Voluntary Report - public distribution

**Date:** 3/31/2004

**GAIN Report Number:** CA4021

CA4021

**Canada**

**Sugar**

**Update**

**2004**

**Approved by:**

![](media/image1.wmf)Gary C. Groves

U.S. Embassy

**Prepared by:**

George Myles

**Report Highlights:**

Canada's main source of sugar (more than 90%) comes from imported raw
sugar that is refined in Canada. The Canadian cane sugar refining
industry is comprised of three cane sugar refineries. Sugar production
in Canada is limited to the sugar refined from about 12,000 hectares of
sugar beets in the province of Alberta.

Includes PSD Changes: Yes

Includes Trade Matrix: No

Unscheduled Report

Ottawa \[CA1\]

\[CA\]

Table of Contents

[Executive Summary 3](#executive-summary)

[Production 3](#production)

[Production Subsidies 4](#production-subsidies)

[Tariffs 4](#tariffs)

[Safeguard Protection 4](#safeguard-protection)

[Structure of the Refining Industry
5](#structure-of-the-refining-industry)

[Trade Policy 6](#trade-policy)

[Income Stabilization Policy 8](#income-stabilization-policy)

[Prices 8](#prices)

# Executive Summary

## Production

Canada's main source of sugar (more than 90%) comes from imported raw
sugar that is refined in Canada. The Canadian cane sugar refining
industry is comprised of three refineries.

Sugar production in Canada is limited to the sugar refined from about
12,000 hectares of sugar beets in the province of Alberta. Sugar from
sugar beet production accounts for about 8% of Canadian sugar supply.
While beet processing plants have existed in Ontario, Quebec and
Manitoba at various times in history, the only remaining processor is in
Alberta (Rogers Sugar, Taber, Alberta). Between 3,000-4,000 hectares of
sugar beets are produced in southwestern Ontario and trucked to a
processing facility in Croswell, Michigan. The Ontario growers have an
8% ownership in the Michigan refinery. All the sugar processed from
Ontario-grown sugar beets remains in the United States, but represents
less than 1% of total U.S. sugar production.

+---------------+-------+-------+-------+-------+--------+----------+
| Canada        |       |       |       |       |        |          |
+---------------+-------+-------+-------+-------+--------+----------+
| Commodity     | ####  |       |       |       | (1000  |          |
|               | ## Ce |       |       |       | MT)    |          |
|               | ntrif |       |       |       |        |          |
|               | ugal  |       |       |       |        |          |
|               | Sugar |       |       |       |        |          |
+---------------+-------+-------+-------+-------+--------+----------+
|               | 2002  | Re    | 2003  | Est   | 2004   | Forecast |
|               |       | vised |       | imate |        |          |
+---------------+-------+-------+-------+-------+--------+----------+
|               | USDA  | Post  | USDA  | Post  | USDA   | Post     |
|               | Off   | Est   | Off   | Est   | Of     | Estimate |
|               | icial | imate | icial | imate | ficial | \[New\]  |
|               | \[    | \[    | \[    | \[    | \      |          |
|               | Old\] | New\] | Old\] | New\] | [Old\] |          |
+---------------+-------+-------+-------+-------+--------+----------+
| Market Year   | 10    | 10    | 10    | 10    | 1      | 10/2003  |
| Begin         | /2001 | /2001 | /2002 | /2002 | 0/2003 |          |
+---------------+-------+-------+-------+-------+--------+----------+
| Beginning     | 194   | 194   | 253   | 128   | 128    | 144      |
| Stocks        |       |       |       |       |        |          |
+---------------+-------+-------+-------+-------+--------+----------+
| Beet Sugar    | 88    | 88    | 54    | 54    | 98     | 98       |
| Production    |       |       |       |       |        |          |
+---------------+-------+-------+-------+-------+--------+----------+
| Cane Sugar    | 0     | 0     | 0     | 0     | 0      | 0        |
| Production    |       |       |       |       |        |          |
+---------------+-------+-------+-------+-------+--------+----------+
| TOTAL Sugar   | 88    | 88    | 54    | 54    | 98     | 98       |
| Prod.         |       |       |       |       |        |          |
+---------------+-------+-------+-------+-------+--------+----------+
| Raw Imports   | 1207  | 1202  | 1140  | 1287  | 1300   | 1300     |
+---------------+-------+-------+-------+-------+--------+----------+
| Refined       | 32    | 33    | 60    | 37    | 50     | 32       |
| Imp.(Raw Val) |       |       |       |       |        |          |
+---------------+-------+-------+-------+-------+--------+----------+
| TOTAL Imports | 1239  | 1235  | 1190  | 1378  | 1350   | 1332     |
+---------------+-------+-------+-------+-------+--------+----------+
| TOTAL SUPPLY  | 1521  | 1517  | 1497  | 1560  | 1576   | 1574     |
+---------------+-------+-------+-------+-------+--------+----------+
| Raw Exports   | 0     | 0     | 0     | 0     | 0      | 0        |
+---------------+-------+-------+-------+-------+--------+----------+
| Refined       | 14    | 14    | 18    | 18    | 157    | 13       |
| Exp.(Raw Val) |       |       |       |       |        |          |
+---------------+-------+-------+-------+-------+--------+----------+
| TOTAL EXPORTS | 14    | 14    | 18    | 18    | 157    | 13       |
+---------------+-------+-------+-------+-------+--------+----------+
| Human Dom.    | 1254  | 1250  | 1315  | 1398  | 1275   | 1431     |
| Consum.       |       |       |       |       |        |          |
+---------------+-------+-------+-------+-------+--------+----------+
| Other         | 0     | 0     | 0     | 0     | 0      | 0        |
| Disappearance |       |       |       |       |        |          |
+---------------+-------+-------+-------+-------+--------+----------+
| Total         | 1254  | 1250  | 1351  | 1398  | 1275   | 1431     |
| Disappearance |       |       |       |       |        |          |
+---------------+-------+-------+-------+-------+--------+----------+
| Ending Stocks | 253   | 253   | 128   | 144   | 144    | 130      |
+---------------+-------+-------+-------+-------+--------+----------+
| TOTAL         | 1521  | 1517  | 1497  | 1560  | 1576   | 1574     |
| DISTRIBUTION  |       |       |       |       |        |          |
+---------------+-------+-------+-------+-------+--------+----------+

