Sugar

USITC Publication 3405

March 2001

OFFICE OF INDUSTRIES

U.S. International Trade Commission

Washington, DC 20436
UNITED STATES INTERNATIONAL TRADE COMMISSION

This report was prepared principally by

Devry S. Boughner

Fruits, Vegetables, and Specialty Products Branch

Agriculture and Forest Products Division

Vern Simpson

Robert A. Rogowsky

Address all communications to

Secretary to the Commission

United States International Trade Commission

Washington, DC 20436

Director of Operations

Director of Industries

COMMISSIONERS

Marcia E. Miller

Deanna Tanner Okun, Vice Chairman

Stephen Koplan, Chairman

Jennifer A. Hillman

Lynn M. Bragg

Dennis M. Devaney
03/01

OMB No.: 3117- 0188

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1

 The information and analysis provided in this report are for the purpose of this report only. 

Nothing in this report should be construed to indicate how the Commission would find in an

investigation conducted under statutory authority covering the same or similar subject matter. 

i

PREFACE

In 1991 the United States International Trade Commission initiated its current Industry and

Trade Summary series of informational reports on the thousands of products imported into,

and exported from, the United States. Each summary addresses a different

commodity/industry and contains information on product uses, U.S. and foreign producers,

and customs treatment. Also included is an analysis of the basic factors affecting trends in

consumption, production, and trade of the commodity, as well as those bearing on the

competitiveness of U.S. industries in domestic and foreign markets.1

This report on sugar covers the period 1995 through 1999. Listed below are the individual

summary reports published to date on the agricultural and forest products sector.

USITC

publication Publication

number date Title

2459 November 1991 ........... Live Sheep and Meat of Sheep

2462 November 1991 ........... Cigarettes

2477 January 1992 ............. Dairy Produce

2478 January 1992 ............. Oilseeds

2511 March 1992 .............. Live Swine and Fresh, Chilled, or

 Frozen Pork

2520 June 1992 ................ Poultry

2544 August 1992 .............. Fresh or Frozen Fish

2545 November 1992 ........... Natural Sweeteners

2551 November 1992 ........... Newsprint

2612 March 1993 .............. Wood Pulp and Waste Paper

2615 March 1993 .............. Citrus Fruit

2625 April 1993 ............... Live Cattle and Fresh, Chilled, 

 or Frozen Beef and Veal

2631 May 1993 ................ Animal and Vegetable Fats and Oils

2635 June 1993 ................ Cocoa, Chocolate, and Confectionery

2636 May 1993 ................ Olives

2639 June 1993 ................ Wine and Certain Fermented Beverages

2693 October 1993 ............. Printing and Writing Paper

2702 November 1993 ........... Fur Goods

2726 January 1994 ............. Furskins

2737 March 1994 .............. Cut Flowers

2749 March 1994 .............. Paper Boxes and Bags

2762 April 1994 ............... Coffee and Tea
ii

PREFACE—Continued

USITC

publication Publication

number date Title

2859 May 1995 ................ Seeds

2865 April 1995 ............... Malt Beverages

2875 May 1995 ................ Certain Fresh Deciduous Fruits

2898 June 1995 ................ Certain Miscellaneous Vegetable

 Substances and Products

2917 October 1995 ............. Lumber, Flooring, and Siding

2918 August 1995 .............. Printed Matter

2928 November 1995 ........... Processed Vegetables

3015 February 1997 ............ Hides, Skins, and Leather

3020 March 1997 .............. Nonalcoholic Beverages

3022 April 1997 ............... Industrial Papers and Paperboards

3080 January 1998 ............. Dairy Products

3083 February 1998 ............ Canned Fish, Except Shellfish

3095 March 1998 .............. Milled Grains, Malts, and Starches

3096 April 1998 ............... Millwork

3145 December 1998 ............ Wool and Related Animal Hair

3148 December 1998 ............ Poultry

3171 March 1999 .............. Dried Fruits Other Than Tropical

3268 December 1999 ............ Eggs

3275 January 2000 ............. Animal Feeds

3350 September 2000 ........... Grain (Cereals)

3352 September 2000 ........... Edible Nuts

3355 September 2000 ........... Newsprint

3373 November 2000 ........... Distilled Spirits

3391 January 2001 ............. Cotton
iii

CONTENTS

Page

Preface ................................................................ i

Abbreviations and Acronyms ................................... vii

Abstract .............................................................. 1

Introduction ......................................................... 3

Sugar Industry ...................................................... 7

U.S. industry profile .................................................... 7

Industry structure ................................................... 7

Number, concentration, geographic distribution of firms ................... 11

Production sector ............................................. 11

Processing sector ............................................. 13

Employment .................................................... 17

Vertical and horizontal integration .................................... 18

Degree of integration with foreign suppliers ............................. 19

Marketing methods and product distribution ............................ 19

U.S. Government programs ............................................ 21

Loan rate program ............................................... 21

Marketing assessments ............................................ 22

Information reporting ............................................. 23

2000 sugar purchase .............................................. 23

Payment-in-kind program .......................................... 23

Sugar trade programs ............................................. 24

Tariff-rate quota program ....................................... 24

Refined sugar re-export program .................................. 24

Sugar-containing product re-export program ......................... 25

Polyhydric alcohol program ..................................... 25

Research and development ............................................. 26

U.S. market ........................................................... 27

Consumer characteristics and factors affecting demand ....................... 27

Characteristics of consumers ........................................ 27

Factors affecting demand ........................................... 27

Consumption ....................................................... 29

Consumption levels and trends ....................................... 29

Import penetration levels ........................................... 30

Production levels and trends ........................................... 31
iv

CONTENTS—Continued

Page

Sugar Industry—Continued

Domestic prices ........................................................ 31

U.S. trade .............................................................. 37

Overview ............................................................ 37

U.S. imports .......................................................... 37

Import levels ....................................................... 37

Products imported ................................................... 37

Principal import suppliers ............................................. 38

U.S. trade measures ..................................................... 38

Tariff measures ..................................................... 38

Nontariff measures .................................................. 42

NAFTA tariff-rate quotas .......................................... 42

URAA tariff-rate quotas ........................................... 44

Government trade-related investigations ................................... 48

Foreign industry profile ..................................................... 48

Overview of world market ................................................ 48

Country profiles ....................................................... 50

Mexico ........................................................... 50

Canada ........................................................... 52

Australia .......................................................... 53

Brazil ............................................................ 54

European Union .................................................... 56

Cuba ............................................................. 58

China ............................................................ 60

India ............................................................. 61

Japan ............................................................ 63

Appendices

A. Harmonized Tariff Schedule subheadings ........................................ A-1

B. Understanding the structure of the Harmonized Tariff Schedule for sugar ................ B-1

C. Explanation of tariff and trade agreement terms ................................... C-1

Figures

1. Natural sweeteners: Product share of total U.S. consumption, 1999 .................... 5

2. Sugar: U.S. industry structure ................................................ 9

3. Sugar: U.S. production, 1995-99 ............................................. 33

4. Sugar: Domestic and world prices, 1990-99 ..................................... 34

5. Sugar: Price margins, 1990-99 ............................................... 35

6. Sugar: Country shares of world production, 1999 ................................. 49
v

CONTENTS—Continued

Page

Tables

1. Natural sweeteners: Total U.S. consumption, by product category, 1995-99 ............. 4

2. Natural sweeteners: Per capita U.S. consumption, by product category, 1995-99 ......... 4

3. Sugar beets and sugarcane: Area harvested, yield production, imports, and exports

1995-99 .............................................................. 10

4. Sugar beets and sugarcane: U.S. prices, 1995-99 ................................. 11

5. Sugar: U.S. refined sugar deliveries for domestic human consumption by consumer

use, 1995-99 ........................................................... 12

6. U.S. sugarcane processors: Company, mill location, grinding capacity, 1999 ............ 14

7. U.S. sugarcane refiners: Company, refinery location, melting capacity, 1999 ............ 15

8. U.S. sugar beet processors: Company, factory location, slicing capacity, 1999 ........... 16

9. Sugar: U.S. imports, consumption, and import penetration ratio (IPR), 1995-99 .......... 30

10. Sugar: World production, consumption, imports, and exports, crop-years, 1995-99 ........ 32

11. Sugar: U.S. production, 1995-99 ............................................. 33

12. Sugar: World prices, U.S. prices, and price margins, 1995-99 ....................... 36

13. U.S. producer price index for sugar and consumer price index for sugar and

sweetener-containing products, 1995-99 ...................................... 36

14. Raw and refined sugar: U.S. imports for consumption, by country, 1995-99 ............. 39

15. Raw and refined sugar: URAA base period world and domestic prices and

URAA over-quota tariff commitment levels .................................... 41

16. Raw and refined sugar: Over-quota tariff reduction commitments under

the URAA ............................................................ 43

17. Raw and refined sugar: U.S. access commitment levels under the URAA and

actual TRQ allocation levels ............................................... 45

18. U.S. raw and refined sugar TRQ allocations and actual imports, by country,

1996-99 .............................................................. 46

A-1. Sugar: Harmonized Tariff Schedule subheadings; description; U.S. column 1

rate of duty as of January 1, 2000; U.S. exports, 1999; and U.S. imports, 1999 ......... A-2

A-2. Sugar: Harmonized Tariff Schedule preferential NAFTA rates for goods of

Mexico as of January 1, 2000 .............................................. A-11

A-3. Sugar: Harmonized Tariff Schedule value-based and quantity-based special

safeguard subheadings; description; and U.S. additional rate of duty as of

January 1, 2000 ........................................................ A-13

B-1. HTS subheadings HTS 1701.11.05-1701.11.50 ................................ B-3

B-2. Special safeguard rates for subheading 1701.11.50 .............................. B-6

B-3. HTS subheadings 1701.91.52-1701.91.58 ..................................... B-7

B-4. Preferential NAFTA rates for Mexico for HTS subheading 1701.91.58 ............... B-8

vii

ABBREVIATIONS and ACRONYMS

ACP African, Caribbean, Pacific

ATPA Andean Trade Preference Act

CA Current Access

CBERA Caribbean Basin Economic Recovery Act

CCC Commodity Credit Corporation

ERS Economic Research Service

EU European Union

FAA Food and Agriculture Act of 1981

FAIR Federal Agricultural Improvement and Reform Act of 1996

FAS Foreign Agricultural Service

FCFS First-come, First-served

FSA Farm Service Agency

GATT General Agreement on Tariffs and Trade

GSP Generalized System of Preferences

HFCS High Fructose Corn Syrup

HTS Harmonized Tariff Schedule of the United States

IP Intervention Price

IPR Import Penetration Ratio

ISO International Sugar Organization

ITC United States International Trade Commission

LR Loan Rate

mmt million metric tons

mst million short tons

MAC Minimum Access Commitment

MFN Most-Favored Nation

NAFTA North American Free Trade Agreement

NAICS North American Industry Classification System

NASS National Agricultural Statistics Service

NTR Normal Trade Relations

NYBOT New York Board of Trade

PAP Polyhydric Alcohol Program

PSE Producer Subsidy Equivalent

RSREP Refined Sugar Re-export Program

SCP Sugar-containing Product

SCPREP Sugar-containing Product Re-export Program

SIC Standard Industrial Classification

SMP Statutory Minimum Price

SPSA Sugar Price Stabilization Agency

SSG Special Safeguard

TRQ Tariff-Rate Quota

UK United Kingdom

URAA Uruguay Round Agreement on Agriculture

USCIT United States Court of International Trade

USDA United States Department of Agriculture

USTR United States Trade Representative

WTO World Trade Organization

1

ABSTRACT

This report addresses market, industry, and trade conditions for sugar for the period

1995-99.

• The U.S. sugar industry produces a multitude of sugar products, derived

from sugarcane and sugar beets, for both the industrial and retail markets,

of which some are white fine sugar, granulated brown sugar, powdered white

sugar, powdered brown sugar, liquid sugar, extra fine and super fine sugar,

and special coarse sugar. The industry also produces byproducts from cane

and beet production such as bagasse, molasses, ethyl alcohol, rum, animal

feed, paper board, and particle board. The industry discussed here is limited

to the growers of sugarcane and sugar beets, sugarcane millers and raw cane

sugar refiners, and sugar beet processors that are involved in the production

of raw cane and refined cane and beet sugar.

 • U.S. production of sugar totaled 7.6 million metric tons (mmt) in 1999,

representing an almost 6-percent increase since 1995. This increase was

made possible by significant increases in acres planted and increases in

yields. High domestic production levels, coupled with imports of foreign

sugar fueled price declines for and forfeitures of raw and refined sugar in the

U.S. market. Of the total amount of refined sugar produced in 1999, 53

percent was derived from sugar beets and the remainder from sugarcane.

 • The United States is the fifth-largest producer of sugar in the world,

following Brazil, the European Union, India, and China. During the most

recent 5-year period, world production levels have increased by 12 percent,

reaching nearly 130 mmt in 1999. The top five producers captured a

combined world production share of 54 percent in 1999. World stocks of

sugar rose by 36 percent during 1995-99, reaching almost 31 mmt in 1999.

Increases in world production and stocks contributed to falling world prices.

From 1995 to 1999 world exports increased by 20 percent, from 30 mmt to

36 mmt. As a share of production volume, world exports rose from 26

percent in 1995 to 28 percent in 1999. The world price of raw sugar fell by

51 percent from 1995 to 1999 and the world price of refined sugar fell by 49

percent in the same period.

 • The United States is a net importer of sugar, and in 1999 was the world’s

fourth-largest importer of the commodity. Imports of sugar in 1999 were

valued at $640 million. The United States scheduled tariff-rate quotas

(TRQs) with the World Trade Organization (WTO) for raw and refined

sugar for approximately 1.14 million metric tons during the Uruguay Round

Agreement on Agriculture (URAA). In 1999, the United States imported

1.138 million metric tons of in-quota imports. In general, over-quota imports

are nonexistent, as they face a prohibitive tariff equivalent to nearly 242

percent ad valorem. Exports of U.S. sugar are minimal, and occur only as

a result of the sugar re-export program.
2

ABSTRACT—Continued

 • Price margins between wholesale and retail markets have increased since 1995.

In 1999, retail prices for refined sugar were 62 percent and 104 percent higher

than the wholesale price of refined sugar and raw cane sugar, respectively.

Consumer prices for retail products containing sugar have increased since 1995,

while producer prices have fallen from 1995 levels.

 • The greatest problem facing the U.S. sugar industry is declining prices caused in

part by increased domestic production, coupled with imports of foreign sugar

under the raw and refined sugar TRQs. It is generally acknowledged that U.S.

domestic and trade policies for sugar have conflicting objectives, resulting in an

excess supply of sugar in the U.S. market. The domestic policy maintains a

guaranteed price for producers under the loan rate program, thus encouraging a

certain level of production, while the trade policy maintains a required level of

imports. Production plus imports in 1999 exceeded domestic consumption

requirements by nearly 200,000 metric tons.

 • The quantity of access for foreign sugar is in a state of uncertainty for two

reasons. The U.S. sugar industry is awaiting a resolution to the issue of access

for Mexico under NAFTA. The Mexican Government contested the validity of

the “side letter” and claims it should be able to export all of its surplus

production. Also, the U.S. industry awaits a resolution to the “stuffed molasses”

issue for which an estimated 113,000 metric tons of additional refined sugar

enters the United States annually.

 

 • Practically all of the major sugar-producing nations afford high levels of

protection from imports or provide some sort of government assistance.
 

1

 L.C. Polopolus and J. Alvarez, Marketing Sugar and Other Sweeteners, Elsevier, New York:

1991.

