.67 246,491 126,116 67.8 8,555,424 986,849 1935 7.82 1,042,316 974,149 227 7.97 8.80 245,891 130,828 70.1 9,170,279 1936 8,802,716 944,382 882,619 215 1937 7.46 9.32 240,833 126,671 69.5 135,978 65.0 8,835,370 941,293 879,732 213 1938 6.92 9.39 238,302 231 235,227 138,440 622 8,609,543 994,173 929,154 1939 7.18 8.66 912,802 228 8.76 235,110 136,417 627 8,557,216 976,677 1940 7.16 947,190 885,244 221 7.24 9.04 238,111 130,768 65.5 8,559,797 1941 7,918,342 870,099 813,195 220 1942 7.58 9.10 225,199 114,745 69.0

1945 7.96 8.98 211,331 103,173 71.4 7,371,158 821,216 767,509 223 1946 8.06 8.83 208,376 84,379 71.1 6,002,127 680,073 635,596 227 212,230 1947 7.72 9.11 211,624 113,020 70.3 7,942,216 872,187 815,146 220 285,190 1948 8.35 9.03 206,550 100,042 75.4 7,542,613 835,107 780,491 221 254,740 1949 8.76 8.44 213,354 108,794 73.9 8,045,941 955,890r 893,375 238 251,500 1950 8.78 8.51 220,383 109,405 74.7 8,174,821 960,961' 898,114 235 259,130 1951 9.09 8.51 221,212 109,494 77.4 8,477,201 955,759 930,636 235 270,585 1952 9.44 8.52 221,990 108,089 80.4 8,693,920 1,020,450 953,712 235 259,360 1953 10.15 8.19 221,542 108,337 83.1 9,003,967 1,099,316 1,027,421 244 287,480 1954 10.02 8.75 220,138 107,480 87.75 9,431,781 1,077,347 1,006,889 228 306,910 1955 10.74 8.66 218,819 . 106,180 9294 9,867,978 1,140,112 1,065,525 231 295,550 1956 10.28 9.01 220,606 106,956 9265 9,909,990 1,099,543 1,027,633 222 305,580 1957 10.16 8.71 221,336 106,742 88.51 9,447,647 1,084,646 1,013,710 230 303,700 1958 9.09 9.87 221,683 84,136 89.77 7,552,750 764,953 714,925 203 307,210 1959 8.83 9.66 222,588 110,371 85.31 9,416,225 974,632 910,891 207 330,790 1960 9.03 9.20 224,617 103,584 83.15 8,613,317 935,744 874,546 217 299,590 1961 10.09 8.78 227,027 108,320 88.58 9,595,342 1,092,481 1,021,033 228 329,960 1962 10.31 8.76 228,926 108",600 90.36 9,812,580 1,120,011 1,046,762 228 335,510 1963 10.25 9.12 231,321 107,436 93.39 10,033,969 1,100,768 1,028,777 219 322,610 1964 10.64 8.90 233,145 110,759 94.76 10,495,175 1,178,770 1,101,678 225 336,250 1965 I 1.11 8.82 235,576 109,600 97.97 10,737,507 1,217,667 1,138,033 227 340,190 1966 11.12 8.89 237,499 111,005 98.82 10,969,925 1,234,121 1,153,409 225 349,540 1967 10.65 9.27 239,813 111,837 98.74 11,045,949 1,191,042 1,113,148 216 359,170 1968 10.85 9.15 242,476 113,525 99.36 11,279,920 1,232,182 1,151 ,597 218 368,050 1969 10.44 9.17 242,216 113,232 95.73 10,839,272 1,182,414 1,105,060 218 340,330 1970 10.21 9.00 238,997 113,816 91.88 10,457,377 1,162,071 1,086,000 222 322,480 -....J 1971 10.62 8.69 232,278 115,810 9226 10,685,019 1,229,976 1,149,510 230 330,227 1972 10.32 8.87 229,611 108,456 91.55 9,929,068 1,118,883 1,045,708 225 307,543 1973 10.43 8.55 226,580 108,189 89.15 9,645,452 1,128,529 1,054,723 234 301,500 1974 10.86 8.73 224,227 95,826 94.76 9,082,684 1,040,742 972,677 229 293,380 1975 10.53 8.57 221,426 105,12 90.23 9,485,299 1,107,199 1,034,788 233 301,335 1976 10.51 8.73 221,551 99,926 91.79 9,172,649 1,050,457 981,757 229 275,352 1977 10.68 8.70 220,729 96,770 9295 8,994,388 1,033,739 966,132 230 284,349 1978 10.36 9.00 220,697 99,355 93.23 9,263,190 1,028,933 961,641 222 310,238 1979 10.53 9.09 218,773 100,610 95.74 9,632,135 1,059,737 990,430 220 325,843 1980 10.51 9.00 217,718 97,358 94.64 9,214,136 1,023,232 956,313 222 315,088 232,000 1981 10.74 8.43 216,099 97,573 90.51 8,831,477 1,047,541 979,032 237 311 ,719 214,000 1982 11.01 8.96 204,749 89,261 98.68 8,807,998 982,913 918,630 224 287,190 299,406 1983 11.25 8.55 194,258 92,808 96.18 8,926,358 1,044,204 975,913 234 303,254 288,698 1984 11.86 7.96 188,396 89,541 94.41 8,453,721 1,061,814 992,371 251 314,202 280,943 1985 1219 7.82 187,858 83,029 95.35 7,916,459 1,012,249 946,048 256 271 ,645 332,871 1986 1247 8.04 184,181 83,583 100.25 8,379,463 1,042,452 974,276 249 290,422 433,029 1987. 1232 8.18 180,966 79,498 100.79 8,012,899 979,209 915,169 244 283,250 384,419 1988 11.78 8.19 177,693 78,861 96.40 7,602,414 928,195 867,491 244 271,070 438,503

• Until 1934 repraiented period from October I through September 30. bThe average growth of a crop is from 22 to 26 months. Only a portion of the tot.al acreage in cane is harvested each year. c Converted in accordance with Sugar Regu!ationa, Series I, No. I, U.S. Depanment of Agriculture, Agricultural Adjualment Admini11tr1tion, issued February 18, 1935, or Section IOl(h) of :re Sugar Act of 1948 or corresponding provisions of ill predeceuon u the case may be. I ton of sugar, 96° test is usumed to be equivalent to 0.9346 tons of refined. • Actual weight; unconverted to 85 % Brix. r ~ludes 2,369 tons raw sugar produced from volunteer cane for which no acreage shown. 'Includes 2,690 tons raw value sugar produced from volunteer cane for which no acreage shown. AVERAGE RAW SUGAR PRICE, EARNINGS, EMPLOYEES & MAN-DAYS (All Hourly Rated Employees Only, On Hawaiian Sugar Plantations)

Average New York Raw Sugar Price Average Value Total Value Adult Total Man-Days (cents per pound) Average Daily Average Daily Hourly Rated Hourly Rated Year (Hawaiian basis)• i:::sb Employee Benefits Wages/Benefits Employeesc Employees