## Production Subsidies

Canada does not operate any subsidy scheme for sugar or for sugar beets.
Sugar beet producers may voluntarily join an income stabilization
program called the Canadian Agricultural Income Stabilization Program
(CAIS), (outlined on page 8). Canada's National Tripartite Stabilization
Program, which provided large deficiency payments to sugar beet
producers, ran from 1987 to 1992. The plan, cost shared by producers,
the federal government and the provincial government was designed to be
financially self-sustaining, but terminated with a deficit of C\$8.4
million in 1992.

# Tariffs

Canadian sugar tariffs are minimal and no Tariff Rate Quotas (TRQs)
apply. All duties are zero if raw sugar is imported by a domestic
refinery for processing.

## Safeguard Protection 

In 1995 Canada imposed anti-dumping and countervailing duties on certain
refined sugars from a number of suppliers, including the United States.
In a November 2000 review, Canada's International Trade Tribunal
continued the findings in respect of the dumping of the subject goods
originating in or exported from Denmark, the Federal Republic of
Germany, the Netherlands and the United Kingdom, and the subsidizing of
the subject goods originating in or exported from the European Union,
with an amendment to exclude certain goods. The Tribunal also continued
the finding in respect of the dumping of the subject goods originating
in or exported from the United States, with an amendment to exclude the
certain goods. Another review of the above safeguard measures is
scheduled in 2005.

# Structure of the Refining Industry 

Canadian refiners purchase raw sugar on the world market at prices that
are significantly lower than those in the United States. Access to
low-priced refined sugar provides a cost advantage for Canadian
consumers and food processors.

  ------------------- ---------------------------------------------------
  LANTIC SUGAR        
  Operations          

  Montréal:           Executive Office and Cane Sugar Refinery\
                      4026 Notre Dame East\
                      Montréal, QC H1W 2K3\
                      Tel: (514) 527-8686 or\
                      1-800-361-7742

  Toronto:            Sales and Distribution Office\
                      198 New Toronto Street\
                      Toronto, ON M8V 2E8\
                      Tel: (416) 252-9431 or\
                      1-800-387-7325

                      

  REDPATH SUGARS      
  Operations          

  Toronto, ON:        Head office and cane sugar refinery\
                      95 Queens Quay\
                      Toronto, ON M5E 1A3\
                      Tel: (416) 366-3561 or\
                      1-800-267-1517