3

INTRODUCTION

This report provides a summary of the U.S. sugar market, covering the basic factors affecting

trends in consumption, production, and trade, as well as those bearing on the competitiveness

of U.S. industry in domestic and foreign markets. Sugar and its products are provided for in

several chapters of the Harmonized Tariff Schedule of the United States (HTS): chapter 4

(refined sugar-containing dairy products); chapter 17 (raw sugar, refined sugar, and sugar

syrups); and chapters 18, 19, and 21 (refined sugar-containing products (SCPs)). 

The scope of this summary is limited to raw sugar, refined sugar, and sugar syrups–found

only in chapter 17, so the scope excludes SCPs (see table A-1). Chemically, “sugar”is a

naturally occurring organic crystalline substance known as sucrose. Sucrose, a disaccharide,

is a combination of two simple sugars–fructose and glucose. Internationally, when the term

“sugar” is used, it is understood to mean sucrose that is produced from either sugarcane or

sugar beets. Raw sugar is sugar normally produced from sugarcane that requires further

refining or quality improvement.1 Refined sugar is sugar processed from sugarcane or sugar

beets. Sugar syrup (liquid refined sugar) is a solution of sugar (sucrose) in water, and is

usually sold in bulk quantities. 

Sugar is a large component of the American diet. In fact, the United States is the third-largest

consumer of sugar in the world, behind the EU and Brazil. In the United States, consumption

of sugar has been on the rise for the last 5 years, increasing by 7.5 percent since 1995, from

almost 8 mmt to nearly 8.6 mmt (table 1). In 1999, per capita consumption of refined sugar

reached 68.5 pounds, an increase of approximately 4 percent in 5 years (table 2). The increase

in consumption is a rather new phenomenon in comparison to the massive declines in

consumption of sugar experienced by the U.S. sugar industry during the 1980s and early

1990s as a result of the introduction of High Fructose Corn Syrup (HFCS) as a substitute

sweetener. HFCS, a lower priced sweetener substitute, permanently captured a large part of

the U.S. sweetener market share from sugar, and since its introduction, the U.S. sweetener

market has become highly competitive. Sugar and HFCS are the most heavily consumed

sweeteners in the United States today, and together comprise 85 percent of total U.S. caloric

sweetener consumption–sugar 43 percent and HFCS 42 percent (figure 1).

Production levels for sugar have been growing in recent years. In 1999, production reached

7.6 mmt, reflecting an increase of nearly 6 percent since 1995. High production levels in the

United States are a contributing factor to the difficult economic conditions facing the U.S.

sugar industry in the most recent years (i.e., excess supply and lower domestic prices).

Another likely contributing factor is the construct of the U.S. sugar policy. The domestic

policy attempts to maintain a certain market price for U.S. producers under the loan rate

program (and thus encourages a certain level of production) while the trade policy requires
4

Table 1

Natural sweeteners: Total U.S. consumption, by product category, 1995-99

Calendar year

Sugar

(refined

basis) HFCS

Glucose

syrup Dextrose Honey

Maple

syrup

Other

edible

syrups

Total

caloric

sweeteners

 ))))))))))))))) 1,000 metric tons, dry basis )))))))))))))))

1995 ............ 7,998 6,947 2,265 478 103 12 32 17,835

1996 ............ 8,129 7,243 2,277 485 121 13 32 18,299

1997 ............ 8,258 7,665 2,488 466 125 14 32 19,048

1998 ............ 8,336 8,004 2,391 461 121 15 32 19,360

1999 ............ 8,598 8,268 2,334 448 133 14 32 19,828

Source: USDA, ERS, Sugar and Sweetener Situation & Outlook, May 2000.

Table 2

Natural sweeteners: Per capita U.S. consumption, by product category, 1995-99

Calendar year

Refined

sugar HFCS

Glucose

syrup Dextrose Honey

Edible

syrups

Total

caloric

sweeteners

 ))))))))))))))))))))))) Pounds, dry basis )))))))))))))))))))))))))

1995 ................ 66.1 57.4 18.7 3.9 0.8 0.4 147.3

1996 ................ 66.5 59.3 18.6 4.0 1.0 0.4 149.8

1997 ................ 67.0 62.2 20.2 3.8 1.0 0.4 154.6

1998 ................ 67.1 64.4 19.2 3.7 1.0 0.4 155.8

1999 ................ 68.5 65.9 18.6 3.6 1.1 0.4 158.1

Source: USDA, ERS, Sugar and Sweetener Situation & Outlook, May 2000.

a certain level of access to the U.S. market via imports in accordance with WTO

commitments. Combined, the two policies have contributed to increased supply on the U.S.

market and thus, price declines for sugar. Furthermore, the U.S. sugar market is pressured

because the world has experienced an increase in production and stocks in recent years and

this excess sugar supply has driven down world market prices to historical lows. A portion

of this summary is devoted to providing a detailed overview of the complexities of the U.S.

policy and economic conditions facing the U.S. sugar industry. 

Sugarcane is a tall, immensely strong perennial grass that reaches heights from 8 to 24 feet

and is grown in tropical or semitropical climates. The outer layer of sugarcane can be likened

to a bamboo stalk. The inner core of the stalk is thick and pithy but moist, as it contains the

cane juice. Each stalk of cane has an “eye” from which the cane is germinated. Sugarcane

takes 6 to 24 months, depending upon the condition of the soil and the climate, to reach full

maturity after the initial planting of the cane stalks. Each planting can produce several crops;

however, each crop is less productive than the previous one. In Florida, for
 

2

 Association Andrew Van Hook, Sugar, Groiler Incorporated, 2000.

5

Figure 1

Natural sweeteners: Product share of total U.S. consumption, 1999

Source: USDA, FSA, Sweetener Market Data Yearbook, fiscal year 1999.

example, producers harvest three successive crops, known as “ratoon” crops, from the same

cane. In other parts of the world, more than 6 crops may be harvested from the same cane

(e.g., 6 to 8 in Cuba).2 Cane is planted in rows and fairly close together. In the United States,

planting is one of the few times that manual labor is used during production. Once the

sugarcane is mature and ready for harvest, the fields are generally burned. The burning takes

place within 1 day of harvest to reduce the amount of dry matter and green leaves that enter

the mill. Also, the burning process makes it easier to harvest the cane. Often, the cane is

burned only a few short hours (or even minutes) before harvest. Some cane is harvested

“green.” Harvesting of cane has become 100 percent mechanized in recent years. The topper

on the harvester first tops the cane and then the harvester chops the cane into pieces. These

pieces are loaded into field carts. The field carts are attached to trucks or rail cars (depending

upon how far the field is from the mill) and are transported immediately to the mill. One truck

load (4 field carts) of cut cane weighs between 16 to 20 tons. The cane can sit 19 hours (at

the most) after it is cut before it starts to lose sucrose. To extract the most sucrose possible

the mill and refinery run 24 hours a day, 7 days a week during harvest.

When the cane arrives at the mill, it is leveled and knifed to break apart the stalk. Then the

cane is sent through a series of four-roll mills, the tandem, where the juice is extracted. In the
 

3

 Often the filter mud is returned to the sugarcane producer for application in the field.

 

4

 Information on processing was obtained while the author made a tour of the Florida

sugarcane industry, Feb. 2000.

 

5

 Information obtained while on a tour of the Florida sugarcane industry, Feb. 2000.

6

final four-roll mill, water is added to assist with the extraction of the juice. The raw juice is

then ready to begin the purification process. The raw cane juice is treated with lime and heated

to the boiling point; the liming neutralizes acidity and prevents the inversion of sucrose. The

combined effect of heat and lime is the formation of a heavy precipitate of complex

composition know as filter mud. The separation of the filter mud from the pure cane juice is

accomplished by placing the substance in a clarifier where continuous decantation occurs. The

clear juice is extracted from the clarifier and the thick, de-sweetened mud gathered from the

mud filter is disposed.3 The clarified juice contains about 85 percent water. Most of this water

is removed and condensed in steam-heated multiple effect evaporators operating under a

vacuum. The product that results from the evaporation stage is a high-density fluid either

syrup or molasses. The crystallization of sucrose (sugar) out of syrup and molasses is carried

out in large vessels under vacuum called vacuum pans. The mixture of sugar crystals and

syrup or molasses is called massecuite. The massecuite is boiled (called sugar boiling) and

then placed into crystallizer tanks where it is cured by slow cooling and stirring for a period

of 36 hours. The crystallization process increases the recovery of sucrose from the molasses.

The massecuite is then placed in a centrifuge where the sugar crystals are separated from the

molasses by centrifugal force. There is a fine screen at the bottom of the centrifuges where the

molasses is forced through, leaving the raw sugar as the finished product. The remaining

molasses is extracted through another crystallization process and then through yet another

centrifuge. Both operations are done several times to extract the largest possible quantity of

sugar from the massecuite. Finally, the raw sugar that remains is either sent directly to a

warehouse for storage or shipped to a refinery.4

The refining process begins when raw sugar is added to water and the mixture is melted to

produce liquified sugar. Chemicals, air, and additional heat are added to the liquified sugar

and it is placed in a clarifier. The remaining liquid is called clarified liquor. The scum is

removed from the clarified liquor, and the liquor is further heated. It passes through granular

carbon filters that remove constituents imparting the amber coloring. The final filtrate is

concentrated in a pan and heated. The liquified sugar moves through triple effect evaporators

that remove the water, creating a mixture called pan liquor that is 76 percent solid. Pan liquor

is then heated and the sugar crystallizes in the pan. The massecuite from the pan is placed is

a centrifuge, while the run-off syrup is collected for further processing. The wet sugar that is

taken out of the centrifuge is placed in large dryers to dry the sugar. The sugar is transferred

to conditioning silos where it is further dried in conditioned, dehumidified air for 24 hours.

The sugar is stored in bins according to crystal size. Finally, the sugar is transferred by

conveyors to bulk shipping or packaging areas.5

Sugar beets are biennials that are harvested yearly for their roots. The roots are white in color

and narrow in shape and contain approximately 16-18 percent sucrose. Unlike red beets, when

harvested, sugar beets are not fit for human consumption. In the United States, sugar beets

are grown approximately 5 months out of the year in cooler, temperate climates, and generally

in rotation with other crops such as corn and soybeans. Because sugar beets are highly

perishable, they are processed soon after harvest so as to maintain higher sucrose levels.
 

6

 American Sugarbeet Association, website http://hometown.aol.com/asga/sugar.htm, Mar.

2000.

7

Processing plants operate for a campaign (a period of time) of 4 to 7 months.6 The processing

begins at the onset of harvesting (early fall) and continues 24 hours a day, 7 days a week.

At harvest, the sugar beets are dug from the ground with special harvesters. The crown and

the leaves are removed by “toppers” from the beets in the field. Trucks are used to deliver the

beets to piling stations near the factory for storage in beet piles. Beets are taken from the piles

directly to the processing plant for processing into refined beet sugar. Unlike refined cane

sugar, refined beet sugar is processed from raw beet sugar directly into refined beet sugar at

the same processing plant. The first step in beet sugar manufacturing is cleaning the beet

root–removing excess dirt, rocks and trash–through a process called screening. Then the beets

are washed while tumbling in a rotating wheel and sliced into chips, “cossettes,” by revolving

knives. These cossettes are soaked in hot water, a process known as diffusion. Essentially, the

plant cells are infused with water in cone-shaped metal vessels, forcing the cells to rupture.

The beet pulp is leached from the beet juice to be used in the production of animal feed and

other products, after which the beet juice goes through purification processes. The addition

of lime and the passage of carbon dioxide through the product solidify nonsugar substances

in the beet juice, while the passage of sulfur dioxide through the juice controls the acidity and

improves the color. The purified juice is thickened through the evaporation of excess

moisture. From this point, the process becomes identical to that of cane sugar refining.

Crystals form in the thick juice when it is boiled in vacuum pans and seeded with pulverized

sugar. The viscous fluid is placed in a centrifuge where the crystals are separated from the

thick juice known as molasses. The molasses is added to the beet pulp and dried into pellet

form for use as animal feed. The sugar is stored, packaged, or mixed with water and delivered

as liquid sugar.

SUGAR INDUSTRY

U.S. Industry Profile

Industry Structure

The structure of the United States sugar industry is shown in figure 2. The sugar industry

consists of three sectors: (1) the production sector where the production of sugarcane and

sugar beets occurs; (2) the processing sector where sugarcane and sugar beets are

manufactured into refined sugar; and (3) the consumption sector where refined sugar is

consumed domestically by industrial and nonindustrial users, placed into stocks, or exported

under the sugar re-export program.

The production sector is composed of the producers of sugarcane and sugar beets. The North

American Industry Classification System (NAICS) categories applicable to the production of
 

7

 The corresponding categories under the former Standard Industrial Classification (SIC)

system are 2061 for sugarcane production and 2063 for sugar beet production. 

8

sugarcane and sugar beets are 111930 and 111991, respectively.7 The production of

sugarcane and sugar beets used in domestically manufactured refined sugar occurs primarily

on U.S. soil, even though there are no quantitative import restrictions on sugarcane or sugar

beets. Low levels of imports of sugarcane are recorded for the years 1995 through 1999 (table

3); however, imports of cane are inconsequential relative to domestic production (i.e., nearly

zero percent of domestic production; see table 3). Imports of sugar beets follow the same

course as imports of sugarcane, with imports close to zero percent of U.S. production in 1995,

1996 and 1997, and at zero in 1998 and 1999. The general tariffs for cane and beets are rather

low in comparison to U.S. prices, $1.24 per ton and 39.7 cents per ton, respectively (see table

4). The tariffs most likely do not inhibit imports of beets and cane; rather, the need to process

them within hours deters importation of cane and beets in mass quantities. Exports of

sugarcane and sugar beets to foreign markets occur (table 3), but are negligible relative to

domestic production (i.e., the ratio of exports to production is close to zero). 

The processing sector consists of sugarcane mill owners engaged primarily in the processing

of sugar cane into raw cane sugar (NAICS category 311311), sugarcane refiners engaged

primarily in the refining of raw cane sugar (NAICS category 311312), and beet sugar

manufacturers engaged primarily in the manufacturing of refined sugar from sugar beets

(NAICS category 311313). The structure of the processing sector differs for sugarcane and

sugar beets. Ultimately, refined sugar results from the processing of both crops; however, the

method by which refined sugar is obtained differs for the two crops. Sugar beets are processed

into refined beet sugar at the same processing plant. Unlike the production of refined beet

sugar, making refined cane sugar involves an extra step in the manufacturing process. First

the harvested sugarcane is transported to the mill where raw sugar is produced, and

subsequently the raw sugar is transported to the refinery where it is processed into refined

cane sugar. There is no difference in terms of physical character between refined cane sugar

and refined beet sugar in their final form.

The consumption sector consists of domestic and foreign consumers of U.S. refined sugar.

Domestically, nearly 60 percent of U.S. refined sugar used in the United States in 1999 was

consumed by industrial users (e.g., bakeries, confectionery manufacturers, ice cream makers,

etc.) and 41 percent by nonindustrial users (e.g., hotels, restaurants and grocers) (table 5).