1940 2.78 $2.18 35,062 9,994,863 1945 3.75 5.10 20,806 6,350,489 1950 5.95 10.62 15,935 3,896,761 1960 6.31 13.18 4.40 17.58 12,111 2,917,459 1965 6.75 18.40 6.50 24.90 10,346 2,505,839 1970 8.08 24.24 10.00 34.23 8,?08 2,139,183 1971 8.52 26.08 10.27 36.35 8,610 2,077,011 1972 9.10 29.09 11.23 40.32 8,127 1,934,563 1973 10.30 30.86 12.48 43.34 7,900 1,897,369 1974 29.43 34.41 15.81 48.73 7,700d l,744,346d 1975 22.49 37.34 15.66 53.00 7,800 1,937,973 1976 13.31 43.12 17.28 60.40 7,500 1,854,272 1977 11.1 le 43.92 19.97 63.89 7,200f l,660,298f 1978 13.74 47.06 21.28 68.34 7,200 1,771,530 1979 15.2<>8 50.49 22.21 72.70 7,065 1,762,838 1980 19.74 61.51 27.71 89.22 7,282 1,806,020 1982 19.94 66.80 32.00 98.80 6,543 1,565,928 1984 21.74 68.88 34.71 103.59 6,319 1,467,127 1985 20.39h 68.72 35.99 104.71 5,751 1,323,525 1986 20.90e 69.28 34.24 103.52 5,413 1,290,067 1987 21.83 71.36 41.83 113.19 5,222 1,261,209 1988 22.12 72.46 34.56 107.02 5,110 1,204,708

• Hawaiian basis is the average New York raw sugar price computed over all the days in the year. The New York price is computed for days the New York market is operating. bCash wage only; does not include employee benefits. c Prior to 194'1 included only male adults. dlndustry-wide strike, 6 weeks. eNew York spot price discontinued on Nov. 2, 1977; after that date based on Clearing Association 1ettlement prices. · Industry-wide strike, 3 weeks. &New York spot price reinstituted on Aug. 20, 1979. hNew York spot price "nearby futures," effective JW1e 1985. Effective Jan. 1, 1986, "nearby" 14 contract futures.

Grades 9 and 10 receiving an additional $0.25 an hour. APPROXIMATE EMPLOYMENT BY Unlike some farming areas where OCCUPATION AT SUGAR COMPANIES crops are seasonal, Hawaii's sugar industry provides year-round, long-tenn Factory 1,300 employment. In 1988, the payroll for all of Field 3,375 Hawaii's sugar workers amounted to Clerical 170 $125.5 million, with daily earnings Miscellaneous 435 (wages and benefits) averaging $107.02. Supervisors Year-round employees receive up to 820 four weeks of vacation with pay, 10 paid Total 6,100 holidays a year, paid sick leave for up to

8 54 days plus a temporary disability The Experiment Station supplement for extended illness, a medical The Association's largest activity is plan, a family dental care plan, retirement research conducted through its Experi pensions, severance pay, and many other ment Station. The Station conducts benefits. research on sugarcane for the benefit of all sugarcane growers and processors in Hawaii. Research at the Station began in INDUSTRY ORGANIZATION 1895 and has led to consistent and substantial improvements for the industry. Hawaiian Sugar Planters' The most important research program Association of the Experiment Station is the develop ment of new sugarcane varieties. The The Association Station has been a world leader in On March 23, 1882, sugar planters in developing methods for breeding the then Kingdom of Hawaii met and sugarcane. Other important contributions organized the Planters' Labor and Supply include the development of irrigation Company. This organization evolved into systems and methods for controlling the Hawaiian Sugar Planters' Association insects, diseases, weeds, and rodents. It (HSPA), with a change in name and has improved sugarcane factory processes bylaws in 1895, but with no break in the and methods of factory process control. Its objectives and membership from the work has resulted in higher sugar recovery Planters' Labor and Supply Company. and in improvements in raw sugar quality. HSPA is a voluntary, nonprofit, Although its research is directed at incorporated association organized for the practical problems in growing and milling maintenance, advancement, improvement, sugarcane, the Station performs basic and protection of the sugar industry in research on the physiology and bio Hawaii and for the support of a sugarcane chemistry of the sugarcane plant when research station. Companies engaged such information is unavailable from other primarily in the business of growing sources. sugarcane and manufacturing sugar from The Experiment Station provides itareplantation membersofthe Asso many important services to its member ciation. Those people directly connected companies, such as analyses of raw sugar with the direction, management, or opera and molasses; plant and soil analyses to tion of the sugar companies are individual determine fertilizer needs; repair and members. calibration of sugar factory instruments; Among the Association's functions field, factory, and factory laboratory are the compilation of information, audits; and employee training. answering of inquiries, and coordination In addition to its headquarters, of activities on the problems of common offices, and laboratories in Aiea, Oahu, interest to its members. Many of these the Experiment Station has substations on functions are carried out through the each of the four islands where sugarcane following standing committees: is grown - Hawaii, Kauai, Maui, and Accounting, Energy, Environmental Oahu. One of its principal substations on Standards, Experiment Station Advisory, Oahu operates specifically for breeding Industrial Relations, Insurance, Land and varieties of sugarcane and crossing them Water, Legal Advisory, Legislative, to develop improved varieties. The Public Relations, Raw Sugar Technical, Experiment Station also has a large and Retirement Plans, and Tax. complete library, with a collection of The Association has maintained an reference books and periodicals on sugar office in Washington, D.C., since 1898. cane growing and milling, as well as a A vice president represents member comprehensive collection of journals and company interests in federal legislative, reference books on agrit:ulture, chemistry, administrative, and regulatory activities. and engineering.

9 California and Hawaiian Sugar Company

The California and Hawaiian Sugar Company (C&H) was founded in 1906 and has been an agricultural cooperative marketing association since 1921. It is proportionately owned by its 12-member sugar companies in Hawaii. It also serves the 50 independent sugarcane farmers in Hawaii. C&H sells the leading sugar brand in its markets. The company operates refineries at Crockett, California, and Aiea (a suburb of Honolulu), Hawaii. The company markets sugar and molasses produced only in Hawaii. Except for raw sugar sold to other refineries, C&H refines, packages, and markets all of the output of Hawaii's 12 sugar factories. C&H's primary market is the western United States, although some sugar is sold as far east as the Mississippi River. More than 100 types, grades, and package sizes are sold within the two major groupings of grocery and industrial products. Over the last decade, annual sales of C&H have averaged $555 million, returning an average of $396 million a year to Hawaii's raw sugar producers. The company employs about 1,150 people in mainland refining and marketing operations and about 61 people at its Aiea refinery. The C&H payroll totals about $41 million annually. Harold R. Somerset is president and chief executive officer of C&H. Company headquarters are located at 1390 Willow Pass Road, Concord, CA 94520.

10 U.S. SWEETENER AND SUGAR INDUSTRY

SWEETENER INDUSTRY is purchased directly from wholesalers, jobbers, and retail grocers. More than 16.42 million tons of In 1988, 46 percent of all caloric natural, caloric sweeteners - virtually all sweeteners used was sugar - domestic cane and beet sugar and com syrups and imported cane sugar and domestic were consumed in the United States beet sugar. A little more than half was during 1988. On a per capita basis, that is com sweeteners - high-fructose, glucose, an estimated 133.5 pounds for each and dextrose corn syrups. Less than American. 1 percent was honey and edible syrups. Consumption appears to be rising. In the 1970s it averaged 123 pounds per person. Per capita consumption has SUGAR INDUSTRY averaged 128 pounds since 1980 and nearly 131 pounds for the last 5 years. The American sugar needs are met from balance of national needs was met by the both domestic and foreign sources. In synthetic low-caloric and noncaloric 1988, the United States produced more sweeteners aspartame and saccharin. than 87 percent of the sugar for its needs; About 60 percent of all caloric remaining needs were filled by imported sweeteners is consumed as ingredients in sugar. U.S. sugar imports are regulated industrial products: cereal and bakery through country-by-country quota products, confections, ice cream and other allocations awarded to 39 nations. dairy products, beverages, prepared foods, Of the 6.9 million short tons of sugar and jams and jellies. A small percentage is produced in the United States in 1988, used for nonfood industrial products such about 3.35 million were from sugarcane as pharmaceuticals and tobacco. and 3.55 million from sugar beets. The remaining 40 percent consumed Imported raw cane sugar totaled 1.02

U.S. CALORIC SWEETENER USE FOR 1975, 1980, 1982-1988 (Million Short Tons, Dry Basis)

High- Total Com Honey Fructose Sweeteners and Calendar Sugar Sugar Com HFCS,Glucose Edible Year Raw Refined Syrup & Dextrose Syrups Total•

1975 10.30 9.63 0.53 2.96 0.15 12.73 1980 10.19 9.52 2.05 4.45 0.14 14.11 1982 9.16 8.56 3.10 5.60 0.15 14.31 1983 8.92 8.33 3.65 6.17 0.15 14.66 1984 8.57 8.00 4.43 6.97 0.17 15.14 1985 8.11 7.58 5.28 7.85 0.17 15.60 1986 7.86 7.35 5.55 8.15 0.17 15.67 1987 8.14 7.60 5.80 8.42 0.17 16.20 1988 8.16 7.62 5.98 8.63 0.17 16.42

Source: USDA Sugar and Sweetener Situation and Outlook Report, Vol. 14(1), March 1989. • Sum of refined sugar, total com sweeteners, and honey and edible syrups. Numbers may not add because of rounding.