  Montréal, QC:       Québec sales and distribution office\
                      7400 TransCanada\
                      Montréal, QC H4T 1A5\
                      Tel: (514) 738-1743 or\
                      1-800-361-1657

                      

  ROGERS SUGAR        
  Operations          

  Vancouver:          Cane sugar refinery\
                      123 Rogers Street - Box 2150\
                      Vancouver, BC V6B 3V2\
                      Tel: (604) 253-1131

  Taber:              Beet sugar factory\
                      5405 64th Street\
                      Taber, AB T1G 2C4\
                      Tel: (403) 223-3535

                      
  ------------------- ---------------------------------------------------

 

# Trade Policy

The following summary was selected from an Agriculture and Agri-Food
Canada sugar industry profile:

During the first few years of the FTA (U.S./Canada Free Trade
Agreement), Canada enjoyed increased access to the U.S. for refined
sugar-of-origin. However, the U.S. created a small global TRQ (22,000
MT) in the recent WTO round to distinguish refined sugar from raw sugar
thereby substantially reducing Canada\'s exports. Then, in 1997, Canada
and the U.S. reached an understanding yielding a country-specific
portion of the U.S. TRQ for refined sugar as well as a country-specific
allocation of the U.S. TRQ for Sugar Containing Products (SCP).
According to the understanding, the U.S. provided Canada with guaranteed
access for 10,300 MT of refined sugar and 59,250 MT of sugar-containing
products. Canada could also compete for a share of the remaining portion
of the global TRQ (about 7,500 MT of refined sugar). In exchange for the
Canada-specific allocations, Canada agreed not to pursue a NAFTA
challenge of the U.S. Re-export program for SCPs.

A limited number of Canadian exports of SCPs, particularly those
products with a significantly high sugar content, such as iced tea,
crystal drink mixes, sweetened cocoa, cake mixes and doughs, are subject
to U.S. TRQs.

Canada administers an export control system to regulate exports of sugar
and sugar containing products to the United States. The tables on the
following page track the weekly utilization rate of the U.S. TRQs and
are available on the following GOC webpage:

http://www.dfait-maeci.gc.ca/trade/eicb/EICS/EICS-en.asp

+-----------------------------------------------------------------------+
| +------------------------------------------------------------------+  |
| | **Refined Sugar and Sugar-Containing Products**                  |  |
| |                                                                  |  |
| | Date: March 23, 2004                                             |  |
| |                                                                  |  |
| | October 1, 2003 - September 30, 2004\                            |  |
| | Chapter 17, Additional U.S. Note 5 = Raw Sugars\                 |  |
| | Refined                                                          |  |
| |                                                                  |  |
| |   ------------                                                   |  |
| | ---------- ---------- ------- ---------- ------------ ---------- |  |
| |   Can                                                            |  |
| | ada Quota                                                        |  |
| |   Lev                                                            |  |
| | el:                                                              |  |
| |   10,                                                            |  |
| | 300,000                                                          |  |
| |   kil                                                            |  |
| | ograms                                                           |  |
| |   raw                                                            |  |
| |  =                                                               |  |
| |   9,5                                                            |  |
| | 79,000                                                           |  |
| |   kil                                                            |  |
| | ograms                                                           |  |
| |   ref                                                            |  |
| | ined                                                             |  |
| |                                                                  |  |
| |   **Date                                                         |  |
| | **     **U.S.     **%        ** **   **Date**   **Cdn.       **% |  |
| |                                                                  |  |
| |   Entry**    Filled**                      Exports**    Filled** |  |
| |                                                                  |  |
| |   Mar 22/04                                                      |  |
| |     2 547 596  24.73%             Mar 22/04  6 327 791    61.43% |  |
| |   ------------                                                   |  |
| | ---------- ---------- ------- ---------- ------------ ---------- |  |
| |                                                                  |  |
| |   -----------                                                    |  |
| | ---------- ---------- ------- ---------- ------------ ---------- |  |
| |   Gl                                                             |  |
| | obal                                                             |  |
| |   Qu                                                             |  |
| | ota                                                              |  |
| |   Le                                                             |  |
| | vel:                                                             |  |
| |   7,                                                             |  |
| | 090,000                                                          |  |
| |   ki                                                             |  |
| | lograms                                                          |  |
| |                                                                  |  |
| |   **Dat                                                          |  |
| | e**    **U.S.     **%        ** **   **Date**   **Cdn.       **% |  |
| |                                                                  |  |
| |   Entry**    Filled**                      Exports**    Filled** |  |
| |                                                                  |  |
| |   Mar 22/                                                        |  |
| | 04   7 090 000  100.00%            Mar 22/04  38 000       0.54% |  |
| |   -----------                                                    |  |
| | ---------- ---------- ------- ---------- ------------ ---------- |  |
| |                                                                  |  |
| | October 1, 2003 - September 30, 2004\                            |  |
| | Chapter 17, Additional U.S. Note 7, Sugar Blends\                |  |
| | Bulk and Retail                                                  |  |
| |                                                                  |  |
| |   ------------                                                   |  |
| | ---------- ---------- ------- ---------- ------------ ---------- |  |
| |   Can                                                            |  |
| | ada Quota                                                        |  |
| |   Lev                                                            |  |
| | el:                                                              |  |
| |   59,                                                            |  |
| | 250,000                                                          |  |
| |   kil                                                            |  |
| | ograms                                                           |  |
| |                                                                  |  |
| |   **Date                                                         |  |
| | **     **U.S.     **%        ** **   **Date**   **Cdn.       **% |  |
| |                                                                  |  |
| |   Entry**    Filled**                      Exports**    Filled** |  |
| |                                                                  |  |
| |   Mar 22/04                                                      |  |
| |     31 425 843 53.04%             Mar 22/04  35 402 021   59.75% |  |
| |   ------------                                                   |  |
| | ---------- ---------- ------- ---------- ------------ ---------- |  |
| |                                                                  |  |
| |   -----------                                                    |  |
| | ---------- ---------- ------- ---------- ------------ ---------- |  |
| |   Gl                                                             |  |
| | obal                                                             |  |
| |   Qu                                                             |  |
| | ota                                                              |  |
| |   Le                                                             |  |
| | vel:                                                             |  |
| |   5,                                                             |  |
| | 459,000                                                          |  |
| |   ki                                                             |  |
| | lograms                                                          |  |
| |                                                                  |  |
| |   **Dat                                                          |  |
| | e**    **U.S.     **%        ** **   **Date**   **Cdn.       **% |  |
| |                                                                  |  |
| |   Entry**    Filled**                      Exports**    Filled** |  |
| |                                                                  |  |
| |   Mar 22/                                                        |  |
| | 04   5 459 000  100.00%            Mar 22/04  938          0.02% |  |
| |   -----------                                                    |  |
| | ---------- ---------- ------- ---------- ------------ ---------- |  |
| +------------------------------------------------------------------+  |
+-----------------------------------------------------------------------+

  ----------------- -----------------------------------------------------
                    

  ----------------- -----------------------------------------------------

#  

# Income Stabilization Policy

The Canadian Agricultural Income Stabilization (CAIS) program is part of
the Business Risk Management element of the Agricultural Policy
Framework of the Canadian government. The voluntary CAIS program is a
whole-farm program available to eligible farmers regardless of the
commodities they produce. With the CAIS program, participants select a
protection level for their operation and then make the necessary deposit
to secure that protection level. Program payments, which include funds
from their account and a government contribution, are made when the
participant's margin in the program year falls below their reference
margin. The bigger the loss, the larger the share of the payment from
government.

# 

# Prices

Canadian sugar prices are based upon the world raw sugar market, traded
on the New York Coffee & Sugar Cocoa Exchange. Most raw sugar
transactions are hedged, thus eliminating gains or losses from any raw
sugar price movements. For the Rogers operation in Taber, the raw
material is sugar beets, while the selling price of refined sugar is
based upon the world price of raw cane sugar. Alberta sugar beet growers
are paid a fixed price for the sugar derived from the beets processed.

Domestic cane sugar refineries rely almost entirely on imported raw
sugar purchased at world prices to meet their raw sugar requirements.
The prevailing price of refined sugar in Canada has historically been
below that in the United States.

VISIT OUR WEBSITE: The FAS/Ottawa website is now accessible through the
U.S. Embassy homepage. To view the website, log onto
[http://www.usembassycanada.gov](http://www.usembassycanada.gov/); click
on Embassy Ottawa offices, then Foreign Agricultural Service. The
FAS/Ottawa office can be reached via e-mail at: <agottawa@usda.gov>