Only approximately 3 percent of U.S. production of refined sugar in 1999 was exported by

means of the sugar re-export program (i.e., imported as raw sugar at the world price, plus a

low tariff refined and re-exported) and less than 10 percent was placed in carry-over stocks

(i.e., placed in storage for sale the preceding year).
9

Sugar 

Beets

Production Sector Processing Sector Consumption Sector

Sugar 

Cane

Processing Plant

Mill

Refined

Sugar

Raw Cane

Sugar Refinery

Raw Cane

Sugar

Imports

Sugar

Cane

Imports

Sugar

Beet

Imports

Exports 

(Re-exports)

Non-Industrial

Hotels,

Restaurants

Grocers

Other

Industrial

Canned, Bottled,

Frozen Foods

Bakery, Cereal

Products

Ice cream and 

Dairy Products

Beverages

Multiple and All

Other Food Uses

Non-food Uses

Confectionery

Stocks

Raw Beet 

Sugar

Refined

Sugar

Imports

Figure 2

Sugar: U.S. industry structure
10

Table 3

Sugar beets and sugarcane: Area harvested, yield, production, imports, and exports, 1995-99

 Items 1995 1996 1997 1998 1999

Change 

1995-99

––––––––––––––––––––– 1,000 acres ––––––––––––––––––– Percent

Area harvested:

Sugar beets:

Great Lakes1........................... 203.3 134.6 160.9 174.1 191.7 -5.7

Upper Midwest2......................... 624.2 663.3 673.5 700.6 717 14.9

Great Plains3........................... 249.7 230.1 262.5 220.5 253.4 1.5

Far West4............................. 328.8 295.3 331.4 355.5 365 11

Total ............................. 1,406.0 1,323.3 1428.3 1450.7 1527.1 8.6

Sugarcane:5

 Florida ................................ 417.0 417.0 421.0 426.0 443.0 6.2

 Hawaii ................................ 48.5 42.9 32.0 30.3 32.7 -32.6

 Louisiana .............................. 368.0 335.0 380.0 400.0 435.0 18.2

Texas ................................. 41.2 34.6 27.3 32 28.7 -30.3

Total ............................. 874.7 829.5 860.3 888.3 939.4 7.4

–––––––––––––––––––– Tons per acre –––––––––––––––––––

Yield:

Sugar beets:

 Great Lakes1........................... 15.4 17 19 16.7 19.1 23.7

 Upper Midwest2......................... 18.5 18.5 18.5 21.7 20.5 10.8

 Great Plains3........................... 18.8 21.4 21.1 21.3 21.3 13.5

 Far West4............................. 23.2 28.8 29.5 28.6 27.9 20

 Average ............................... 19.8 20.2 20.9 22.4 21.8 10.1

Sugarcane:5

Florida ................................ 34.6 33.1 36.9 40.1 35.5 2.6

Hawaii ................................ 81.5 82.6 91.4 90 87.6 7.5

Louisiana .............................. 25.6 27.9 28.2 29.7 33 28.9

Texas ................................. 32.4 28.7 30.3 32.9 34 4.9

Average .......................... 33.3 33.4 34.2 36.9 36.1 8.4

–––––––––––––––––––––– 1,000 tons ––––––––––––––––––––

Production:

Sugar beets:

Great Lakes1........................... 3,200 2,049 3,057 2,787 3,567 11.5

Upper Midwest2......................... 11,363 12,184 12,456 15,096 14,585 28.4

Great Plains3........................... 4,694 4,588 5,126 4,729 5,388 14.8

Far West4............................. 8,324 7,859 9,269 9,887 9,779 17.5

Total .............................. 27,581 26,680 29,908 32,499 33,319 20.8

Sugarcane:5

Florida ................................ 14,445 13,803 15,535 17,083 15,727 8.9

Hawaii ................................ 3,953 3,544 2,925 2,727 2,865 -27.5

Louisiana .............................. 9,421 9,347 10,716 11,880 14,355 52.4

Texas ................................. 1,336 992 827 1,053 976 -27

Total ............................. 29,155 27,686 30,003 32,743 33,923 16.4

Share of 1999

production

–––––––––––––––––––– 1,000 tons ––––––––––––––––––––– Percent

Imports:

Sugar beets .............................. 0.1 5.6 61.9 0 0 0

Sugarcane ............................... 0.0 0.6 0.1 4.3 9.5 0

Exports:

Sugar beets .............................. 0.5 1 1 6.4 3.8 0

Sugarcane ............................... 0.6 0.8 0.6 0.6 0.4 0

1

 Great Lakes: Michigan, Ohio.

2

 Upper Midwest: Minnesota, North Dakota.

3

 Great Plains: Colorado, Montana, Nebraska, New Mexico, Texas, Wyoming.

4

 Far West: California, Idaho, Oregon, Washington.

5

 Excludes sugarcane produced for seed.

Source: USDA, NASS, Crop Production Annual Summary, various issues, and USDA, NASS, Crop Values Annual Summary, various issues.
 

8

 USDA, FSA, Total Farm Acreage Report, Sept. 1999.

11

Table 4

Sugar beets and sugarcane: U.S. prices, 1995-99

Items 1995 1996 1997 1998 1999

Change

1995-98

 –––––––––––––– Dollars per ton ––––––––––––––

Sugar beets:

 Great Lakes1........................ 33.80 41.80 38.45 37.10 (

2

) 9.8

 Upper Midwest3...................... 38.55 46.60 38.30 35.25 (

2

) -8.6

 Great Plains4....................... 36.78 40.73 35.65 36.63 (

2

) -0.4

 Far West5.......................... 39.73 43.63 40.00 35.90 (

2

) -9.6

 U.S. average ....................... 38.10 45.40 38.80 36.40 36.50 -4.5

Sugarcane:

 Florida ............................ 30.60 29.40 28.70 29.50 (

2

) -3.6

 Hawaii ............................ 32.30 30.50 29.20 32.00 (

2

) -0.9

 Louisiana .......................... 27.00 26.20 27.10 23.20 (

2

) -14.1

 Texas ............................. 26.20 25.50 25.60 24.90 (

2

) -5.0

 U.S. average ....................... 29.50 28.30 28.10 27.30 24.10 -7.5

 

1

 Great Lakes: Michigan, Ohio.

 

2

 Not available.

 

3

 Upper Midwest: Minnesota, North Dakota.

 

4

 Great Plains: Colorado, Montana, Nebraska, New Mexico, Texas, Wyoming.

 

5

 Far West: California, Idaho, Oregon, Washington.

Source: USDA, NASS, Crop Production Annual Summary, various issues; USDA, NASS, Corp Values Annual

Summary, various issues; and USDA, ERS, Sugar and Sweetener Situation and Outlook Report, Sept. 2000.

Number, concentration, geographic distribution of firms

Production sector

Over the past 5 years, the production sector has seen an increase in the acreage devoted to

sugarcane and sugar beets, area harvested, yield, and actual output, the bulk of which can be

attributed to a few key producing States.

Sugarcane is grown in four States: Florida, Hawaii, Louisiana, and Texas. In 1998, the total

number of sugarcane producing farms was reported to be 5,109, up 7.8 percent from 1994

figures.8 In recent years, Hawaii and Texas sugarcane farmers have contributed to only a

small portion of total U.S. sugarcane production (8 and 3 percent in 1999, respectively). The

majority of sugarcane production is concentrated within Florida and Louisiana. Combined,

Florida and Louisiana farmers produced approximately 30 million tons of sugarcane in 1999,

which is almost 90 percent of the total sugarcane produced in the United States (table 3).

Texas and Hawaii have reduced the amount of land in production, and as a consequence,

overall production has fallen by over 30 percent in both States. Overall, sugarcane production

has increased by 16 percent since 1995, attributed mostly to substantial increases in

production of Louisiana sugarcane–approximately 52 percent since 1995.
 

9

 Ibid.

12

Table 5

Refined sugar: U.S. deliveries for domestic human consumption by consumer use, 1995-991

Items 1995 1996 1997 1998 1999

Change

95 to 99

Share

of

total

use

1999

 ––––––––– Metric tons, actual weight––––––––––– – Percent –

Industrial use:

 Bakery, cereal and related

 products ................ 1,706,990 1,771,091 1,932,719 1,992,747 2,079,961 21.8 24.5

 Confectionery and related

 products ................ 1,214,195 1,217,520 1,242,938 1,211,091 1,222,137 0.7 14.4

 Ice cream and dairy products 410,649 405,117 391,804 399,039 429,237 4.5 5.1

 Beverages ............... 153,421 173,866 153,600 143,520 161,934 5.5 1.9

 Canned, bottled, frozen goods 254,940 282,074 281,088 295,382 310,426 21.8 3.7

 Multiple and all other food uses 739,670 778,183 718,489 808,190 783,447 5.9 9.2

 Nonfood uses ............. 64,450 59,193 60,576 63,167 66,109 4.2 0.8

 Total industrial use ........ 4,543,315 4,687,044 4,781,213 4,913,136 5,053,252 11.2 59.5

Nonindustrial use:

 Hotels, restaurants ......... 90,985 77,040 72,238 71,246 65,119 -28.4 0.8

 Grocers ................. 3,056,512 3,161,198 3,220,651 3,141,123 3,186,657 4.3 37.5

 Other ................... 176,197 160,652 175,935 199,277 183,818 4.3 2.2

 Total nonindustrial use ..... 3,323,694 3,398,891 3,468,823 3,411,646 3,435,594 3.4 40.5

 Total use ................ 7,867,009 8,085,935 8,250,037 8,324,782 8,488,845 7.9 100.0

1

 Fiscal year is the period beginning Oct. 1 of the previous year and ending Sept. 30.

Note.—Short tons converted to metric tons by multiplying by .9072.

Source: USDA, FAS, Sweetener Market Data Yearbook, fiscal year 1999.

The area of sugarcane harvested in the United States has increased by 7.4 percent

since 1995, from 875,000 acres in 1995 to 939,000 acres in 1999. Florida has

historically allocated the most land to production of sugarcane of the four caneproducing States, and has harvested the greatest amount of acres on a yearly basis.

However, there has been a gradual increase in the number of sugarcane-producing

farms in Louisiana in recent years (from 4,231 in 1994 to 4,602 in 1998).9 In contrast,

the number of farms in operation in Florida has remained quite steady (between 150 and 160

farms). Louisiana farmers have been increasing the amount of land in production and have

thereby increased the amount of acres harvested since 1995 by 18.2 percent. In 1999,

Louisiana came within 9,000 acres of surpassing the total amount of area harvested in Florida

(table 3).
 

10 Ibid.

 

11 USDA, ERS, Sugar and Sweetener Situation and Outlook Report, Sept. 1997.

13

Advances in technology, coupled with favorable growing conditions, have lead to higher yields

of cane per acre. Once again, Louisiana farmers are major contributors to the increases,

recording sugarcane yields which rose by 30 percent in the last 5 years. On average, yield per

acre was 36.1 tons in 1999. Overall, sugarcane yield in the United States has increased by 8.4

percent since 1995.

Sugar beets are grown in 12 States and were planted on approximately 11,847 farms in 1998,

down from 13,657 in 1994.10 The production of sugar beets is concentrated into four regions:

(1) the Far West, in the States of California, Idaho, Oregon, and Washington; (2) the Great

Plains, in Colorado, Montana, Nebraska, New Mexico, Texas, and Wyoming; (3) the Upper

Midwest, in Minnesota and North Dakota; and (4) the Great Lakes, in Michigan and Ohio.

Sugar beet production has increased in every region since 1995 (table 3), resulting in an

almost 21 percent overall increase in total U.S. production between 1995 and 1999.

Production increases have been greatest in the Upper Midwest (28.4 percent), followed by

smaller increases of 17.5, 14.8, and 11.5 percent in the Far West, the Great Plains, and the

Great Lakes regions, respectively. In 1999, 73 percent of the total production of sugar beets

was concentrated in the Upper Midwest and Far West, particularly in the States of California,

Idaho, Michigan, Minnesota, and North Dakota There was an 8.6-percent increase in total

acres of sugar beets harvested in 1999, and acres harvested rose in every region except in the

Great Lakes region where there was a 5.7-percent decline. The Upper Midwest harvested 47

percent of all of the sugar beets harvested in the United States in 1999. Increased yields of

sugar beets in every region have resulted in a 10-percent increase in overall yield since 1995.

On average, yield per acre in 1999 was 21.8 tons, with the highest yields in the Far West

(27.9 tons per acre). As with sugarcane, higher yields can be attributed to favorable growing

conditions, increased efficiency in planting and harvesting, and advances in technology.

Processing sector

Over the past two decades, the structure of the processing sector has been changing, with

fewer sugarcane mills and beet sugar factories in operation and with increased concentration

among the sellers of refined sugar.11

There were 29 sugarcane mills operating in the United States as of 1999 (table 6). Closures

and consolidations have been fairly common in the last decade, and the number of mills in

operation has dropped by 27 percent since 1989. Three of the four cane-producing states have

seen closures in mills since 1989: from 7 to 6 in Florida, from 20 to 18 in Louisiana, and from

12 to only 4 in Hawaii. 

Currently, Louisiana has the greatest total grinding capacity–the State’s 18 mills are equipped

to grind a total of 175,000 tons of cane per day. In comparison, Florida possesses only 71

percent of Louisiana’s total grinding capacity (124,500 tons of sugarcane per day); however,

there are only 6 mills in operation in Florida. Thus, the average grinding capacity
14

Table 6

U.S. sugarcane processors: Company, mill location, grinding capacity, 1999 

Company Mill location

Grinding

capacity

Share of

total

Tons

per day Percent

Florida:

Atlantic Sugar Association .................... Belle Glade, FL ............ 14000

Okeelanta Corporation1....................... South Bay, FL ............. 24,500

Osceola Farms Company1.................... Pahokee, FL .............. 15,500

Sugar Cane Growers Cooperative of Florida ....... Belle Glade, FL ............ 25,500

United States Sugar Corporation ................ Clewiston, FL .............. 26,000

Canal Point, FL ............ 19,000

Total Florida .................................................... 124,500 37.9

Hawaii:

Gay & Robinson, Inc. ....................... Kaumakani, Kauai, HI ....... 2,880

Hawaiian Commercial & Sugar Company ........ Puunene, HI ............... 7,200

Paia, HI .................. 3,600

Lihue Plantation Company, Ltd. ................ Lihue, HI ................. 3,600

Total Hawaii ................................................... 17,280 5.3

Louisiana:

Alma Plantation ............................ Lakeland, LA .............. 8,000

Cajun Sugar Cooperative ..................... New Iberia, LA ............. 12,000

Caldwell Sugars Cooperative .................. Thibodaux, LA ............ 6,000

Harry L. Laws & Company .................... Brusly, LA ................ 5,500

Cora Texas Manufacturing Company ............ White Castle, LA ........... 12,000

M.A. Patout & Son, Ltd. ...................... Jeanerette, LA ............. 24,000

Evan Hall Sugar Cooperative .................. Donaldsonville, LA .......... 7,500

Glenwood Cooperative, Inc. ................... Napoleanville, LA ........... 6,500

Iberia Sugar Cooperative, Inc. ................. New Iberia, LA ............. 7,000

Jeanerette Sugar Company ................... Jeanerette, LA ............. 7,000

Lafourche Sugars Corporation ................. Thibodaux, LA ............. 9,500

Louisiana Sugar Cane Cooperative ............. St. Martinville, LA .......... 9,000

Lula-Westfield, LLC ......................... Belle Rose, LA ............. 8,200

Paincourtville, LA ........... 9,800

Raceland Raw Sugar Corporation .............. Raceland, LA .............. 13,000

St. James Sugar Cooperative ................. St. James, LA ............. 7,000

St. Mary Sugar Cooperative ................... Jeanerette, LA ............. 10,000

Sterling Sugars, Inc. ........................ Franklin, LA ............... 13,000

Total Louisiana ................................................. 175,000 53.4

Texas:

Rio Grande Valley Sugar Growers, Inc. .......... Santa Rosa, TX ............ 11,000

Total Texas .................................................... 11,000 3.4

Total United States ............................................ 327,780 100

1

 Subsidiary of Florida Crystals Corp.

Source: Lilleboe Communications, U.S. Sugar Industry Directory, 1999/2000.
15

in reach of Florida’s sugarcane mills is much greater–on average 20,750 tons of cane per

day–as opposed to only 11,000 in Texas, 9,722 in Louisiana, and 4,320 in Hawaii.

There are 10 refineries that process raw cane sugar into refined sugar in the United States

(table 7). Two refineries have closed since 1995–Supreme Sugar in California and C&H

Sugar in Hawaii–and one refinery has opened–United States Sugar Corp. in Clewiston,

Florida. Sugar is no longer refined in Hawaii since the closure in 1996. In 1999, raw sugar

refining was concentrated among six companies, of which 2 (Imperial Sugar and Tate & Lyle,

Inc.) owned 67 percent of the melting capacity. The average melting capacity of U.S.

refineries is approximately 2,400 tons of sugar per day.