11 million tons. Sugar deliveries for all uses reported operating in the United States. totaled 8.19 million tons (raw value). Thirteen years earlier, there were 62. U.S. raw cane sugar production Cane Sugar Production increased from an annual average of about Sugarcane is grown and milled in 2.7 million tons from 1975 to 1977 to 3.0 Florida, Hawaii, Louisiana, Texas, and the million from 1986 to 1988. This increase Commonwealth of Puerto Rico. has been due chiefly to the expansion of Sugarcane is a one-year crop (10 to Florida's industry from 0.803 million tons 15 months) in all areas except Hawaii in 1975 to 1.53 million tons in 1988. where it is a two-year crop. Hawaii's production of 1.1 million tons in Florida is the leading producer of raw 1975 declined to 0.928 million tons in cane sugar (1.53 million tons in 1988-89 1988. crop year) followed by Hawaii (0.928 The tonnage of refined cane sugar has million tons), Louisiana (0.78 million dropped in recent years, reflecting a reduc tons), and Texas (0.11 million tons). tion in foreign imports much greater than Hawaii produces the most raw sugar the increase in domestic cane production. per acre. In 1988, yields were 11.78 tons More than half of all refined sugar per acre (5.9 tons on an annual basis). consumed in the United States comes Florida was next with 3.75 tons, then from sugarcane. In 1988, 3.35 million tons Texas, 3.47 tons, and Louisiana, 2.8 tons. of domestic and 1.02 million tons of In 1988, 41 raw sugar factories were imported raw sugar were refined in 12

·.· ··....·...·. .·.·.· ·..· ··.·..·.··.·.··.· -.- .· . .·.··· SUGARCANE Sl"iies:... 4 Thirty-two states produce sugarcane, sugar ..• pills J"u~tto RICQ beets, and corn used to manufacture caloric sweeteners for America. Sugarcane is processed into raw sugar in 46 mills located in 4 states plus Puerto Rico. Sugar beets are refined into beet sugar in 36 factories operating in 13 states. Corn is processed into com sweetener products in 21 plants located in 13 states. Raw sugar is refined to a finished state in 12 refineries located in 8 states (see map, page 15). About 11 percent of the sugar consumed in the United States is imported. Sources: USDA Sugar and Sweeteners Situation and Outlook Report, Vol. 13(1), March 1988; CPI-U.S. Bureau of Labor Statistics. Compiled by HSPA.

:::. :/:.:::·. . :: .::)·:::::.. //:>:""·"· ® Be~t augarf11ctorl~ .@) Corh w;1tn1111ng plallts ( • 2factorles n,startt986 ...... C~ N<> Hi=¢$,:fr~ v#t19fo .

12 U.S. Sugar Supply Sources For 1984 Through 1988 (1 ,000 Short Tons, Raw Value, by Calendar Year)

Source 1984 1985 1986 1987 1988

DOMESTIC Cane Sugar Florida 1,412 1,413 1,476 1,572 1,530 Hawaii 1,062 1,012 1,043 979 928 Louisiana 452 532 650 720 780 Texas _n _::JfJ. -2.l _!}]_ -1.li! Total Cane 3,007 3,033 3,260 3,368 3,348 Beet Sugar U2S. ~ ~ wz u.u TOTAL DOMESTIC 5,912 6,033 6,591 7,325 6,899 FOREIGN Caribbean Islands Do~ican Republic 533 474 317 262 240 Othe~ ...2J ~ ---23. -51 ---18. Total 626 530 345 319 278 Central America Belize 29 14 56 15 34 Costa Rica 92 3 72 41 31 El Salvador 68 77 47 l 43 Guatemala 151 113 133 63 92 Honduras 100 50 32 9 7 Nicaragua 6 6 Pana~a __fil ....6.8. ..J1 _u -5. Total 507 331 337 142 212 Other North America Canada 15 19 14 11 IO c Mexiio ll ill m llJl Total Ts 37 128 239 190 South America Argentina 221 163 56 38 27 Bolivia 9 19 7 7 14 Brazil 356 340 225 133 144 Cokrnbia 58 181 128 45 88 Ecuador 19 28 19 8 Peru 108 100 58 30 34d Otherb ~ ...ll ~ ..1.8. _lQ Total 816 842 538 271 335 Eastern Hemisphere Australia 256 134 108 75 80 Ouna, Taiwan 35 26 21 II 14 Fiji Islands 32 16 25 9 c c India 20 7 8 16 12 12 7 c c Malawi 37 40 10 c Mauritius 34 11 30 12 Mozambique 28 10 22 20 13 Philippines 41 6 347 235 146 148 South Africa 83 58 39 Swaziland 48 18 28 28 16 Thailand 43 37 24 13 JO Zimbabwe 43 16 21 II 12 Otherb --8. ----18. ..J1 ...12 ....llc Total 1,079 767 593 375 365 TOTAL FOREIGNb 3,043 2,507 1,981 1,346 1,380 TOTAL U.S. SUPPLY 8,955 8,540 8,572 8,671 8,279 Source: USDA Sugar and Sweetener Situation and Outlook Report, Vol. 10(2), July 1985; Vol. 11 (I ), March 1986; Vol. 12(1), March 1987; Vol. 13(1), March 1988; Vol. 14(1), March 1989. ~ Other 1988 imports from Barbados (8), Haiti (6), Jamaica (1 1) , St. Christopher-Nevis (7), Trinidad and Tobago (6). c Numbers may not add precisely because of rounding. d Less than 0.5 ton. e Other 1988 imports from Para!l"ay (1 4), Uruguay (6), Venezuela (less than 0.5). Other 1988 imports from Belgium, Denmark , France, Sweden, Switzerland, United Kingdom, W. Germany (each less than 0.5); Congo (8); Gabon (8); Ivory Coast (9); Papua New Guinea (8); China, mainland (less than 0.5).