Sugar beets are processed in 30 factories in the United States, and 65 percent of the slicing

capacity is concentrated among the four largest firms (table 8). Most of the companies

operating sugar beet processing plants are cooperatives which are owned by sugar beet

producers. The beet processing industry has lost 20 percent of its processing facilities (6

plants) since 1988, and 2 more facilities terminated processing operations at the end of the

2000 processing season.

Table 7

U.S. sugarcane refiners: Company, refinery location, melting capacity, 1999 

Company Refinery location

Melting

capacity

Share of

 total

Tons sugar

per day Percent 

California & Hawaiian Sugar Company (C&H)1.... Crockett, CA ............ 3,400 14.2

Florida Crystals Refinery, Inc.1................ South Bay, FL ........... 925 3.9

Imperial Sugar Company1................... Clewiston, FL ............ 850

Gramercy, LA ........... 2,150

Port Wentworth, GA ....... 3,100

Sugarland, TX ........... 1,950

Total .............. 8,050 33.6

Refined Sugars, Inc.2....................... Yonkers, NY ............ 1,800 7.5

Tate & Lyle North American Sugars, Inc.

(Domino)1............................ Baltimore, MD ........... 3,000

Brooklyn, NY ............ 2,000

Chalmette, LA ........... 3,000

Total ............... 8,000 33.4

United States Sugar Corporation3............. Clewiston, FL ............ 1,800 7.5

Total United States ............................................ 23,975 100

1 Source: United States Cane Sugar Refiners’ Association.

2

 Source: John Gephart, Refined Sugars, Inc.

3

 Source: U.S. Sugar Corp.
16

Table 8

U.S. sugar beet processors: Company, factory location, slicing capacity, 1999 

Company Factory location Slicing capacity

Share of

total

Tons

per day Percent

Amalgamated Sugar Company ............ Mini-Cassia, ID ......... 12500

Twin Falls, ID .......... 6,500

Nampa, ID ............. 12,000

Nyssa, ID .............. 9000

Total ............. 40,000 21.5

American Crystal Sugar Company .......... Crookston, MN .......... 5,300

East Grand Forks, MN .... 9,000

Moorhead, MN .......... 5,400

Drayton, ND ............ 5,900

Hillsboro, ND ........... 7700

Total ............... 33,300 18.0

Holly Sugar Corporation1................. Sidney, MT ............ 7,000

Worland, WY ........... 3,600

Torrington, WY ......... 5400

Total .............. 16,000 8.7

Michigan Sugar Company ............... Caro, MI .............. 3,600

Carrollton, MI ........... 3,100

Croswell, MI ............ 3,700

Sebewaing, MI .......... 5550

Total ............. 15,950 8.6

Minn-Dak Farmers Cooperative ............ Wahpeton, ND .......... 7,500 4.1

Monitor Sugar Company ................. Bay City, MI ............ 8,000 4.3

Pacific Northwest Sugar Company .......... Moses Lake, WA ........ 6,000 3.2

Southern Minnesota Beet Sugar Cooperative . . Renville, MN ........... 11,000 5.9

Spreckles Sugar Company ................ Brawley, CA ............ 8,400

Mendota, CA ........... 4,200

Tracy, CA3............. 5,000

Woodland, CA3......... 3800

Total ............. 21,400 11.6

Western Sugar Company ................. Ft. Morgan, CO ......... 5,800

Greeley, CO ........... 4,000

Billings, MT ............ 5,000

Bayard, NE ............ 3,000

Scottsbluff, NE .......... 5,000

Lovell, WY ............. 3100

Total ............. 25,900 14.0

Total United States ................................ 185,050 100.0

1

 Division of Imperial Holly Company.

2 Division of Savannah Foods.

3

 Ceased processing at end of 2000.

Source: Lilleboe Communications, U.S. Sugar Industry Directory, 1999/2000. 
 

12 U.S. Department of Commerce, Economics and Statistics Division, U.S. Census Bureau,

1997 Economic Census, Manufacturing Series: Beet Sugar Manufacturing; 1997 Economic

Census, Manufacturing Series: Cane Sugar Refining; and 1997 Economic Census,

Manufacturing Series: Sugarcane Mills.

 

13 U.S. Department of Commerce, Economics and Statistics Division, U.S. Census Bureau,

1992 Census of Manufactures: Sugar and Confectionery Products.

 

14 USDA, FSA, Total Farm Acreage Report, Sept. 1999.

 

15 LMC International, Ltd., “The Importance of the Sugar and Corn Sweetener Industry to the

U.S. Economy,” Oxford, England, 1994.

17

Employment

There are differing estimates of the actual number employed by the U.S. sugar industry, and

none of the estimates are current. The Census of Manufacturing (CM)12 reported that, in

1997, sugarcane mills employed 4,968 employees, 68 percent of which were involved in the

production of raw sugar; that cane sugar refineries employed 3,891 employees, 73 percent of

which were responsible for production of refined sugar; and that beet sugar factories employed

7,718 workers, 87 percent of which were involved in production. In 1992, the CM reported

that 7,000 employees worked in sugarcane mills; 4,800 employees worked in

sugarcane refineries; and 7,600 employees worked in beet processing plants.13 This

suggests, from 1992 to 1997, a 30-percent decline in the number employed by sugarcane

mills; a 19-percent decline in the number employed by refineries; and a 2-percent increase in

the number employed by beet processing plants. The average annual salary reported in the

CM for production workers in sugarcane mills, cane sugar refineries, and beet-processing

plants in 1997 was $32,672, $44,710, and $30,377, respectively. 

The number of growers of sugarcane and sugar beets and the wages for growers are not

directly reported by the Government. The USDA’s Farm Service Agency (FSA) has released

estimates of the number of farms on which cane and beets are grown, but that does not

necessarily coincide with the actual number of growers within the industry (see previous

section of the production sector). What is generally known is that the number of farms that

produced sugarcane increased from 1994 to 1998, and the number of farms that produced

sugar beets decreased during that time frame. It can be inferred that the number of farmers

increased in the sugarcane industry over the period and the number of farmers in the sugar

beet industry fell.14

The industry supports another set of employment data published by LMC International, Ltd.

(LMC) in 1994.15 According to LMC, in 1994, there were 26,692 full-time equivalent

employees involved directly in the growing of sugar beets and 22,488 involved directly in the

growing of sugarcane. On the processing side, LMC estimated 8,585 full-time equivalent

employees in the beet processing sector, 6,268 full-time equivalent in the cane milling sector,

and 4,231 full-time equivalent in the refining of cane sugar. Estimates of annual income were

not provided by LMC.

Sugar beet farmers are skilled laborers; they rotate other crops with sugar beets and typically

have extensive knowledge of the markets and the production practices involved in producing

a variety of crops. Harvesting of sugar beets is mechanized, and there is a high degree of skill

involved in the operation of harvesting machines. The skill level required for sugarcane

production has increased in recent years, as the industry has almost completely shed its use
18

of manual labor in the field and has fully mechanized its harvesting process. 

Processing of sugar beets and sugarcane both require high skill levels, as the processing

facilities are automated and involve extensive knowledge of computer systems. In both the

beet and cane industry, highly skilled professionals are involved in every step of the

production process. For example, the industry employs agronomists, entomologists, plant

pathologists, biotechnologists, computer technicians, and production management specialists,

to name a few.

Vertical and horizontal integration

The degree and type of integration within the U.S. sugar industry differ by region and by raw

commodity (i.e., sugarcane and sugar beets). In general, the sugar industry is vertically

integrated in that vertical links exist between various levels of the marketing system; however,

horizontal integration exists between beet and cane operations as well.

In the sugarcane industry, vertical links are established between sugarcane production,

milling, refining, and marketing. Three companies (and their subsidiaries) and one cooperative

operate in Florida (table 6): Florida Crystals Corp., United States Sugar Corp., Atlantic Sugar

Association, and Sugar Cane Growers Cooperative of Florida. The first two companies listed,

Florida Crystals Corp. and United Sugar Corp., are fully vertically integrated (i.e., each

company grows cane, harvests the cane with company-owned mechanical harvesters,

transports the cane directly from the field to a sugar mill owned by the company, transports

the raw sugar from its mill directly to a refinery that is also owned by the company for

processing into refined sugar, and finally markets its refined sugar to buyers, both household

consumers and manufacturers). The two companies may also contract with individual growers

for cane or with mills for raw sugar to secure additional supply. The remaining company and

the farmer-owned cooperative in Florida are not involved in every stage of the sugar

production process, but are still highly vertically integrated through forward contracting for

cane and raw sugar. Atlantic Sugar Association generally contracts with individual growers

to guarantee supply of the raw commodity, and then refineries in Florida or out-of-state

refineries contract with the mill to guarantee supply of raw sugar. Sugar Cane Growers

Cooperative of Florida enlists its owners (cane farmers) 

as suppliers of sugarcane for the sugar mill. Refineries then purchase the raw sugar for

processing. Thus, even though the fields, mills, and refineries are not owned by the same entity

in the latter two cases, vertical integration is still present. 

In the second largest sugarcane producing state, Louisiana, vertical integration exists in that

cane growers contract with sugar mills, which are often farmer-owned cooperatives (table 6).

A link is established between cane production and milling in Louisiana; however, the direct

link between the sugar mill and the refinery does not exist in that state as it does in Florida.

Raw sugar produced in Louisiana is shipped to another site (usually out of state) for

transformation into refined sugar. Vertical integration occurs within Texas between growers

and the sole sugar mill in Santa Rosa, which is owned by the grower cooperative. In Hawaii,

growers and mills are vertically integrated in that the mills contract for cane, but as no

refinery exists in Hawaii, all raw sugar is transported to the mainland for refining.

Nevertheless, the mill and refineries are vertically linked via supply contracts.

In the beet sugar industry, vertical integration between the grower and the processor is not as

strong as in the cane industry. Ten companies operate sugar beet processing plants in 10 U.S.
 

16 L.C. Polopolus and J. Alvarez, Marketing Sugar and Other Sweeteners, Elsevier, New

York: 1991.

 

17 Ibid.

19

States. Generally, sugar beet processors do not grow their own sugar beets, but instead, 

contract with independent growers or members of grower cooperatives in their area. There are

some cases, however, where vertical integration exists between growers and processors in that

some sugar beet growers collectively own a beet processing facility or facilities in their area.

One example is American Crystal Sugar Co., which is a company that operates 5 processing

plants (table 8) and is owned by 1,300 farmers in the Red River Valley of Minnesota and

North Dakota.

Vertical links between processors and marketers of refined beet and cane sugar exist in the

U.S. sugar industry in that processors are also the marketers of their own refined sugar. In

some cases, refined beet sugar processors will package sugar under private labels for

customers. 

Horizontal integration also exits between beet and cane operations in the marketing of sugar.

One example is United Sugars Corp., which is a sugar marketing cooperative comprising three

Upper Midwest beet processors and United States Sugar Corp., a sugarcane refiner in

Clewiston, Florida. United Sugars Corp. is the largest seller of refined sugar in the United

States. 

Degree of integration with foreign suppliers

As mentioned earlier, sugarcane and sugar beets are rarely imported into the United States,

so sugarcane mills and sugar beet processing plants are not linked with foreign suppliers.

Refiners in the United States likewise are not linked via ownership or through joint ventures

with foreign sugarcane mills. The relationship between foreign raw sugar suppliers and U.S.

refineries is contractual. Contracts for raw sugar are usually performed with the assistance

of brokers and sugar dealers.16 It should be noted that three of the refineries operating in the

United States are owned by the British-based multinational sugar company, Tate and Lyle

(table 7); however, imports of raw sugar still occur via contracting.

Marketing methods and product distribution

The U.S. sugar sector processes and markets several major products to industrial and retail

users. Combined, refiners and beet processors produce a multitude of granulated sugar

products such as white fine, granulated brown, powdered white, powdered brown, extra fine,

super fine, standard, special coarse, canners’, bakers’ special, and bottler’s special.17 Also,

cane refiners in the industry produce some specialty sugars such as turbinado sugar, raw

washed sugar, and organic sugar. Additionally, the industry markets a wide array of cane and

beet byproducts. In the beet sugar industry, beet pulp and molasses are byproducts for which

viable markets exist. The byproducts of cane sugar production for which important markets

exist are bagasse, molasses, and filter mud. From all of these byproducts, a plethora of other

products are produced, including ethyl alcohol, rum, and alcohol derivatives from molasses;

animal feed from beet pulp and molasses; and electricity, paper board, and particle board from

bagasse.
 

18 Ibid.

 

19 Ibid.

 

20 Ibid.

 

21 Raw sugar is traded on the Coffee, Sugar, and Cocoa Exchange, which is a subsidiary of the

NYBOT. The United States contract for U.S. domestic raw sugar is No. 14 and for world raw

sugar is No. 11. 

20

Two market sectors exist for refined sugar in the United States: industrial and nonindustrial.

The industrial sector used nearly 60 percent of the sugar produced in the United States in

1999 (table 5) in products such as baked goods and cereal products, confectionery products,

ice cream and dairy products, beverages, and canned, bottled, and frozen goods. The

nonindustrial sector, comprised of hotels restaurants, and grocers, consumed the remainder

of the sugar.

Refined sugar is marketed to the industrial and nonindustrial sectors through different

methods. Producers of refined sugar may choose to market sugar on their own. Often,

however, refiners will employ sugar brokers to facilitate in the marketing of their sugar. The

sugar brokers serve as a liaison for both the buyer and the seller of sugar. The broker does not

take title to the sugar, but provides the economic function of pricing by bringing the buyer and

seller together and assists in the rapid dissemination of prices.18 Brokers are paid a brokerage

fee for their services. Refiners may prefer to sell their sugar through one broker or through a

network of brokers.

Another method of marketing used by refiners is to sell their sugar to what the industry calls

“operators.” Operators differ from sugar brokers in that they actually take title or ownership

of the sugar from the refiners. They purchase the sugar in large quantities at discounted prices

and then resell the sugar in smaller quantities to “jobbers” and industrial users.19

Refiners do not always utilize the services of brokers and operators in the marketing of their

sugar. As mentioned earlier, they may choose to market their own sugar either directly to

industrial users in bulk or to retail and food service markets in appropriate packaging. One

example of refiners marketing their own sugar is United Sugars Corp. The corporation was

formed by three beet sugar refiners in 1993; in 1997, one cane refiner joined forces. These

four refiners jointly market their sugar to industrial users such as Kraft, General Mills, Mars,

and Hershey, and also package refined sugar under their own label and private labels for retail

sale in grocery stores.20

A new phenomenon in the marketing of sugar is the use of the Internet. While there is not one

single industry site where the buying and selling of sugar takes place, there are scattered

websites where buyers and sellers trade sugar. The websites serve as brokers of sorts and

facilitate the bringing together of buyers and sellers of sugar. Also, there are a multitude of

websites where traders of sugar futures and options contracts place orders electronically for

a minimal fee, and subsequently those orders are passed to traders on the New York Board

of Trade (NYBOT) where sugar futures are traded.21 The industry may move toward utilizing

the Internet more intensively in the future for marketing purposes in an attempt to reach more

customers, eliminate transaction costs, and facilitate the dissemination of the most current

information.
 