13 PER CAPITA CONSUMPTION OF ALL SWEETENERS IN POUNDS, 1970-1988

NON- & LOW-CALORIC CALORIC SWEETENERS SWEETENERS

Refined Cane and Beet Sugar Com Sweeteners• Minor Caloric1 Im- Syrups Total Cal. U.S.A. poned High Glu- Dex- Edible Total Non& Low Total Year Beet Cane Cane Total Fructose cose trose Total Honey Syrup Total Caloricb Saccharin Aspaname Caloricc All

1970 31.3 25.0 45.4 101.7 0.7 14.0 4.6 19.3 1.0 0.5 1.5 122.5 5.8 0 5.8 128.3 1971 30.6 22.9 48.6 102.1 0.9 14.9 5.0 20.8 0.9 0.5 1.4 124.3 5.1 0 5.1 129.4 1972 30.3 25.3 46.7 102.3 1.3 15.4 4.4 2Ll 1.0 0.5 1.5 124.9 5.1 0 5.1 130.0 1973 30.2 24.: 45.9 100.8 2.1 16.5 4.8 23.4 0.9 0.5 1.4 125.6 5.1 0 5.1 127.8 1974 25.8 20.8 49.0 95.6 3.0 17.2 4.9 25.1 0.7 0.4 1.1 121.9 5.9 0 5.9 131.5 1975 30.1 24.6 34.4 89.2 5.0 17.5 5.0 27.5 1.0 0.4 1.4 118.1 6.1 0 6.1 124.2 1976 32.0 22.4 39.0 93.4 7.2 17.5 5.0 29.7 0.9 0.4 1.3 124.4 6.1 0 6.1 130.5 1977 29.8 22.9 41.5 94.2 9.5 17.6 4.1 31.2 1.0 0.4 1.4 126.8 6.6 0 6.6 133.4 - ~ 1978 27.4 22.9 41.2 91.4 12.1 17.8 3.8 33.7 1.1 0.4 1.5 126.6 7.1 0 7.1 133.7 1979 26.5 21.1 41.7 89.3 14.9 17.9 3.6 36.4 1.0 0.4 1.4 127.1 7.4 0 7.4 134.4 1980 26.9 24.3 32.5 83.6 19.1 17.6 3.5 40.2 0.8 0.4 1.2 125. l 7.7 0 7.7 132.8 1981 25.6 21.5 32.4 79.4 23.2 17.8 3.5 44.5 0.8 0.4 1.2 122.9 8.0 0.2 8.2 131.1 1982 25.4 23.5 24.9 73.7 26.7 18.0 3.5 48.2 0.9 0.4 1.3 122.8 8.4 1.0 9.4 132.2 1983 23.1 24.0 23.9 71.1 30.7 18.0 3.5 52.2 1.0 0.4 1.4 123.8 9.5 3.5 13.0 136.8 1984 21.5 21.8 24.2 67.4 36.3 18.0 3.5 57.8 1.0 0.4 1.4 126.0 10.0 5.8 15.8 141.8 1985 22.4 24.2 16.5 63 .0 45.0 18.0 3.5 66.5 1.0 0.4 1.4 131.1 6.0 12.0 18.0 149.1 1986 23.2 23.5 13.5 60.2 45.8 18.0 3.5 67.3 1.0 0.4 1.4 128.8 5.5 13.0 18.5 147.3 1987 29.3 25.4 7.5 62.2 46.3 18.0 3.5 67 .8 1.0 0.4 1.4 132.4 6.0 14.0 20.0 152.4 1988 27.3 26.7 8.0 62.0 48.5 18.0 3.6 70.1 1.0 0.4 1.4 133.5 6.0d 14.0d 20.0d 153.5

Source: USDA Sugar and Sweetener Situation and Outlook Repon 1970-83, Vol. 9(4), December 1984; Source: USDA and USDA Sugar and 1984-86, Vol. 12(1), March 1987; Vol. 13(1), March 1988; Vol. 14(1), March 1989. Sweetener Situation and Outlook Repon 1970-77, Vol. 4(5), May 1979; 1978-79, Vol. • Dry basis. 10(2), July 1985; 1980-86, Vol. 12(1), March b May not add precisely because of rounding. 1987; Vol. 13(1), March 1988. c Assumes saccharin 300 times as sweet as sugar; aspaname 200 times. d Industry data not available; 1987 data repeated to represent likely similar situation in 1988. record 8.6 million tons (dry basis), a level requiring more than 500 million bushels of corn. Consumption of corn sweeteners rose 2.4 percent from 1987. The dominant com sweetener is high fructose com syrup (HFCS), a relatively new product that has captured almost all of the U.S. liquid sweetener market from sugar producers. Glucose syrup and dry dextrose are also produced from com. HFCS manufacturers have been able to make rapid strides in dominating the liquid sweetener market because they have been able to consistently price their product under that of sugar. HFCS is one refineries located in eight states. Most of a group of co-products produced by U.S. cane sugar is refined in seven com wet millers. Other co-products refineries in six Gulf and East Coast include starch, crude com oil, gluten feed, states. The large C&H refinery near San and gluten meal. Francisco refines Hawaiian raw sugar for HFCS is mostly sold as HFCS-55 or mainland markets, and the C&H refinery HFCS-42. The numbers indicate the per near Honolulu produces granulated and cent of fructose in the mixture, with "55" liquid sugars for the Hawaiian market. having the equivalent sweetness of sugar. Actual price discounts of HFCS to Beet Sugar Production refined sugar vary due to several factors, Sugar beets in 1988 were harvested foremost of which is the price of sugar. from 1.3 million acres in 12 states in the Other factors include demand, excess or Midwest, Great Plains, and West.The limited plant capacity, and variable stocks leading sugar beet-producing states in of com, soybeans, and other feed and oil 1988 were California, Minnesota, Idaho, products. Nonetheless, HFCS has always and North Dakota. remained lower in price than sugar. In 1988, 24.8 million tons of sugar In 1988, HFCS consumption was beets were harvested. Sugar production 5.98 million tons (dry basis). Combined was 3.52 million tons (raw value). By glucose and dextrose consumption was comparison, annual sugar production 2.65 million tons (dry basis). averaged 3.8 million tons from 1975 to Twenty-one plants in 13 states produce 1977. Thirty-six beet sugar factories were com syrups, of which 20 produce HFCS. reported in operation in 1988, compared with 56 in 1975. SWEETENER MARKET . Although beetsugarproduction is converted to a raw basis for comparison, The U.S. caloric sweetener market, beets are processed in a single operation which has undergone considerable change to refined sugar. In contrast, sugarcane is over the past decade, appears to have first processed into raw sugar and then entered a period of relative stability with refined. the growth in consumption of both sugar and com sweeteners tied to population CORN SWEETENER increases. Further gains in market share by com INDUSTRY sweeteners, especially HFCS, which on the basis of price has taken the liquid Com is grown in significant quantities sweetener market from sugar, appear in 26 states. In 1988, the USDA estimated limited with present technology. U.S. com sweetener consumption at a HFCS consumption, which increased

15 19 percent between 1981 and 1985, has risen less than 4 percent annually in the Wholesale Sugar and HFCS Prices, last 3 years. Further growth in consumption Midwest (Cents Per Pound) is expected to be restricted by limited additional sugar substitution and population growth and by the increased 30 use of low-caloric and noncaloric sweeteners, particularly in soft drinks. 20

Although net com and starch costs 10 soared in 1988, annual average prices for com sweeteners rose only moderately. Midwest prices for HFCS-55 in 1988 Jan Ap Jul Oc:t Jan Ap Jul Oc1 J., Ap Jul Oc:t Jan Ap Jul Oc:t 1985 1986 1987 1986 were 18.68 cents per pound (dry basis), up Source: USDA Sugar and SWeetener S~uation and Outlook from 17.46 in 1987; the price for HFCS Repon, Vr:J.. 14(1), March 1989. 42 was 16.47 cents, down from 16.50 ~basis. cents. This lower price occurred because Estimated market price. many com wet millers locked in the HFCS-42 price before the drought-related run up of com prices. decline resulted mostly from soft drink Saccharin use in 1987 was 6 pounds manufacturers' switch to the use of (sugar equivalent basis) per person, down aspartame. Aspartame consumption in from IO pounds per person in 1984. This 1987 was 14 pounds (sugar equivalent

16 basis), primarily through diet soft drinks. deliveries to industrial users fell 2 percent, Further market gains of these sweeteners although deliveries to bakers and cereal appears limited to soft drink use because and soft drink manufacturers were up. of the technological limitations and U.S. raw sugar prices in 1988 government approvals needed for use in averaged 22.12 cents a pound, up 0.29 other products. cents from 1987. The highest monthly After 10 consecutive years of decline, average was for July at 23.43 cents per sugar deli1'eries rose 5 percent and 2.4 pound, which is the highest monthly price percent in 1987 and 1988, respectively. since the 23.81 cents per pound of March Deliveries in 1988 were 8.19 million tons, 1981. up marginally from 8.17 million tons (raw The 1988 price is the highest for raw value) in 1987. Growth in 1988 deliveries sugar in this decade, except for the came from nonindustrial use. Deliveries to average 30.11 cents per pound recorded in wholesalers were up 8 percent Shipments 1980, a time when U.S. sugar producers to retailers fell 6 percent, reflecting in and consumers were not protected from creased sugar purchases from wholesalers the volatility of the world market by a rather than directly from refiners. Overall, sugar program.