22 R. Lord, USDA, ERS, Sugar: Background for 1995 Farm Legislation, Apr. 1995.

 

23 USDA, ERS, Sugar: Background for 1990 Farm Legislation, R. D. Barry, et. al., Feb. 1990.

 

24 USDA, ERS, Sugar: Background for 1985 Farm Legislation, Sept. 1984.

21

U.S. Government Programs

U.S. sugar producers have been afforded some degree of protection and/or support from the

Federal Government since shortly after the Revolutionary War. From 1789 to 1934,

protection was granted primarily in the form of tariffs. It was the Jones-Costigan Act of 1934,

however, that cast the foundation for the present-day U.S. sugar program.22 The JonesCostigan Act was responsible for instituting the allocation system for domestic and foreign

sugar in the United States. The act called for: (1) an annual determination of U.S. domestic

requirements for sugar; (2) the division of the U.S. sugar market among domestic and foreign

suppliers via the use of quotas; (3) the allotment of quotas among processors of sugar in

domestic areas (i.e., marketing allotments); and (4) the adjustment of cane and beet production

in each area to the established quotas (i.e., acreage allotments). Subsequent legislation

superseded the 1934 Act–the Sugar Act of 1937 and the Sugar Act of 1948–but the basic

objectives of the Jones-Costigan Act were preserved in this legislation until 1974 when, after

several extensions and renewals, Congress elected not to renew the Sugar Act of 1948.23 Three

years later, excess production and low world prices lead to the passage of the Food and

Agriculture Act of 1977. This act restored the concept of providing domestic support to

producers and instituted the first loan-and-purchase program for sugar.24

Loan rate program

The sugar loan rate program was adopted in 1979 in title III of the Agricultural Act of 1949.

The 1979 statute authorized the President to offer price supports to processors through

offering loans and through conducting purchases to remove some of the excess supply of

sugar from the market. In 1981, Congress voted to provide the loans on a nonrecourse basis

under the Food and Agriculture Act of 1981 (FAA). Under the FAA, processors of raw cane

sugar and refined beet sugar received the loan rate on a per-pound basis, using their sugar as

collateral. As a qualification for the loan, the processor agreed to pay the producer of

sugarcane or sugar beets a minimum price set by the USDA. 

In 1981, the raw sugar loan rate was set at 16.75 cents per pound and the refined beet sugar

loan rate at 19.70 cents per pound. Congress required the rate to increase to 18 cents for raw

cane sugar by 1985. If the market price exceeded the loan rate at the time of sale, then the

processor would simply sell the sugar on the open market and repay the amount of the loan

to the government. If, however, the market price fell below the loan rate, the processor would

have the opportunity to forfeit the sugar under loan to the Commodity Credit Corporation

(CCC), with no forfeiture penalties attached (under the non-recourse provision). Therefore,

the loan rate acted as a guaranteed minimum price for processors with the government as a

guaranteed customer. 

The loan rate program was continued under the 1990 Farm Act, but in 1996 the U.S. sugar

program was reformed with the passage of the new farm bill, the FAIR Act. The 1996 FAIR

Act involved several key changes to the previous loan rate program. Under the previous sugar

legislation, forfeitures of sugar under the loan rate program were nonexistent because the

program was required to operate at “no cost to the government.” Thus, the USDA was able
 

25 Section 22 import quotas were converted to TRQs in 1990. See U.S. Trade Measures section

for further explanation of U.S. sugar TRQs.

 

26 USDA, ERS, Provisions of the Federal Agriculture Improvement and Reform Act of 1996,

Sept. 1996.

 

27 The USDA set the combined TRQ levels for raw and refined sugar at 1.501 mst for the

1999-2000 TRQ season, so as to allow for the issuance of nonrecourse loans.

 

28 USDA, ERS, Provisions of the Federal Agriculture Improvement and Reform Act of 1996,

Sept. 1996.

 

29 On May 16, 2000, the USDA announced that it would purchase 136,000 metric tons

(150,000 short tons) of domestic sugar to remove some of the excess supply from the market as a

means of increasing prices above the loan rate. In total, 120,000 metric tons were purchased. The

purchase was an attempt to discourage forfeitures and to minimize costs to the Government (see

2000 Sugar Purchase section). 

22

to maintain a “no cost” program by either restricting supply through the use of domestic sugar

marketing allotments (production quotas) or adjusting (reducing) the level of the raw and

refined sugar import quotas (the TRQs).25 Both of these options had the effect of limiting the

supply of sugar on the market and artificially forcing the domestic market prices above the

loan rates. 

The new provisions of the FAIR Act limited the options available to the USDA for increasing

the domestic price above the loan rate.26 Marketing allotments were suspended under the FAIR

Act, leaving the USDA with only the practice of managing TRQ levels for imports of raw and

refined sugar as a means for reducing supply and increasing domestic prices; however,

reducing the TRQ levels is not viewed as a viable option for several reasons. First, the United

States has entered into international agreements (e.g., WTO and NAFTA) to increase market

access through increases in TRQs and through reductions in over-quota tariff levels, both of

which have the potential to increase levels of imported sugar on the market. Second, the ‘no

cost’ provision was excluded from the FAIR Act, so altering the TRQs below URAA

committed levels to discourage costly forfeitures is no longer feasible. Third, a provision was

included in the FAIR Act that fixed the current national average loan rates at 1995 levels (18

and 22.9 cents per pound for raw cane and refined beet, respectively), so the loan rates may

no longer be adjusted to make certain they exceed domestic market prices. Finally, and most

importantly, all loans were converted to recourse loans unless the USDA announces the TRQ

at a level greater than 1.5 mst (1.36 mmt), raw value, annually.27 Under the FAIR Act

provisions, even nonrecourse loans are now subject to a 1-cent forfeiture penalty.

The FAIR Act provisions no longer afford the USDA any flexibility in administering the loan

rate program through the use of import restrictions.28 Thus when the domestic price drops

below the loan rate, as it did in the first half of 2000, forfeitures of sugar are likely to occur

in greater numbers.29

Marketing assessments

The 1996 FAIR Act provided for marketing assessments for the sale of raw cane sugar and

beet sugar during the 1997 through 2003 fiscal years. Processors of sugarcane and sugar beets

are required to pay the CCC a nonrefundable marketing fee on a monthly basis. Sellers of

domestic raw cane sugar are assessed 0.2475 cent per pound (i.e., 1.375 percent of the

national cane sugar loan rate) and sellers of refined beet sugar are assessed 0.2654 cent per

pound (i.e., 1.159 percent of the national beet sugar loan rate). Sugar that has yet to be

marketed by the last day of the fiscal year (September 30) is subject to the assessment rate on
 

30 USDA, FAS, “The U.S. Sugar Program,” FASonline, www.fas.usda.gov/

info/factsheets/sugar.html, Mar. 2000.

 

31 Ibid.

 

32 B.W. Dyer & Company, Dyergram, “Pressure Mounts for USDA to Intervene in Sugar

Market,: Apr. 5, 2000.

 

33 USDA, “USDA to Purchase U.S. Sugar, Reduce Cost to the Government,” News Release

No. 0159.00, May 11, 2000. 

 

34 M. Pates, Agweek Online, Aglink, “Sugar leaders: Buy won’t be enough,” Wednesday, May

17, 2000.

 

35 USDA, FSA, 1999 Loan Forfeiture National Report.

23

that date. When this sugar is finally marketed, processors are not subject to a second

assessment rate. Forfeited sugar is considered to be marketed and is subject to a marketing

assessment on the date of forfeiture. The penalty for foregoing the assessment payment is the

loan value of the quantity of sugar involved.30

Information reporting 

Sugarcane processors, cane refiners, and beet refiners are required to report production,

imports, distribution, and stocks to the USDA on a monthly basis. Also, purchases of

sugarcane and sugar beets must be reported. Reported data are issued on a monthly basis by

the FSA. Each reporting violation is subject to a $10,000 civil penalty.31

2000 sugar purchase

In the year 2000, domestic prices for sugar fell well below the loan rate, and the threat of

large-scale forfeitures of the 1999 sugar crop to the CCC loomed. Some members of the sugar

industry asked the Government to purchase some of the excess sugar that was present in the

market, (i.e., up to 350,000 short tons) and to dispose of the sugar (e.g., donate it to foreign

countries or use it in the production of ethanol) so that the stocks would not hang over the

market with the threat of release at a later date.32 On May 11, 2000, the Secretary of

Agriculture announced that the CCC would purchase sugar “...to reduce the cost of expected

sugar program forfeitures, support sugar growers, and help stabilize low prices.”33 The CCC

agreed to purchase up to 136,000 metric tons of sugar, at least 75 percent of which would be

refined. Through purchasing the sugar, the USDA had hoped to save as much as $6 million

that would otherwise have been incurred from expected loan forfeitures. The authority to

purchase the sugar was granted under the cost reduction option of the Food Security Act of

1985. The CCC did not dispose of the sugar but placed it in storage. The U.S. industry had

hoped the size of the purchase would have been much closer to 336,000 metric tons and

argued that 136,000 metric tons would not preclude forfeitures from occurring.34 In all, the

CCC purchases totaled 120,000 metric tons, valued at just over $54 million. In the end,

54 percent of the beet sugar under loan and 58 percent of the raw cane sugar under loan

(valued at $378 million) was forfeited to the CCC.35

Payment-in-kind program

Effective August 18, 2000, the government implemented a temporary Payment-in-Kind (PIK)

Program pursuant to section 1109(e) of the Food and Security Act of 1985. The PIK program

results in the diversion of acres from sugar beet production, and thus to a reduction in the
 

36 Sugar Payment-In-Kind (PIK) Diversion Program, Federal Register, Vol. 65, No. 164,

Aug. 23, 2000, pp. 51280-51283.

 

37 Ibid.

 

38 Ibid.

 

39 USDA, ERS, Agricultural Outlook, “Weak Prices Test U.S. Sugar Policy,” Sept. 2000.

 

40 USDA, FSA, “USDA Announces Final Results for the Fiscal Year 2000 Sugar PIK

Diversion Program,” Press Release No. 1671.00, Dec. 7, 2000.

24

overall amount of sugar in the market, and was spurred by an effort to assist all U.S. sugar

producers in dealing with low prices caused by oversupply on the domestic market.36 The

reasoning provided by the CCC for the implementation of the temporary PIK program was

based upon the combination of the following factors: market prices below forfeiture levels;

expected forfeitures of the 1999 crop; greater excess supply outlook for the upcoming crop

year; CCC holding sugar inventory with no other specific disposal plan; and the U.S. sugar

producers’ growing realization of the major market problems facing the sugar sector.37

Through the implementation of the PIK program, the CCC hopes to reduce the amount of

forfeitures expected, and to eliminate CCC inventory, thereby eliminating storage costs.38

Essentially, the CCC is using the PIK program as a domestic supply control measure39 in an

attempt to raise prices above the existing loan rates for raw and refined sugar, and to maintain

imports of sugar in accordance with market access commitments made during the URAA

The PIK program requires sugar beet producers involved in the program to agree not to

harvest beets in return for sugar from the CCC’s existing inventory. Sugar beet producers

may submit bids indicating the dollar value of CCC sugar they are willing to accept in return

for diverting acres away from sugar beet production. The CCC reviews all bids and accepts

those bids that will maximize the amount of acreage reduced for the least reduction in CCC

inventory of sugar. A payment limit of $20,000 per producer is enforced. In total, U.S. sugar

beet producers submitted 5,022 bids to participate in the PIK program with approximately

102,000 acres to be diverted from production.40 Diverted acres represent approximately 7

percent of the total acreage planted to sugar beets in fiscal year 2000.

Sugar trade programs

Tariff-rate quota program

The United States converted its absolute import quotas for sugar to TRQs in 1990. In doing

so, lower in-quota tariff rates were established for sugar from countries that held shares of the

previous absolute import quotas for raw and refined sugar, and higher (generally prohibitive)

over-quota tariff rates were established for sugar from nonquota holding countries. As

mentioned earlier, the TRQ has effectively doubled as a domestic policy tool that, when

reduced, subsequently bolstered the domestic price above the loan rate so as to discourage

forfeitures of sugar. The U.S. sugar TRQ program is explained in detail in the section entitled

“United States Trade.” 

Refined sugar re-export program

The sugar re-export program was instituted in November 1982 through the issuance of

Presidential Proclamation 5002; the program, as later modified, derives from the terms of
 

41 USDA, FAS, Sugar Import Requirements.

 

42 FAS Licensing Authority, Apr. 3, 2000.

 

43 Greater than 100 percent due to debit of 21,656 metric tons of imported sugar.

 

44 FAS Licensing Authority, Apr. 3, 2000.

25

additional note 6 to chapter 17 of the Harmonized Tariff Schedule. At the time of issuance,

sugar refiners and manufacturers of SCPs were limited by restrictive import quotas and were

finding it difficult to compete in the world market with foreign competitors who had access

to raw and refined sugar at low world prices.41 The Proclamation authorized, the Secretary

of Agriculture to allow the entry of quota-exempt raw cane sugar, provided the sugar is

refined and re-exported in either refined form, as an ingredient in SCPs, or used in the

production of polyhydric alcohol.

The refiners that wish to participate in the re-export program obtain licenses from the USDA

Licensing Authority at the Foreign Agricultural Service (FAS). A license under the Refined

Sugar Re-export Program (RSREP) allows for the importation of quota-exempt raw cane

sugar under HTS subheading 1701.11.20 at a lower tariff rate (table A-1) as long as the

refiner exports the equivalent quantity of refined sugar onto the world market, or transfers an

equivalent quantity of refined sugar to licensees under the Sugar-containing Product Re-export

Program (SCPREP) or the Polyhydric Alcohol Program (PAP) within 90 days of importation.

There is no limit on the amount of raw sugar the refiner may import, but there is a license

limit of 50,000 short tons (45,360 metric tons), raw value, at any given time. The license

works like credits and debits when balancing a checkbook–credits are added when the licensee

exports domestically produced refined sugar before importing quota-exempt raw cane sugar,

and debits are subtracted when the licensee imports quota-exempt raw cane sugar before

exporting or transferring quota-exempt refined sugar. Imports from Mexico do not count

against a refiner’s license unless the quantity of sugar is not re-exported with 30 days of

importation. Five companies participated in the RSREP during fiscal year 1999, importing

a total of approximately 350,000 metric tons of raw sugar, which is an increase of 10.5

percent from 1998 levels.42 Of the 1999 imports, roughly 60 percent was exported in the form

of refined sugar, 40 percent was delivered to manufacturers of SCPs and 3 percent was

delivered to producers of polyhydric alcohol.43

Sugar-containing product re-export program

Manufacturers of SCPs that wish to participate in the sugar re-export program are also

required to obtain licenses from the USDA Licensing Authority at the FAS. A license under

the SCPREP permits the holder to receive transfers of low-priced refined sugar from licensed

refiners as long as an equivalent amount of the sugar is exported as an ingredient in SCPs

within 18 months of the transfer. The license balance may not exceed 10,000 short tons,

refined value. Over 300 companies owned licenses under the SCPREP in 1999.44

Polyhydric alcohol program

Producers of polyhydric alcohol that wish to participate in the PAP must obtain licenses from

the USDA Licensing Authority at the FAS. As with the licensees in the SCPREP, these

producers may receive transfers of low-priced refined sugar from licensed refiners, but may

not exceed a license balance of 10,000 short tons, refined value. The producers under the PAP

must, within 18 months of the transfer, use the equivalent amount of sugar transferred from
 

45 Ibid.

 

46 For example, U.S. sugar production costs were below world average production costs for

1995-99. U.S. beet producers costs ranked second lowest out of 40 sugar-producing nations and

U.S. cane producers costs ranked thirty-first out of 63 sugar-producing nations. LMC

International Ltd., A Worldwide Survey of Sugar and HFCS Production Costs: The 2000 Report,

preliminary results presented to the 17th Annual International Sweetener Symposium, Aug.

2000.

 

47 F.O. Licht, “Sugar in the 21st Century–The international sugar congress in Berlin,”

International Sugar and Sweetener Report, Vol 132., No. 21, July 18, 2000.

 

48 H.E. Rees, “Recent developments in sugarcane agriculture,” International Sugar Journal,

Vol. 102, No. 1221, 2000.