U.S. SUGAR DELIVERIES TO INDUSTRIAL & NONINDUSTRIAL USERS 1984-1988 (1,000 Short Tons, Refined)

1984 1985 1986 1987 1988

INDUSTRIAL USE Food Products Bakery/Cereals 1,404 1,494 1,432 1,513 1,541 Confectionery 1,115 1,059 1,051 1,146 1,107 Processed Foods 433 428 387 398 354 Dairy 408 456 447 449 411 Other 416 441 443 534 529 Subtotal 3,776 3,872 3,760 4,040 3,942 Beverages 908 340 266 212 237 Total Industrial 4,684 4,212 4,026 4,252 4,179 NONINDUSTRIAL USE a Institutions 209 204 142 163 175 Wholesalers, Jobbersb 1,744 1,874 1,867 2,040 2,200 Retail Grocery 1,100 1,045 1,066 996 941 Total Nonindustrial 3,053 3,123 3,075 3,199 3,316 Total Food/Beverage Use 7,737 7,341 7,101 7,451 7,495 Other Usec 127 131 138 149 121

TOTAL USE 7,864 7,472 7,239 7,600 7,616

Conswner-sized Packagesd 2,274 2,305 2,298 2,144 2,084 Redistributed to industrial, c other users 570 614 635 892 1,057

TOTAL' 2,844 2,919 2,933 3,036 3,141

Source: USDA Sugar and Sweetener Situation and Outlook Report, Vol. 14(1), March 1989. : Includes eating, drinking places, government and military. Includes sugar dealers. ~ Largely pharmaceuticals and some tobacco. Less than 50 pounds. ; Includes some institutions. Equal lo total of wholesalers and retail.

17 U.S. SUGAR LEGISLATION sugar agreement, and little control of sub sidized sugar imports into the United States Sugar in the United States, as in threatened the survival of the domestic virtually all other sugar producing nations, sugar industry, which produced the has long been under various fonns of nation's sixth largest farm-tonnage crop. governmental control. Concurrently, high-fructose corn syrup A tariff on sugar to support federal began talcing away the liquid sweetener government activities was the first piece market from sugar, intensifyiqg price of general legislation enacted by the first competition within a shrinlcing market. U.S. Congress in 1789. Tariffs on sugar imports remained an important source of U.S. Fann Act of 1981 government revenue until enactment of In 1981, Congress, for the first time, federal income and corporate taxes early included sugar with other major farm in this century. commodities in national policy legislation - the Agriculture and Food Act of 1981, U.S. Sugar Act also known as the Farm Act This action From 1934 to 1974, sugar produc resulted from two primary concerns. First, tion, wages and worlcing conditions, and uncontrolled imports of foreign subsidized other aspects of the U.S. sugar industry sugar represented unfair competition for were governed by a series of laws known American farmers and threatened the sur as the Sugar Act This separate legislation vival of the domestic industry. Second, the was in contrast to the omnibus farm law, national interest could be best served by also enacted during the great depression the country maintaining some self of the 1930s, that encompassed other sufficiency in sugar production as a means major commodity programs. of providing consumers with an ample The Sugar Act was unique in that it supply of sugar at reasonable prices. was self-supporting. A refiners' tax of 0.5 Enacted by Congress and signed into cent per pound supported the cost of law in December 1981, Title IX, the Sugar administering the law and of compliance Provision of the Farm Act, provided payments made to sugar farmers who protection for our nation's sugar agreed to operate under the legislation. producers until September 30, 1986. During the 40 years of the Sugar Act, The law was designed to keep the U.S. Treasury collected more than efficient U.S. producers in business by $500 million over its administrative costs. protecting them against unfair competition Additionally, American consumers from subsidized foreign sugar imports. benefited from a stable supply of sugar at No cash payments or other government reasonable prices. Only twice during the grants were involved, and it was four decades of this act's life did the price Congress' intent that the program be increases of refined sugar substantially administered without cost to the exceed the increases of the Department of government. Labor's annual index of all wholesale Major elements of the program food prices. That was in 1963 and again in included: 1974 when world shortages caused sharp O A nonrecourse sugar loan program was rises in sugar prices, fueled by speculative established under which sugar processors buying. The same index reveals sugar of raw cane or refined beet sugar could prices were generally above the index and place sugar under loan to the Commodity more volatile between 1860 and 1934. Credit Corporation with the sugar as full With the defeat of the Sugar Act in collateral for the loan. 1974, the United States abandoned a O Loan rates were set at an average of 17 cohesive national policy until 1981. This cents per pound for raw sugar and for seven-year period was chaotic for U.S. refined beet sugar at a rate "fair and sugar producers. Excess world production, reasonable" in relation to the raw cane failure to achieve an effective international sugar loan rate for the 1982 crop. The

18 -- Cpl ------ ------

___.,...,·-·-·-...--...... ______.

Midwest Wholesaleb

Sources: USDA Sugar and Sweetener Situation and Outlook Report, Vol 14(1), March 1989; U.S. Bureau of Labor Statistics. "Raw sugar, C.I.F., duty-free paid, contract No. 12 to June 1985; "nearby r,tures" to December 1985; No. 14 contract "nearby futures" since January 1986. Bulk, effective prices through 1987 as Oticago-West; beginning 1988 prices are " ~uoted as Midwest markeL U.S. retail average refined. loan rate increased at small annual and other circumstances adversely increments to 18 cents per pound for raw affecting domestic sugar production. sugar for the 1985 crop. A 16.75-cents O Congress directed the Administration to per-pound purchase program was included extend the 1985-86 quota period by not to provide temporary support until less than three months, or to take such October 1, 1982. other steps as may be necessary to limit Existing authority was used under loan forfeitures by an equal amount. The Section 22 of the Agriculture Adjustment Administration extended the IO-month, Act of 1933 to impose fees or quotas to 1.85-million-ton quota for three additional protect the program; Headnote 2 authority months. of the Tariff Schedule of the United States O For the 1987 fiscal year and beyond. was also utilized. Congress specified that "the President shall use all authorities ... to enable the Food Security Act of 1985 Secretary of Agriculture to operate the The sugar price support program in program ... at no cost to the Federal the 1981 law was extended until Government" September 30, 1990, in the Food Security O New provisions were included to Act of 1985, with some minor changes: protect cane and beet growers from O The minimum loan rate was maintained nonpayment resulting from processor at 18 cents per pound of raw sugar for the bankruptcies and natural disasters. five-year life of the bill but with Adminis tration authority to increase the loan rate Farm Act Administration annu~lly based upon changes in the cost Proper administration of the sugar of sugar products, the cost of production, support program requires restrictions upon

19 the entry of foreign sugar to make the selling of domestic sugar in our Sugar Loan Rates, marketplace more attractive to sugar Market Stabilization Prices, producers than forfeiting it under loan to & U.S. Raw Sugar Price the Commodity Credit Corporation. To (Cents Per Pound) determine the necessary price objective, Fann Act the Administration developed a market Sugar Year Loan N.Y. stabilization price (MSP) at a level equal By Quarter Rate MSP Price" to the loan rate plus accrued interest, 1982-83 Oct.-Sept. 17.00 20.73 21.78 transportation and handling costs, and an 1983-84 Oct.-Dec. 17.50 21.17 21.75 incentive factor. Jan.-March 17.50 21.17 21.80 Marketplace prices are measured by April-June 17.50 21.17 22.03 July-Sept. 17.50 21.17 21.77 the New York Coffee and Sugar 1984-85 Oct.-Dec. 17.75 21.57 21.35 · Exchange domestic spot price for raw Jan.-March 17.75 21.57 20.67 sugar. The New York spot price includes April-June 17.75 21.57 21.11· payment for sugar, free and clear, landed July-Sept. 17.75 21.57 20.44· at a refinery in New York City. Price 1985-86 Oct.-Dec. 18.00 21.50 19.15· Jan.-March 18.00 21.50 20.88. adjustments are made for sugar going to April-June 18.00 21.50 20.91 . refineries elsewhere in the nation. Thus, July-Sept. 18.00 21.50 20.90 · all costs for moving the sugar from the 1986-87 Oct.-Dec. 18.00 21.78 21.12 · "farm gate" to the market are for the Jan.-March 18.00 21.78 21.68 · April-June 18.00 21.78 21.96 account of the farmer. July-Sept. 18.00 21.78 21.94 At first, the Administration sought to 1987-88 Oct.-Dec. 18.00 21.76 21.73 • defend the program through imposition of Jan.-March 18.00 21.76 22.03 fees and duties on sugar imports. With Apr.-June 18.00 21.76 22.28 July-Sept. 18.00 21.76 22.37 sharply dropping prices in early 1982, the 198S-89 Oct.-Dec. 18.00 21.80 21.81 50 percent ad valorem fee limit under Jan.-March 18.00 21.80 22.02 Section 22 authority and the 2.8125-cent Apr.-June 18.00 21.80 maximum duty soon made those measures July-Sept. 18.00 21.80 insufficient. Country-by-country import Source: USDA Sugar and Sweetener Situation and Outlook quotas were established in May 1982 Report Yearbook, June 1989. based upon each country's sales to the "No. 12 contract to June 1985; "nearby futures" until Jan. U.S. market from 1975 through 1981. 1986; "nearby" No. 14 contract futures thereafter. The imposition of these quotas brought prices up to and somewhat above the MSP, where they remained until the Service ruled that most sugar blends third quarter of 1984. Through February would be included under quota restraints. 1987, the price remained below the MSP In January 1985, the quota year was as a result of several factors. Excessive extended for an additional two months, quotas, sugar blends, increased high and the President signed an executive sugar-content product imports, illegal order establishing quotas on certain high diversion of nonquota sugar imports from sugar-content products. Additional actions the reexport to the domestic market, an reducing the duty to the 0.625-cent earlier than anticipated switch by the minimum and suspending the fee on raw major soft drink companies to high sugar imports benefited the exporters of fructose com syrup, and underestimation sugar to the U.S. market. Sugar loan of domestic sugar production - all maturity dates were extended to avoid played a role in lowering prices below the forfeitures. MSP. In September 1985, import quotas for A number of actions were taken to the 1986 fiscal year were announced at defend the program and avoid forfeitures 1.85 million tons for the 10 months of sugar under loan. remaining - some 0.6 million to 0.8 In November 1984, the U.S. Customs million tons in excess of the market's

20 view of the lessened import need because MARKET STABILIZATION PRICE of carryover stocks, a further decline in FOR FY '89 sugar consumption, an increase in Pricing Factor Cents Per Pound domestic sugar production (primarily beet sugar), and nonquota sugar-blend product Loan Rate 18.00 imports. Transportation/Handling 2.97 In January 1987, the Administration, Interest Cost .63 repeating its opposition to the sugar Incentive to Market .20 program, presented a fiscal year 1988 budget to Congress with a change in the TOTAL MSP 21.80 sugar provisions of the 1985 fann law that Source: USDA Sugar and Sweetener Situation and lowered the loan rate from 18 to 12 cents Outlook Report----Supplement, January 1989. per pound. Legislation was later introduced in April 1987, but it did not pass. needs. The excessive quota followed As introduced, the revised sugar heavy lobbying by foreign sugar program would reduce the loan rate suppliers, pariicularly Caribbean nations. beginning with the 1987 crop and institute This caused a sharp reduction in the direct payments, to be phased out over price of sugar to almost 3 cents below the four years. These payments would be MSP and resulted in the forfeiture of decoupled from current production, being 0.303 million tons of Florida sugar to the calculated on the smaller of the 1985 or CCC at a governmental cost of $107 1986 crops. Full payment of 6 cents per million. This was the first and only pound, to decline by 1.5 cents per year, forfeiture of sugar under the 1981 Fann would be paid on the first 350 tons of Act, except for sugar forfeited because of sugar only. Reduced payment would be processor bankruptcy. made on additional production up to In April 1986, the Administration 20,000 tons. announced the extension of the fiscal year The estimated cost of this direct 1986 quota by three months in response to payment program was put at $1.2 billion a Congressional directive. This caused the over four years. price of sugar to improve somewhat, but it Sweetener industry supporters lingered about 0.5 cent and more below contended that the program would destroy the MSP of 21.50 cents per pound the bulk of the domestic sugar industry, throughout the rest of 1986. Meanwhile, reduce sugar revenues to debtor nations sugar loans had again been extended holding U.S. sugar quotas by one-third, beyond the six-month time limit in the and violate the no-cost provision of the hope that prices would improve enough to current fann law. make the marketplace once again more The import quota for 1988 was attractive than forfeitures to the CCC. In reduced to 757,000 tons in response to addition, the Administration sold 122,000 further increases in domestic production, tons of forfeited sugar to an ethanol parlicularly beet sugar production because manufacturer for just over 3 cents per of increased acreage and yields. In reac pound, resulting in a $36 million cost to the tion to the lower import quota, the CBI sugar program. Hearings were conducted countries and the Philippines successfully by a House Government Affairs Oversight lobbied for an import-reexport program Subcommittee on the propriety of this that was included in an amendment in the action. FY '88 Continuing Resolution by Senator In December 1986, the Administra Daniel Inouye (D- Hawaii). The . tion announced a sugar import quota of amendment, supported by U.S. sugar 1.003 million tons for calendar year 1987, producers, provided for an additional a 40 ~rcent reduction from the prior 13 400,000 tons of imported raw sugar. month quota. The reduction was made in This program was included in the

21 FY '89 Agriculture Appropriations bill, but the Administration refused to implement the program in both years citing lack of legal authority and budget costs. It was also added to the FY '90 funding bill. Bills were introduced in the House and Senate in 1989 which would reduce the loan rate by 1.5 cents each year, while increasing the quota 500,000 tons annually. Another bill was introduced in the House which would eliminate the sugar title from the 1985 Farm Act. There has been no action on any of these bills. Legislation was also introduced in both Houses of Congress establishing a minimum quota for the CBI countries at the 1989 level and providing that unused quotas and quotas taken from countries for national security reasons be reallocated to CBI countries. This language was included in the budget reconciliation package but was not expected to survive conference committee action. The import quotas for 1989 were set at 1.24 million tons. However, in September the quota was increased by 950,000 tons and the quota period extended for nine months. The net effect was a small increase in the annual quota.