 

49 F.O. Licht, “Sugar in the 21st Century–The international sugar congress in Berlin,”

International Sugar and Sweetener Report, Vol 132., No. 21, July 18, 2000.

 

50 Information was obtained while the author made a tour of the Florida sugarcane industry,

Feb. 2000.

26

the refiner in the production of any type of polyhydric alcohol, except that produced by

distillation or polyhydric alcohol used as a substitute for sugar as a sweetener in human food.

In 1999, there were 18 participants in the PAP.45

Research and development

The U.S. sugar industry is one of the most technologically advanced and efficient in the

world.46 Research is instrumental in maintaining the industry’s competitive edge, so millions

of dollars are spent on research annually. Advances have been made in areas such as

biotechnology, plant breeding, pest control, disease prevention, planting, harvesting, irrigation,

fertilizing, transportation, and processing. The U.S. Government funds USDA research

facilities that staff specialists (e.g., plant pathologists, plant scientists, entomologists, and

agronomists) to conduct research and to disseminate their findings to producers and

processors of cane and beets. Also, the government, universities, and private companies fund

the research efforts of professors, research assistants, and graduate students conducting

relevant industry-specific studies.

Biotechnology research is leading to developments in disease and insect resistant cane and beet

varieties,47 creation of maps of sugarcane genetic structure, genetic modification to correct for

crop deficiencies, mapping of favorable traits, and identification of beneficial plant breeding

schemes, to name a few.48 The United States has progressed to the stage of controlled field

testing of genetically modified sugarcane and sugar beet varieties.49

Advances in pest control in recent years have led to integrated pest management schemes

where a natural enemy is introduced into the growing area with the intention of eradicating the

pest. For example, the Cotesia parasite indigenous to Pakistan is a natural enemy of the

sugarcane borer. Researchers introduced the parasite to sugarcane growing areas in the United

States so that it would seek out the cane borer, lay its eggs in the borer’s belly, and

cause the borer to become sick and subsequently die. This new pest management scheme

reduces the level of pesticides used while reducing the level of harm to the sugarcane plant.50
 

51 USITC, Industry and Trade Summary: Natural Sweeteners, USITC Publication 2545 (AG8), Nov. 1992.

 

52 USDA, ERS, Sugar and Sweetener Situation and Outlook Yearbook, May 2000.

 

53 USDA, ERS, “U.S. Food Supply Providing More Food and Calories,” Food Review, Vol.

22, Issue 3, 2000.

27

In the United States, both cane and beet harvesting are fully mechanized. This is a major

advancement for the sugarcane industry, for in 1991 over one-half of Florida’s sugarcane was

still harvested by hand.51 Advances in both industries by private U.S. companies have been

made in the development of harvesting equipment so as to “fine tune” the harvesting process,

leading to increases in the amount of cane and beets harvested in a given season. In sugarcane

harvesting, the large, mechanical harvesters are now able to harvest cane “green” (i.e., without

it having been burned first) with greater ease than in previous years. 

On the processing side, research efforts to increase sucrose extraction levels from cane and

beets continue to progress. In the U.S. sugarcane industry, sugar recovery rates have increased

from 11.68 percent in 1995 to 12.07 percent in 1999, and in the U.S. sugar beet industry,

sugar recovery rates have increased from 14 percent to 14.8 percent in the same period.52

U.S. Market

Consumer Characteristics and Factors Affecting Demand

Characteristics of consumers

The characteristics of the sugar consumer have changed since the 1950s, when most of the

refined sugar produced in the United States was purchased directly by households.53 Today,

the primary group of consumers of U.S. refined sugar are industrial users that purchase sugar

for use as an input in their final products, which then generally are sold to households in the

form of processed foods. Of the approximately 8.5 mmt of refined sugar delivered in the

United States in 1999, almost 60 percent was consumed by the industrial sector (table 5). The

nonindustrial sector consumed the remaining 40 percent of the sugar, of which grocers were

the main buyers, purchasing roughly 38 percent of the total sugar delivered in 1999. All

industrial and nonindustrial users have increased their purchases of sugar since 1995 with the

exception of hotels and restaurants, which have actually reduced their use substantially–by

almost one-third.

Factors affecting demand

In terms of quantity, demand for sugar in the United States depends on several factors: the real

price of sugar, per capita real income, the real price of sweetener substitutes (e.g., price of

HFCS and honey), demand for output of sweetener-containing products, population,
 

54 M. Benirschka, N. Koo, and J. Lou, “World Sugar Policy Simulation Model: Description

and Computer Program Documentation,” North Dakota State University, AER No. 356, Aug.

1996.

 

55 S.L. Haley, “Modeling the U.S. Sweetener Sector: An Application to the Analysis of Policy

Reform,” International Agricultural Trade Research Consortium Working Paper #98-5, Aug.

1998.

 

56 L.C. Polopolus and J. Alvarez, Marketing Sugar and Other Sweeteners, Elsevier: New

York, 1991.

 

57 S.L. Haley, “Modeling the U.S. Sweetener Sector: An Application to the Analysis of Policy

Reform,” International Agricultural Trade Research Consortium Working Paper #98-5, Aug.

1998.

 

58 Ibid.

 

59 N. Uri, “A Re-Examination of the Demand for Sugar in the United States,” Journal of

International Food and Agribusiness Marketing, Vol. 6, No. 2, 1994.

 

60 S.L. Haley, “Modeling the U.S. Sweetener Sector: An Application to the Analysis of Policy

Reform,” International Agricultural Trade Research Consortium Working Paper #98-5, Aug.

1998.

28

population growth rates, and tastes and preferences (e.g., health concerns).54,55 Depending

upon the sector demanding the sugar, these aforementioned factors may or may not apply.

Two definitive sectors demand sugar in the United States (see figure 2): the industrial sector,

composed of producers of bakery items, beverages, processed products, confectionery items,

dairy products, and the like; and the nonindustrial sector, composed of grocers, hotels,

restaurants, and household consumers.

For industrial users, the relative price of alternative sweeteners is one of the most important

factors affecting demand.56 In some instances, alternative sweeteners are directly substitutable

for sugar. For example, the increase in the relative price of sugar to HFCS in the late 1970s

and early 1980s, lead to the substitution of HFCS for sugar in the soft drink industry. Before

the introduction of HFCS as a lower-priced sweetener, sugar had satisfied all sweetener

demand, but when it came to direct price competition, HFCS prevailed, capturing virtually

the entire soft-drink market share and 43 percent of the overall sweetener market share. In

other instances, industrial users find that there is no substitute for sugar. For example, since

HFCS comes in liquid form, these sweeteners can only be substitutes for sugar in products

that do not require a crystalline structure. In cases where sugar is used as a bulking agent,

HFCS would not substitute. This being said, there are products containing sweeteners in liquid

form (e.g., liquid sugar) where HFCS would suffice. In such situations, 

cost of substitute sweeteners is a determining factor. In 1998, it was estimated that among

industrial users of sugar, the bakery and beverage sectors are more responsive to relative price

changes (i.e., to a decline in the price of sugar) than the confectionery and dairy sectors.57

For the nonindustrial (household) consumer of sweeteners, price is not the major determining

factor for demand.58 In fact, demand for sugar at the household level is rather price inelastic.

In a more recent study in 1998, the retail demand elasticity of sugar was estimated to be -.86.

Most estimations for the responsiveness of consumers to changes in the price of sugar

conclude that for a 1-percent increase in the price of sugar, a less than 1-percent decrease in

the quantity demanded of sugar will result. Recent estimates for price elasticity have ranged

from -0.50 to -.86.59, 60
 

61 L.C. Polopolus and J. Alvarez, Marketing Sugar and Other Sweeteners, Elsevier: New

York, 1991.

 

62 USDA, ARS, “Report of the Dietary Guidelines Advisory Committee on the Dietary

Guidelines for Americans,” 2000. 

 

63 USDA, ERS, “U.S. Food Supply Providing More Food and Calories,” Food Review, Vol.

22, Issue 3, 2000.

 

64 “Sugar consumption: A defining difference,” Milling & Baking News, June 6, 2000.

 

65 P.J. Buzanell, “The U.S. Organic Sugar Market,” Sugar y Azucar, Sept. 2000.

 

66 Ibid.

29

Although price does not weigh heavily in the decision to purchase sugar at the household level

for these nonindustrial users, factors such as health concerns weigh into the decision to

purchase sugar. Health concerns have a negative effect on the demand of sugar and have

spurred an increase in the use of non-caloric sweeteners in recent years (e.g., asparatame and

saccharin). Overall, however, as mentioned earlier, consumption of sugar has increased.

Increases in income have been found to have a minimal positive effect on the demand for sugar

in the United States.61

Consumption

Consumption levels and trends

Regardless of health concerns, the American “sweet tooth” has become ever more present in

the last two decades, with consumption of sweet treats such as soft drinks, candies, cakes, and

dairy desserts such as ice cream on the rise. Americans are the largest consumers of

sweeteners in the world and the third largest consumers of sugar in the world behind the EU

and Brazil. Since the early 1990s Americans have increased their overall intake of calories,

most of which has come from increased consumption of carbohydrates in the form of added

sugars–primarily sucrose from cane and beet sugar and corn sweeteners.62 Even though

Americans are consuming more caloric sweeteners in total (158.1 pounds in 1999) (table 2),

per capita consumption of cane and beet sugar has been on the decline since the late 1960s to

early 1970s. From 1970 to 1999, annual per capita consumption of cane and beet sugar has

fallen by 40 percent–from 96 pounds63 to 68.5 pounds per year (table 2). Americans have been

consuming corn sweeteners and artificial sugar substitutes in place of cane and beet sugar. As

a component of their total diet, Americans obtain 18 percent (658 calories) of their total daily

caloric intake from sugar and sweeteners, a greater portion than in any other region in the

world.64

One important trend that is worth noting is the increased consumption of organic sugar. From

1995 to 1999 the value of purchases by U.S. consumers of organically grown food products

increased by 100 percent, from $2.1 billion to an estimated $4.2 billion.65 U.S. consumers

purchase organically grown sugar less for price reasons than for its perceived health benefits

and for its environmental benefits. Organic sugar is produced without pesticides, herbicides,

or preharvest burning, and is less processed than refined sugar. Organic sugar is generally a

natural brown color, providing an image of a more natural product.

Approximately 1,000 to 1,500 metric tons of organic sugar is produced in the United States

annually from sugarcane.66 The U.S. sugar beet industry is experimenting with organic sugar
 

67 S. Gudoshnikov, “Organic sugar–a growth opportunity for producers?,” International Sugar

Journal, Vol. 102, No. 1221, Sept. 2000.

 

68 Ibid.

 

69 P.J. Buzanell, “The U.S. Organic Sugar Market,” Sugar y Azucar, Sept. 2000.

 

70 S. Gudoshnikov, “Organic sugar–a growth opportunity for producers?,” International Sugar

Journal, Vol. 102, No. 1221, Sept. 2000.

 

71 P.J. Buzanell, “The U.S. Organic Sugar Market,” Sugar y Azucar, September, 2000.

 

72 S. Gudoshnikov, “Organic sugar–a growth opportunity for producers?,” International Sugar

Journal, Vol. 102, No. 1221, Sept. 2000.

30

production as well, but levels of production are not available. World production of organic

sugar ranges from 18 mmt to 40 mmt in a given year.67 The United States consumes

approximately 40 percent of total world production of organic sugar.68 Thus, organic sugar

is imported from countries such as Costa Rica, the Dominican Republic, Colombia, Paraguay,

and Brazil in order to meet the growing domestic demand for the product.69,70 Industrial users

are the largest consumer group of organic sugar in the United States, accounting for 70

percent of domestic use.71 The direct retail sector for organic sugar is growing, but is limited

by insufficient supply, owing to low world production levels as well as to limitation on

imports through the U.S. sugar TRQs. Apparently, organically grown sugarcane may yield

up to 20 percent less sugar than conventionally grown sugarcane and organically grown sugar

beets may yield up to 60 percent less sugar.72

Import penetration levels

Import levels as a percentage of domestic consumption have fluctuated in recent years (table

9). The levels are correlated with the size of the annual TRQ allocation and to domestic

production levels. The import penetration ratio (IPR), which is the ratio of imports to

consumption, increased in years when the TRQ was higher and decreased when the United

States began tightening the TRQ level. In 1995, just under 20 percent of apparent

consumption was contributed by imports. In fiscal year 1996, the URAA TRQ allocations

came into effect. In 1996 and 1997, the combined raw and refined sugar TRQ levels were set

at 2.2 mmt and 2.15 mmt (see table 18) respectively, yielding IPRs of nearly 30 percent in

each year. In 1998 and 1999, the TRQ levels were reduced to around 1.65 mmt and 1.2 mmt,

respectively. Subsequently, IPRs dropped to 22 and 18.2 percent, respectively. It should be

noted that in years when domestic production of sugar was on the decline, the IPR rose, and

vice versa. 

Table 9

Sugar: U.S. imports, consumption, and import penetration ratio (IPR), 1995-991

Fiscal year Imports Consumption IPR

 –– 1,000 metric tons, raw value –– Percent

1995 .............................. 1,664 8,470 19.6

1996 .............................. 2,536 8,667 29.3

1997 .............................. 2,517 8,866 28.4

1998 .............................. 1,962 8,903 22.0

1999 .............................. 1,655 9,079 18.2

1 Fiscal year is the 12-month period beginning October 1 of the previous year and ending September 30.

Note.—IPR equals U.S. imports divided by domestic consumption.

Source: USDA, ERS, Sugar and Sweetener Situation and Outlook Report, May 2000.
 

73 Fiscal year is the 12-month period beginning Oct. 1, 1999 and ending Sept. 30, 2000.

 

74 See “Exploding the Consumer Sugar Cost Myth: Theory versus Reality,” Sugar y Azucar,

July 1998.

31

Production Levels and Trends

The United States was the fifth-largest producer of sugar in the world in 1999, trailing Brazil,

the European Union, India, and China (table 10). The United States contributed approximately

6 percent of the world sugar supply last year (table 10) and 60 percent of the total production

in North America in 1999.

U.S. production levels have been trending upward since 1990; and in 1999, production

climbed to a record 7.6 mmt (table 11). Both beet and cane sugar levels have been on the rise

for the past 3 years. Of the total amount of refined sugar produced in the United States, over

half is beet sugar (53 percent in 1999) and the remainder is cane sugar (figure 3).

Domestic Prices

In 1991, domestic producer prices for both raw and refined sugar experienced a considerable

decline from their 1990 levels (figure 4). Since then, prices have not been able to recover, but

from 1995 to 1999, domestic prices for raw and refined sugar have generally trended upward

(figure 4), remaining well above the loan rates of 18 and 22.9 cents, respectively. In the first

months of fiscal year 2000,73 however, prices took a strong downturn, falling below loan rate

levels for the first time in years. Increased production along with steady imports under TRQs

and slower growth in consumption of sugar led to an excess supply of sugar on the domestic

market. Prices did not withstand the pressure of the excess sugar; thus, large-scale forfeitures

resulted. 