22 WORLD SUGAR INDUSTRY

PRODUCTION, TRADE, 1987-88 crop year was 103.5 million CONSUMPTION metric tons, according to the U.S. Depart ment of Agriculture. Nearly 67 million Sugar is produced in about 100 tons were produced from sugarcane and nations in both temperate and tropical more than 36 million tons from sugar regions of the globe. It is one of the beets. (Note: All sugar tonnages in this world's most traded food commodities, section are reported in metric tons.) and one of the world's most regulated. About 106.3 million tons were Total world production in the consumed, exceeding production by 2.8

WORLD'S 10 LARGEST PRODUCING, EXPORTING, IMPORTING, AND CONSUMING NATIONS FOR 1987-88 (x Million Metric Tons) Producers Exporters Importers Consumers Nation Tons Nation Tons Nation Tons Nation Tons EEC 14.0 Cuba 6.3 USSR 5.0 USSR 14.6 India 10.0 EEC 5.8 China 3.2 EEC 11.9 USSR 9.5 Australia 2.8 EEC 2.8 India 10.2 Brazil 8.5 Brazil 2.1 Japan 1.9 China 7.7 Cuba 7.3 Thailand 1.9 U.S. 1.2 U.S. 7.6 U.S. 6.7 Mexico 1.0 Canada 1.0 Brazil 6.4 China 4.8 So. Africa 1.0 So. Korea 1.0 Mexico 3.6 Mexico 3.8 Mauritius 0.7 India 0.9 Japan 2.9 Australia 3.5 Dom. Rep. 0.6 Algeria 0.7 Indonesia 2.2 Thailand _JJ_ Swaziland ...M Iran 0.7 Pakistan -2,Q Malaysia _J1.J... Total 70.8 22.6 19.1 69.1 % of World Total 68.0 81.5 66.5 65.0 World Total 103.5 27.7 28.7 106.3 Source: USDA Sugar and Sweetener Situation and Outlook Report, Vol. 14(1), March 1989.

WORLD SUGAR PRODUCTION, EXPORTS, IMPORTS, AND CONSUMPTION BY REGION FOR 1987-88 (x Million Metric Tons, Raw Value) Production Region Beet Cane Total Exports Imports Consumption North America 3.8 6.8 10.6 1.4 2.1 12.2 South America .5 12.9 13.4 2.7 .7 11.5 Central America .0 1.7 1.7 .7 .0 1.0 Caribbean .0 8.6 8.6 7.3 .2 1.6 European Community 14.0 .0 14.0 5.8 2.8 11.8 Other West Europe .8 .0 .8 .1 .5 1.4 East Europe 5.6 .0 5.6 1.0 1.1 5.8 USSR 9.5 .0 9.5 .2 5.0 14.6 North Africa .5 1.4 1.9 .0 2.2 4.2 Sub-Saharan Africa .0 5.9 5.9 2.8 1.4 4.7 Middle East .3 2.1 2.4 .1 3.2 5.5 Asia 1.3 23.6 24.9 2.8 8.6 30.8 Oceania ___,Q ....12. _ll _li ___,1 _L§ Total• 36.3 66.9 103.5 28.0 28.0 106.3 Source: USDA. • Numbers may not add precisely because of rounding.

23 million tons and causing world stockpiles familiar with the world's sugar industry to fall below 25 million tons for the often believe that the world market second straight year to 21.1 million tons. represents a competitive market for all About 70 nations exported 27.9 sugar sold throughout the world In fact, million tons to an estimated 115 countries the small amount of sugar placed on the that rely on imports to meet all or part of world market is surplus sugar; i.e., sugar their sugar needs. Some importing nations that cannot be sold through preferential also export sugar; the resulting net exports trade agreements or consumed by a can range from 10 to 20 percent below country's populace. This excess sugar is total exports reported. placed on the world market for whatever Most of the world's producers and price it can bring, simply to reduce losses. consumers are protected from market price Raw sugar prices quote

24 SUGAR SUPPLY AND DISTRIBUTION BY COUNTRY FOR 1988-898 (1,000 Metric Tons, Raw Value)

SUPPLY DISTRIBUTION Country Production Imports Consumption Exports

NORTH AMERICA Canada 115 1,070 1,095 70 Mexico 3,650 0 3,550 230 United States 6260 1,530 7.358 ll2. TOTAL 10025 2,600 12,003 439 CARIBBEAN Barbados 80 0 16 63 Cuba 8,000 0 770 7,200 Dominican Republic 800 0 375 475 Haiti 40 40 72 8 Jamaica 200 35 111 132 Trinidad{fobago 85 27 62 51 Other 283 _]_Q .J.12 ____ill_ TOTAL 9,408 180 1,577 8,039 CENTRAL AMERICA Belize. 85 4 6 80 Costa Rica 255 0 178 63 El Salvador 235 0 171 50 Guatemala 725 0 345 358 Honduras 180 3 135 50 Nicaragua 225 0 150 50 Panama ---1.l.Q Q __ll _].Q TOTAL 1,815 7 1,066 681 SOUTH AMERICA Argentina 1,300 0 1,110 130 Bolivia 140 0 160 7 Brazil 8,500 0 6,600 1,800 Chile 400 15 456 0 Colombia 1,350 0 1,244 188 Ecuador 270 40 310 7 Guyana 230 0 37 190 Paraguay 100 5 100 10 Peru 600 210 780 26 Surinam 10 7 17 0 Uruguay 75 35 100 5 Venezuela 600 260 860 __o TOTAL 13,575 572 11,774 2,363 EUROPEAN ECONOMIC COMMUNITY (EEq Belgium/Luxembourg 990 50 380 660 Denmark 550 1 249 272 France 4,457 360 2,110 2,480 Germany, Federal Republic 3,020 170 2,250 900 Greece 255 76 346 0 Ireland 210 17 155 75 Italy 1,650 120 1,750 150 Netherlands 1,110 60 780 365 Portugal 1 298 295 8 Spain 1,260 130 1,155 150 United Kingdom 1.465 1 250 2,410 320 TOTAL 14,958 2,532 11,880 5,380 OTHER WESTERN EUROPE Austria 380 0 344 32 Finland 141 90 207 7 Norway 0 175 170 0 Sweden 404 20 355 20 Switzerland 130 140 286 1 Other _o _].Q _]Q _Q TOTAL 1,055 455 1,392 60

25 SUGAR SUPPLY AND DISTRIBUTION - Continued (1,000 Metric Tons, Raw Value)

SUPPLY DISTRIBUTION Country Production Imports Consumption Exports

EASTERN EUROPE Albania 30 20 50 0 Bulgaria 100 400 446 100 Czechoslovakia 700 200 710 200 German Democratic Republic 830 280 900 250 Hungary 400 80 480 0 Poland 1,800 95 1,700 200 Rumania 450 260 595 120 Yugoslavia 640 250 ~ _Q TOTAL 4,950 1,585 5,821 870 USSR 9,400 5,300 14,100 200

NORTH AFRICA Algeria II 650 720 0 Egypt 1,040 640 1,680 0 Morocco 500 261 760 0 Sudan 550 70 616 0 Tunisia 25 230 255 0 Libya __o 200 200 Q TOTAL 2,126 2,051 4,231 0 AFRICA Cote d'Ivoire 140 0 125 20 Kenya 420 20 473 0 Malawi 170 0 100 82 Mauritius 650 0 40 620 Nigeria 65 515 570 IO Reunion 250 0 15 235 South Africa 2,250 0 1,456 800 Swaziland 445 0 35 400 Tanzania · 110 20 120 IO Zaire 60 40 100 0 Zimbabwe 435 0 258 177 Other 864 810 1.576 ___!fl TOTAL 5,859 1,405 4,868 2,451 MIDDLE EAST Iran 550 850 1,400 0 Iraq 43 650 690 0 Saudi Arabia 0 410 405 0 Turkey 1,600 0 1,750 50 Other ~ U22. l.lli. .J! TOTAL 2,239 3,439 5,804 50 OTHER ASIA Bangladesh 200 120 330 0 Orina (Mainland) 4,900 3,200 8,100 300 Taiwan 580 0 550 30 India 10,900 0 10,680 320 Indonesia 1,800 300 2,242 0 Japan 920 1,860 2,800 0 South Korea 0 1,000 720 280 Malaysia 95 710 665 150 Pakistan 2,055 0 2,100 0 Philippines 1,450 50 1,400 150 Sri Lanka 35 340 380 0 Thailand 3,675 0 840 2,700 Other _m _!U J..ill. -----22 TOTAL 26,937 8,393 31,922 3,955

26 SUGAR SUPPLY AND DISTRIBUTION - Continued (1,000 Metric Tons, Raw Value)

SUPPLY DISTRIBUTION Country Production Imports Consumption Exports OCEANIA Australia 3,650 0 831 2,775 Fiji 450 0 36 420 New Zealand 0 170 169 0 Other __o .21 ~ __o TOTAL 4,100 221 1,087 3,195

WORLD TOTAL 106,447 28,740 107,525 27,683

Source: USDA Sugar and Sweetmcr Situation and Outlook Report, Vol. 14(1), March 1989. •Forecast.

sugar has been the European Economic relatively small amount of sugar traded on Community (EEC), which until the mid the world residual market, no substantial 1970s was a net sugar importer. Sugar changes in production and consumption production within the EEC has been accompanied by improvement in world encouraged by its Common Agricultural prices that reflect actual production costs Policy (CAP), which provides price are likely in the short term. supports, import controls, and export Two international activities have the subsidies. Currently, the EEC is the potential for influencing the world sugar world's largest sugar producer and second trade. One is the International Sugar largest exporter. Also benefiting from the Organisation (ISO). The other is the CAP are sugar producers in Lome current General Agreement on Tariffs and Convention countries because Lome sugar Trade (GATT) round of negotiations. is imported and paid for at prices related to internal EEC prices. Reform of the CAP thus far has been successfully resisted by INTERNATIONAL SUGAR EEC farm blocs. POLICY The EEC's agricultural policy, however, is but one example of political trade decisions that spur excess sugar International Sugar Agreement production around the world. In Thailand, Balancing world supply with domestic prices, production, and revenue demand, which suggests a reasonable sharing between producers and millers are return on the investment required for controlled. In Australia, protection sugar production, has been a long sought includes an import embargo (lifted in July but elusive goal for many years. 1989), a central marketing system, and The most recent attempt was made production. Beginning in July 1989, through the International Sugar Australia also imposed a 35 percent tariff Organisation. After meetings held in 1976 on imported sugar - an item that the and 1977, the ISO forged the latest (and, country has not imported in more than 70 to date, the last) International Sugar years. In Japan, levies on sugar imports are Agreement (ISA). It became provisionally used to subsidize high-cost domestic effective on January 1, 1978, and ran producers. In Brazil, a government agency through 1984. sets prices and is the sole export agent. Most, but not all, major sugar export The U.S. program is discussed in the ing and importing nations were party to previous section of this manual. the ISA. Later events were to underscore :aecause of the extent and variety of the need to have every major exporting sugar support programs and because of the and importing nation participate.

27 The objective of the ISA was to four months later in Geneva, it was clear maintain world market prices within a that agreement on agricultural trade issues specified price range - at first, 11 to 19 would be difficult to achieve. The major cents per pound for raw sugar, and later, issue that received wide public attention 13 to 21 cents per pound. An International was resolving the hard positions taken by Sugar Council assigned each member the United States and the European producing nation an export quota and Economic Community. The United States monitored the market. When prices went into the negotiations committed to moved too high, sugar stocks were to be removing all agricultural commodity released to moderate prices; when too support programs by the year 2000; the low, export quotas were to be reduced to EEC sought reductions in support lower available supplies. programs but resisted the complete The ISA's first real test came after abolition of them. the phantom shortage of 1980-81. The U.S. sugar industry leaders, agreement did not work. A primary cause convinced that their industry can compete for its failure was the lack of EEC successfully in a free market for sugar membership. The EEC, a net importer supported the U.S. position in the GAIT until the mid-1970s, had become a major negotiations. However, they strongly exporter with no restraints on its sugar opposed the previous Administration's exports to the world residual market. efforts to reduce the level of support in the During the final two years of the current U.S. sugar program until similar ISA, extensive negotiations were reductions are made in the support conducted to renew it and to include the programs of other sugar-producing EEC. Major differences between the EEC nations. and the other major sugar exporters How the GATT negotiations tum out doomed the discussions and the ISA and how much and what kind of support expired at the end of 1984. These the new Administration will give to sugar differences continue today. As a result, and other agricultural producers remain to the International Sugar Organisation has be sr-,en. been limited to maintaining a statistical What is clear is that the interval until service with the goal of eventually the GATT negotiations are complete and establishing a new international sugar legislative action is taken on a new U.S. agreement. farm bill will be an anxious, uncertain time for the U.S. sugar industry. General Agreement on Tariffs and Trade The General Agreement on Tariffs and Trade offers another avenue for resolving some or all of the problems of international sugar trade. In September 1986, nations signatory to the GATT meeting at Punta de! Este, Uruguay, agreed to include agricultural trade policies, including those for sugar, in the review of the trade treaty. This was the first time that agricultural issues were put on trade talk agendas by the 96-nation organization. (Because of the location of this meeting, the continuing trade talks have become known as the "Uruguay Round" of trade talks.) During the mid-term review talks held in Montreal in December 1988 and

28 GLOSSARY

BAGASSE. The crushed fiber after sugarcane has UlVULOSE. A highly soluble, simple sugar been milled to extract the sugar-containing containing 6 carbon atoms, it is crystallized juices. with great difficulty, is generally considered sweeter than sucrose, and is present in BLACKSTRAP MOLASSES. The final product after all considerable quantities in combination with the commercially recoverable sucrose has dextrose and sucrose in invert sugars. been removed from the juices expressed from cane. It is a dark-colored, heavy, viscous LIQUID SUGAR. A concentrated solution of refined liquid. sucrose or of a mixture of sucrose and invert sugar. BRIX. The measure of density of a solution containing sucrose as determined by a MAssEcUJTB. A dense mass of sugar crystals mixed hydrometer. with mother liquor, obtained by evaporation.

CALORIB. A measure of the energy value of food. A MOLASSES. The mother li

Gu R. Cane juice, concentrated nearly to dryness by RA w SUGAR. The im~re centrifugal sugar of boiling over an open fire, without commerce, a light brown crystalline material, centrifuging and with no purification other generally containing between 96 and 99% than by skimming. This ancient process is sucrose, plus various impurities and moisture. still used for producing a large share of the sugar consumed in India and some other SoFT SUGARS. Highly refined, dark-colored, countries. The crude product is high in molasses-flavored sugars which are glucose and correspondingly low in sucrose. frequently called brown sugars. They contain significant amounts of reducing sugars. HIGH-FRUCTOSE CORN SYRUP. High-fructose com syrups (HFCS) are produced by the Sucrose. Commonly known as sugar, a sweet enzymatic conversion of a portion of the crystallizable, colorless substance that glucose in corn syrup to fructose. The constitutes the "sugar" of commerce. composition of currently available products Refined cane and beet sugar are essentially ranges from 7 to 55% glucose and 42 to 90% I00% sucrose. fructose on dry solids, the balance being other saccharides. Dry solids average about SYR UP. Concentrated clarified cane juice before 71% on total weight. The product is roughly crystallization. comparable to invert syrup made from sucrose in terms of sweetness and physical TEL QuEL. Literally, such as (it is). When used properties. describing sugar it means "as made," hence of a polarization usually varying among mills HIGH ThsT MOLASSES. A concentrated, clarified and producing areas. cane juice which has been inverted (usually about 1/3) to prevent sucrose from TURBIN ADO. Direct consumption raw sugar of high crystallizing at the high concentrations polarization which must be dried in a normally employed. granulator to a very low moisture content.

INVERT OR INVERT SUGAR. The mixture of equal parts of dextrose and levulose produced by the action of acid or enzymes on solutions of sucrose.