One concern of the sugar industry is that retail prices for refined sugar and SCPs have been

rising at a faster rate than wholesale prices for raw and refined sugar in the last decade.74 As

a result, the price margins have been widening each year, creating greater disparity between

the price the processors receive for the bulk product and the price retailers receive for the

final, packaged product (figure 5). In 1999, retail prices for refined sugar were 62 and 104

percent higher than the wholesale price of refined beet and raw cane sugar, respectively (table

12). The margins have increased substantially since 1995. Consumer prices for retail products

containing sugar such as cereal, ice cream, candy, cookies, and cakes have increased since

1995, while producer prices have fallen from 1995 levels. Table 13 presents the producer

price index (PPI) levels for raw and refined sugar and the consumer price index (CPI) levels

for sugar and sweetener-containing products for the years 1995 through 1999. The PPI shows

a slight increase in the producer prices received for raw and refined sugar. In table 13, the PPI

is measured in July (i.e., the PPI is not averaged over the course of the year), explaining the

contradiction with the fall in absolute price levels in table 12. In comparison to the price

increases indicated by the CPI in sugar and sweetener-containing products, producer price

increases are marginal.
32

Table 10

Sugar: World production, consumption, imports, and exports, crop-years, 1995-991

 Country 1995 1996 1997 1998 1999

Change

95 to 99

Share of

1999

––––––––––– 1,000 metric tons, raw value ––––––––––– –––– Percent –––– 

Production:

Brazil ................................... 12,500 13,700 14,650 15,700 18,300 46.4 14.0

EU ..................................... 16,761 17,234 18,221 19,305 17,826 6.4 13.7

India .................................... 16,410 18,225 14,616 14,592 17,361 5.8 13.3

China ................................... 6,299 6,686 7,789 8,631 8,969 42.4 6.9

United States ............................. 7,191 6,686 6,536 7,276 7,597 5.6 5.8

Thailand ................................. 5,448 6,223 6,013 4,245 5,386 -1.1 4.1

Mexico .................................. 4,556 4,660 4,835 5,490 4,985 9.4 3.8

Australia ................................. 5,196 5,049 5,659 5,567 4,871 -6.3 3.7

Pakistan ................................. 3,212 2,643 2,560 3,805 3,791 18.0 2.9

Cuba .................................... 3,300 4,450 4,200 3,200 3,780 14.5 2.9

Other ................................... 35,251 36,744 37,832 37,396 37,596 6.7 28.8

Total World .......................... 116,124 122,300 122,911 125,207 130,462 12.3 100.0

Consumption:

India .................................... 13,841 14,820 15,697 16,700 16,977 22.7 13.7

EU ..................................... 14,659 14,146 14,332 14,307 14,256 -2.7 11.5

Brazil ................................... 8,000 8,100 8,500 8,800 9,100 13.8 7.3

United States ............................. 8,470 8,667 8,866 8,903 9,079 7.2 7.3

China ................................... 7,948 8,040 8,268 9,012 9,000 13.2 7.2

Russian Federation ........................ 4,900 5,000 5,100 4,960 4,995 1.9 4.0

Mexico .................................. 4,310 4,140 4,240 4,240 4,400 2.1 3.5

Pakistan ................................. 2,900 3,090 3,050 3,200 3,210 10.7 2.6

Indonesia ................................ 2,800 2,900 3,100 3,150 2,800 0.0 2.3

Japan ................................... 2,520 2,520 2,374 2,418 2,313 -8.2 1.9

Other ................................... 43,649 45,070 46,176 47,288 48,227 10.5 38.8

Total World .......................... 113,997 116,493 119,703 122,978 124,357 9.1 100.0

Imports:

Russian Federation ........................ 2,700 3,200 3,600 4,210 5,400 100.0 15.0

EU ..................................... 2,137 1,813 1,808 1,829 1,867 -12.6 5.2

Indonesia ................................ 301 919 1,091 921 1,788 494.0 5.0

United States ............................. 1,664 2,536 2,517 1,962 1,655 -0.5 4.6

Japan ................................... 1,703 1,673 1,608 1,592 1,542 -9.5 4.3

Korea ................................... 1,345 1,411 1,497 1,424 1,403 4.3 3.9

Malaysia ................................ 1,030 1,120 1,166 1,065 1,186 15.1 3.3

Canada ................................. 1,020 1,174 1,057 1,061 1,110 8.8 3.1

Algeria .................................. 990 1,000 920 925 940 -5.1 2.6

Iran .................................... 800 940 1,350 1,200 900 12.5 2.5

Other ................................... 16,598 18,342 19,118 19,747 18,129 9.2 50.5

Total World .......................... 30,288 34,128 35,732 35,936 35,920 18.6 100.0

Exports:

Brazil ................................... 4,300 5,800 5,800 7,200 8,750 103.5 24.4

EU ..................................... 5,449 4,629 5,228 6,361 5,329 -2.2 14.8

Australia ................................. 4,321 4,242 4,564 4,554 4,076 -5.7 11.4

Thailand ................................. 3,809 4,537 4,194 2,839 3,352 -12.0 9.3

Cuba ................................... 2,600 3,800 3,600 2,500 3,200 23.1 8.9

South Africa .............................. 369 399 1,056 1,160 1,355 267.2 3.8

Guatemala ............................... 931 923 1,075 1,361 1,086 16.6 3.0

Colombia ................................ 523 694 821 1,020 960 83.6 2.7

Mexico .................................. 235 587 750 1,224 590 151.1 1.6

Pakistan ................................. 349 0 0 628 540 54.7 1.5

Other ................................... 7,002 8517 8644 6549 6682 -9.7 18.6

Total World .......................... 30,288 34128 35732 35396 35920 18.6 100.0

1

 Crop years vary by country.

 Source: USDA, ERS Sugar and Sweetener Situation and Outlook Report, May 2000.
33

Figure 3

Sugar: U.S. production, 1995-99

Table 11

Sugar: U.S. production, 1995-991

Items 1995 1996 1997 1998 1999

––––––––––––– 1,000 metric tons, raw value2 ––––––––––––––

Production:

Beets ......................... 4,077 3,553 3,641 3,982 4,013

Cane ......................... 3,115 3,134 2,904 3,294 3,585

Total ..................... 7,192 6,687 6,545 7,276 7,598

–––––––––––––––––––––– Percent ––––––––––––––––––––––

Share of production:

Beets ......................... 57 53 56 55 53

Cane ......................... 43 47 44 45 47

––––––––––––––––––––– Million dollars ––––––––––––––––––

Value of production:

Beets3........................ 2,322 2,287 2,175 2,293 2,363

Cane4........................ 1,577 1,548 1,406 1,602 1,672

Total ..................... 3,899 3,835 3,581 3,895 4,035

1 Fiscal year refers to the 12-month period beginning October 1 and ending September 30 of the following

year. 

2

 Quantity converted to metric tons by multiplying short tons by .9072.

3

 Valued at wholesale domestic price for refined beet sugar (table 12).

4

 Valued at wholesale domestic price for raw cane sugar (table 12).

Note.—Total production may differ from figures in table 10 due to rounding.

Source: USDA, FSA, Sweetener Market Data Yearbook, fiscal year 1999 .
34

Figure 4

Sugar: Domestic and world prices, 1990-99 

Source: USDA, ERS, Sugar and Sweetener Situation and Outlook Report, Jan. 2000.
35

Figure 5

Sugar: Price margins, 1990-99

Source: USDA, ERS, Sugar and Sweetener Situation and Outlook Report, Jan. 2000.
36

Table 12

Sugar: World prices, U.S. prices, and price margins, 1995-991

Prices/margins 1995 1996 1997 1998 1999

Change

 95-99

 –––––––––– Cents per pound ––––––––– Percent

World prices:

 Raw .................................. 13.44 12.24 12.06 9.68 6.54 -51.3

 Refined ................................ 17.99 16.64 14.33 11.59 9.13 -49.2

U.S. prices:

 Raw .................................. 22.96 22.40 21.96 22.06 21.16 -7.8

 Refined beet (wholesale) ................... 25.83 29.20 27.09 26.12 26.71 3.4

 Refined retail ........................... 39.83 41.79 43.26 42.98 43.27 8.6

 ––––––––––––– Percent ––––––––––––––

Price margins:

 U.S. raw - World raw sugar ................. 71 83 82 128 224 153

 World refined sugar - U.S. refined retail ....... 134 143 186 247 347 213

 U.S. raw - U.S. refined retail sugar ........... 73 87 97 95 104 31

 U.S. refined beet (wholesale) - U.S. refined

 retail sugar ............................ 54 43 60 65 62 8

 1 Fiscal year is the period beginning Oct. 1 of the previous year and ending Sept. 30.

Source: USDA, ERS, Sugar and Sweetener Situation and Outlook Report, Jan. 2000.

Table 13

U.S. producer price index for sugar and consumer price index for sugar and selected sweetenercontaining products

Indices 1995 1996 1997 1998 1999

Change

1995-99

 ––––––––––––– June 1992 = 100 –––––––––––– Percent

Producer price index

 Raw cane sugar ................... 112.1 116.5 115.5 113.8 114.1 1.78

 Refined beet sugar ................. 109.2 109.9 115.9 116.8 113.0 3.48

 Refined cane sugar ................. 123.3 124.5 127.9 127.1 123.7 0.32

 –––––––––––––– 1982-84 = 100 ––––––––––––––

Consumer price index:

 Nonalcoholic beverages ............. 131.7 128.6 133.4 133.0 134.3 1.97

 Sugar and sweets .................. 137.5 143.7 147.8 150.2 152.3 10.76

 Flour and prepared flour mixes ........ 140.8 151.6 156.2 159.1 160.9 14.28

 Cereal ........................... 192.5 189.9 187.5 189.9 195.2 1.40

 Cookies, fresh cakes and cupcakes .... 169.1 174.1 179.2 181.2 185.0 9.40

 Other bakery products .............. 168.3 176.5 180.2 184.3 186.7 10.93

 Ice cream and related products ........ 137.4 144.6 150.6 155.5 161.7 17.69

Source: USDA, ERS, Sugar and Sweetener Situation and Outlook Report, Sept. 2000.
 

75 Tariff lines for sugar cane and sugar beets from chapter 12 are also included.

 

76 Only HTS 1701.11 is subject to the raw cane sugar TRQ. Raw beet sugar imported under

1701.12 is classified under the refined sugar TRQ.

37

U.S. Trade

Overview

The United States administers a TRQ for sugar and limits in-quota imports to approximately

1.25 mmt in accordance with the URAA. Over-quota imports are essentially nonexistent, as

they face a prohibitive tariff of 242 percent ad valorem equivalent. Exports of U.S. sugar are

very small and occur only as a result of the sugar re-export program, as the domestic price

for sugar exceeds the world price by nearly 250 percent and creates no incentive for U.S.

exporters to export their products.

U.S. Imports

Import levels

The United States is a net importer of sugar and in 1999 was the world’s fourth-largest

importer of the commodity behind the EU, the Russian Federation, and Indonesia. In 1999,

the total value of imports of sugar in raw and refined forms totaled approximately $640

million (see table A-1). Total import levels of sugar on a raw equivalent basis for 1995

through 1999 are provided in table 9. In-quota imports by country are found in table 18.

Products imported

Sugar is separately imported into the United States under 34 different 8-digit tariff lines in

chapter 17 and one tariff line in chapter 21 of the HTS. For convenience, raw and refined

sugar tariff lines are provided in table A-1.75

Twenty of the 34 sugar tariff lines in chapter 17 are under heading 1701 and cover cane or

beet sugar and chemically pure sucrose in solid form (including powder). Raw cane and raw

beet sugars are imported under subheadings 1701.11 and 1701.12, respectively.76 Raw sugars

enter in the form of brown crystals, the brown color resulting from the presence of impurities.

The impurities present in raw sugar make it unfit for human consumption; however, a form

of raw sugar imported into the United States, called turbinado sugar has a high enough degree

of purity so as to be safely consumed by humans. Most of the raw sugar is imported under

1701.11 and 1701.12, but generally requires further processing at a refinery.

Refined cane or beet sugars are imported under subheadings 1701.91, 1701.99, 1702.90.10,

and 2106.90.44. Refined sugar enters in varying forms and in varying degrees of fineness,

coloring, and flavoring. Pure refined sugar, in solid form, not containing any added flavoring

or coloring, falls in subheading 1701.99 in forms such as retail packets, cubes, slabs, bulk

packages, and pure sugar candies (e.g., rock candy and pearl sugar). Refined sugar, in solid
 

77 Conversation with National Import Specialist, U.S. Customs, May 9, 2000.

38

form, containing added coloring or flavoring, is provided for in subheading 1701.91 as

products such as flavored sugars (e.g., cinnamon sugar), sugar decorations (e.g., cake

decorations), and dyed sugar candies (e.g., rock candy with red or blue dye), to name a few.

Refined sugar in the form of sugar syrup or ‘liquid sugar’ is imported under subheadings

1702.90.10 (in-quota) and 1702.90.20 (over-quota) when it contains sugar derived from cane

or beet, no more than 6 percent non-soluble solids (i.e., approximately 94 percent refined

sugar), and no added flavoring or coloring. Refined sugar can also be imported as a sugar

syrup under 2106.90.44 and 2106.90.46 when it contains coloring, but no added flavoring.

Imports of this product are generally near zero, as it is rare to market liquid sugar with added

coloring but without added flavoring as well.77 When sugar syrups 

contain no added flavoring or coloring, subheadings 1702.90.54 and 1702.90.58 apply. Other

sugars containing over 65 percent by dry weight of sugar enter the United States under

1702.90.64 and 1702.90.68.

Principal import suppliers

The five principal import suppliers of raw sugar to the United States are Brazil, the

Dominican Republic, the Philippines, Australia, and Guatemala, in that order (table 14). In

1999, these five countries supplied approximately 56 percent of total U.S. raw sugar imports,

with Brazil supplying 17 percent; the Dominican Republic 14 percent; the Philippines 14

percent; Australia 7 percent; and Guatemala 5 percent. Total imports of raw sugar from the

aforementioned countries were valued at $252 million in 1999, which was over 60 percent of

the total value of raw sugar imports (table 14). Most of the raw sugar imported into the United

States is raw cane sugar.

Mexico, Canada, Guatemala, Paraguay, and Brazil dominate U.S. imports of pure refined

sugar; imports from these countries comprised 91 percent of total quantity and 88 percent of

total value of pure refined sugar imports in 1999 (table 14). The Philippines, Mauritius, Hong

Kong, Canada, and Italy are the top five exporters to the United States of refined sugar in

solid form, containing added coloring or flavoring (not shown in table 14). Switzerland,

China, and Canada are the main exporters of sugar syrups to the United States (not shown in

table 14).

U.S. Trade Measures

Tariff measures

Table A1 shows the column 1 rates of duty as of January 1, 2000 for articles included in this

summary. Tariff rates for cane and beet sugar are set forth in heading 1701 of chapter 17 of

the HTS. Criteria used to classify sugar under consideration in this summary are included in

the General Rules of Interpretation of the HTS and in chapter notes and tariff descriptions.

In addition, “raw sugar” is defined in subheading note 1 to chapter 17 as “...sugar whose

content of sucrose by weight, in the dry state, corresponds to a polarimeter reading of less than

99.5 degrees,” where “degree” means International Sugar Degree as determined by a

polarimetric test performed in accordance with procedures recognized by the International

Commission for Uniform Methods of Sugar Analysis.
39

Table 14

Raw and refined sugar: U.S. imports for consumption, by country, 1995-99

 Products 1995 1996 1997 1998 1999

Change

1995-99 Share of 1999

––––––––––––––––– 1,000 metric tons ––––––––––––––––– ––– Percent ––– 

Raw sugar:1

Imports:

Brazil ................... 209 317 347 213 174 -16.8 16.9

Dominican Republic ....... 180 330 480 292 143 -20.6 13.9

Philippines .............. 140 260 319 183 141 0.0 13.7

Australia ................ 124 230 130 148 75 -39.5 7.3

Guatemala .............. 53 117 93 74 46 -13.5 4.5

Other countries ........... 610 938 942 765 448 -26.6 43.6

Total ................ 1,316 2,192 2,311 1,675 1,027 100.0 100.0

–––––––––––––––––– Million dollars ––––––––––––––––––– 

Import value:

Brazil ................... 91 126 117 94 69 -24.2 16.8

Dominican Republic ....... 84 150 173 114 65 -22.6 15.8

Philippines .............. 67 98 101 82 65 -3.0 15.8

Australia ................ 52 102 57 63 33 -36.5 8.0

Guatemala .............. 21 55 33 31 20 -4.8 4.9

Other countries ........... 269 371 347 276 158 -41.2 38.6

Total ................ 584 902 828 660 410 -29.8 100.0

––––––––––––––– Dollars per metric tons ––––––––––––––– 

Unit value:

Brazil .................. 435 397 337 441 397 -8.9 (

2

)

Dominican Republic ....... 467 455 360 390 455 -2.6 (

2

)

Philippines .............. 479 377 317 448 461 -3.7 (

2

)

Australia ................ 419 443 438 426 440 4.9 (

2

)

Guatemala .............. 396 470 355 419 435 9.7 (

2

)

Other countries .......... 441 395 368 360 353 -19.9 (

2

)

Average ............. 444 411 358 394 399 -10.0 (

2

)

–––––––––––––––– 1,000 metric tons ––––––––––––––––– 

Refined sugar:

3

Imports:

Mexico ................. 0 14.1 20.3 13.3 18.1 100.0 34.8

Canada ................. 22.8 7.6 11.6 11 12 47.4 24.4

Guatemala .............. 0 2.6 1.4 5.2 9.6 100.0 19.5

Paraguay ............... 0 0 7.3 3 4.9 100.0 10.0

Brazil ................... 4.3 2.1 2.8 0.7 1.9 -55.8 2.6

Other countries ........... 13 13.4 2.3 2.3 4.3 -66.9 8.7

Total ................ 40.1 39.8 38.4 35.5 50.8 26.7 100.0

–––––––––––––––––– Million dollars ––––––––––––––––––– 

Import value:

Mexico ................. 0 6.6 10.6 5 8.6 100.0 35.1

Canada ................. 9.4 4.6 6 5.9 6.4 31.9 26.1

Guatemala .............. 0 0.8 0.4 2.4 3.4 100.0 13.8

Paraguay ............... 0 0 0 1.8 2.6 100.0 10.7

Brazil ................... 2.6 1.1 1 0.3 0.6 -323.3 2.5

Other countries ........... 6.9 6 2.4 1.9 2.9 -140.3 11.7

Total ................ 18.9 19.2 20.4 17.3 24.4 22.5 100.0

–––––––––––––– Dollars per metric tons –––––––––––––––– 

Unit value:

Mexico ................. 0 470 521 393 500 100.0 (

2

)

Canada ................. 497 609 518 536 531 6.3 (

2

)

Guatemala .............. 0 308 286 462 354 100.0 (

2

)

Paraguay ............... 0 0 0 597 531 100.0 (

2

)

Brazil .................. 605 524 357 429 462 -23.6 (

2

)

Other countries .......... 529 450 1,043 826 674 27.4 (

2

)

Average ............. 522 482 531 497 498 -4.6 (

2

)

1

 Includes raw cane and beet sugarHTS codes 1701.11.10, 1701.11.50, 1701.12.10, and 1701.12.50.

2

 Not available.

3

 Excludes refined sugar with added flavoring and/or coloring, SCPs, and sugar syrups. Includes pure refined sugarHTS codes 1701.99.10

and 1701.99.50. 

Source: U.S. Department of Commerce, U.S. Treasury, and U.S. International Trade Commission.
 

78 Technical tariffs, as classified by the WTO, include those tariffs based upon technical

formulations such as those based on alcohol content, sugar content, or the value of the imported

product.

 

79 Duty-free preferential rates are offered to eligible products in accordance with the Caribbean

Basin Economic Recovery Act; the United States-Israel Free Trade Implementation Act of 1985

(IFTA); the Andean Free -Trade Preference Act (AFTPA); Generalized System of Preferences

(GSP); the North American Free-Trade Agreement (NAFTA); and the Caribbean Basin

Economic Recovery Act (CBERA). 

 

80 TRQs were also implemented for SCPs.

 

81 The initial over-quota tariff rates for all three commodities were technical tariff rates of

37.386 cents per kilogram less 0.529 cent per kilogram for each degree under 100 degrees and

fractions of a degree in proportion, but not less than 24.161 cents per kilogram. 

40

Tracing the appropriate tariff rates for sugar (and SCPs) becomes quite complicated due to

policy structure (e.g., TRQs and special safeguards (SSGs)), varying tariff types (e.g., ad

valorem, specific, compound, and technical tariffs78), preferential agreements (e.g., NAFTA,

CBERA), product identity, and an intricate footnote scheme that cross-references provisions

in several HTS chapters. Preferential rates are offered for 19 of the 20 rate lines listed in

heading 1701, and about 65 percent of the tariff lines included in heading 1701 make available

a preferential rate of “Free.”79 Appendix B provides a review of the structure of the HTS for

sugar and SCPs, which clarifies the process by which tariff rates and import quantities are

determined. Also, for further understanding of the preferential tariff rates, an explanation of

tariff and trade agreement terms is given in appendix C.

While tariff measures in the form of TRQs are currently used to regulate the level of sugar

imports into the United States, absolute import quotas under section 22 of the Agricultural

Adjustment Act and other authorities were the primary means prior to 1991. During the time

absolute quotas were administered, only a single tariff line existed for each of the following:

raw cane sugar, raw beet sugar, and refined sugar in chapter 17 of the HTS. Subheading

1701.11 listed the raw cane sugar tariff rate, 1701.12 listed the raw beet sugar tariff rate, and

1701.91 listed the tariff rate for refined sugar. The column 1-general rates of duty for each

of these products was “1.4606 cents per kilogram less .020668 cent per kilogram for each

degree under 100 degrees and fractions of a degree in proportion, but not less than 0.943854

cent per kilogram.” During this period, column 1-special in-quota duty-free tariff rates existed

for GSP countries, CBERA countries, and Israel. Thus, column 1 tariff rates (general and

special) applied to imports from those countries that owned a portion of the import quota. 

As a result of a GATT panel ruling, on September 13, 1990, absolute quotas for raw cane and

refined sugar were converted to TRQs, creating a two-tiered tariff system that offered a low

in-quota tariff rate for imports from countries holding portions of the import quota and a

higher over-quota tariff rate for all other imports.80 This system was designed to provide the

opportunity for over-quota imports if importers were willing to pay the over-quota tariff rate.

Over-quota tariff rates were added to the HTS for raw cane sugar, raw beet sugar and refined

sugar.81 In addition, SSGs, based upon the value of the imported product, were automatically

applied to over-quota tariff imports, increasing the actual level of protection to equal the overquota tariff rate plus the SSG.

When the United States negotiated NAFTA with Canada and Mexico, they were given access

to the preferential in-quota tariff rate of “Free,” but Canada was granted no preferences for
 

82 For the most part, the implementation period for developed countries spanned 1995 through

2000 and for developing countries 1995 through 2004.

41

over-quota tariff rates. Mexico, on the other hand, was allocated its own TRQ, which was not

part of the already established global TRQ, and was granted preferential over-quota tariff

rates. Table A-2 lists the preferential tariff rates for Mexico found in chapter 99, subchapter

VI of the HTS. 

The two-tiered tariff quota regime that the United States had implemented in 1990 was

continued under the URAA, and so structurally the URAA was not difficult to implement (i.e.,

the structure of the HTS for sugar was not changed as a result of the URAA). As a condition

of the URAA, all countries agreed to convert non-tariff barriers (e.g., absolute import quotas,

embargoes, etc.) to tariffs (known as the process of ‘tariffication’) by calculating the actual

gap that existed between domestic and world prices in the base period, 1986-1988. In addition,

each country agreed to reduce those tariffs by an unweighted average of 36 percent (15

percent minimum per tariff line) over the implementation period.82

During the process of tariffication, the United States actually increased its over-quota tariffs

from 1994 levels of 16.96 cents per pound for raw and refined sugar to 17.86 cents per pound

for raw sugar and to 19.07 cents per pound for refined sugar. Table 15 illustrates the process

of tariffication performed by the United States for raw and refined sugar.

Table 15

Raw and refined sugar: URAA base period world and domestic prices and URAA over-quota tariff

commitment levels

No. Description Raw sugar Refined sugar

 Cents

per

pound

Cents

 per 

kilogram

 Cents

per

pound

 Cents

per

kilogram

i

ii

iii

iv

v

vi

vii

1986-88 average domestic price1.............................

1986-88 average world price1................................

1986-88 actual domestic and world price gap = (i) - (ii) ............

Initial URAA over-quota tariff commitment level2

Difference between initial over-quota tariff and actual price

gap = (iv) - (iii) .........................................

2000 final over-quota tariff level2.............................

Difference between final over-quota tariff and actual price

gap = (vi) - (iii) ........................................

21.63

7.64

13.99

18.08

4.09

15.36

1.37

47.69

16.84

30.85

39.86

9.01

33.86

3.01

24.14

9.74

14.40

19.07

4.67

16.21

1.81

53.22

21.47

31.75

42.04

10.29

35.74

3.99

1

 USDA, ERS, Sugar and Sweetener Situation and Outlook Report, Jan. 2000.

2

 URAA Schedule of Commitments: Schedule XX–United States, Part I, Section I-A.

Note.—URAA base period is 1986-88. 
 

83 B.W. Dyer & Company, Dyergram, “Mexico Dispute to go to NAFTA Panel After

Negotiations Fail,” Aug. 24, 2000.

42

As shown in table 15, using price information from USDA and scheduled tariff levels, overquota tariffs were set above the actual gap that existed between the domestic and world prices

during the base period (at 4.09 cents per pound and 4.67 cents per pound for raw and refined

sugar, respectively). Also, the price and tariff information reported in table 15 shows that even

after tariff reductions of 15 percent (table 16), the 2000 final over-quota tariff levels remain

above the gap between domestic and world prices that existed in the base period (at 1.37 cents

per pound and 1.81 cents per pound for raw and refined sugar, respectively).

Table 16 provides the scheduled base level tariffs and the tariff reduction commitments made

by the United States during the URAA in both specific and ad valorem equivalent terms. The

United States reduced all over-quota sugar tariffs by the required minimum of 15 percent. Inquota tariffs remained at their preexisting levels. SSGs were scheduled with the WTO as well.

Table A-3 shows the value-based and quantity-based SSGs that were scheduled during the

URAA. Value-based SSGs are automatically applied to over-quota imports, effectively

increasing the amount of the over-quota tariffs by the level of the SSGs. Shipments from

Mexico and Canada are not subject to SSGs. 

Nontariff measures

As mentioned earlier, TRQs for raw and refined sugar were first implemented in 1990,

negotiated separately with Mexico as part of NAFTA, and scheduled with the WTO during

the URAA.

NAFTA tariff-rate quotas

The U.S. schedule of concessions under NAFTA granted Mexico its own TRQs for sugar,

under which the country may ship both raw and refined sugar. The level of the TRQs for raw

and refined sugar for Mexico, and the precise conditions under which Mexico may ship sugar,

are not completely published in the NAFTA or in the HTS, but rather, in what is termed a

“side letter” (side-agreement) to the NAFTA. Under the provisions of the side letter, the

quantitative limitations on imports for raw and refined sugar from Mexico are as follows: In

years 1-6 (1994-1999), the greater of 7,258 metric tons (minimum boat load) or the “other

country” share of the TRQ if Mexico is not a net surplus producer or 25,000 metric tons if

Mexico is a net surplus producer; in years 7-14 (2000-2007), the greater of 7,258 metric tons

or the “other country” share of the TRQ if Mexico is not a net surplus producer or surplus

production up to 250,000 metric tons; in year 15 (2008), the TRQs are eliminated, allowing

for a common market for sugar between the United States and Mexico.

The validity of the side letter has been brought into question by Mexico, causing the United

States and Mexico to enter into negotiations over the interpretation of ‘net surplus producer’

and the level of the yearly TRQ allotments in comparison to the original NAFTA provisions.83

Under the original NAFTA provisions, ‘net surplus producer’ status was to be determined

based on sugar production minus sugar consumption, but under the side letter, net surplus

producer is stated to be sugar production minus the sum of sugar consumption
43

Table 16

Raw and refined sugar: Over-quota tariff reduction commitments under the URAA

Commodity (HTS) Base 1995 1996 1997 1998 1999 2000

Total tariff

reduction

Cents per

pound

Cents

per

kilogram

Cents

per

pound

Cents

per

kilogram

Cents

per 

pound

Cents

per

kilogram

Cents

per

pound

Cents

per

kilogram

Cents

per 

pound

Cents

per

kilogram

Cents

per

pound

Cents

per

kilogram

Cents

per 

pound

Cents

per

kilogram Percent

Raw sugar:

1

1701.11.50 ....... 18.08 39.86 17.64 38.89 17.17 37.85 16.72 36.86 16.27 35.86 15.82 34.88 15.36 33.86 15

Refined sugar:

2

1701.12.50 ....... 19.07 42.04 18.6 41.00 18.12 39.95 17.64 38.89 17.16 37.83 16.69 36.79 16.21 35.74 15

1701.12.50 ....... 19.07 42.04 18.6 41.00 18.12 39.95 17.64 38.89 17.16 37.83 16.69 36.79 16.21 35.74 15

1701.12.50 ....... 19.07 42.04 18.6 41.00 18.12 39.95 17.64 38.89 17.16 37.83 16.69 36.79 16.21 35.74 15

1701.12.50 ....... 19.07 42.04 18.6 41.00 18.12 39.95 17.64 38.89 17.16 37.83 16.69 36.79 16.21 35.74 15

1

 The corresponding in-quota tariff rate for raw sugar is 1701.11.10.

2

 The corresponding in-quota tariff rates for refined sugar are 1701.12.10, 1701.91.10, 1701.99.10, and 2106.90.44, respectively.

Note.—Over quota imports are subject to additional special safeguard duties found in chapter 99, subchapter IV of the HTS. Thus, the actual over quota tariff rate

charged to nonquota holders is the rate listed above plus the additional safeguard rate based upon the value of the imported product.

Source: URAA Schedule of Commitments: Schedule XX–United States, Part I, Section I-A.
44

and HFCS consumption. The net surplus producer calculation is used in the determination of

the size of Mexico’s TRQ each year. Under the original NAFTA terms, as of year 7, if

Mexico had been a net surplus producer for at least one year, the country would gain access

for 150,000 metric tons. In years 8-14, if Mexico had been a net surplus producer for one

year, the amount would increase to 110 percent of the previous year’s access; otherwise, if

Mexico had been a net surplus producer for 2 years, all surplus production could be imported

into the United States. After the calculation for ‘net surplus producer’ is performed, the United

States Trade Representative (USTR) announces Mexico’s TRQ amount in conjunction with

the overall TRQ for raw and refined sugar. In 1996, Mexico was not considered a net surplus

producer, so the USTR allocated 7,258 metric tons of the raw sugar quota and 7,258 metric

tons of the refined sugar quota to Mexico. In the years 1997 through 2000, Mexico was

determined to be a net surplus producer, so under the provisions of the side letter, was

permitted to ship 25,000 metric tons of raw or refined sugar. The USTR “double allocates”

TRQ amounts to Mexico. That is, Mexico was allocated 25,000 metric tons of the raw sugar

TRQ and 25,000 metric tons of the refined sugar TRQ; however, Mexico was permitted to

export half of the total amount (up to 25,000 metric tons) allocated by the USTR (see table

18).

Mexico has contested the allocation level for year 7, which under the side letter is for

quantities up to 250,000 metric tons. The Mexican Government` believes that pursuant to the

original NAFTA, Mexico should be allowed to export all surplus production to the United

States. The two countries have been in extensive negotiations over the issue; in recent months,

Mexico has announced that it will take the United States to a NAFTA dispute settlement

panel. In the meantime, based upon net surplus producer calculations, the United States

allocated 116,000 metric tons to Mexico for fiscal year 2001. As of the date of preparation

of this summary, the issue has not been resolved. 

URAA tariff-rate quotas

As part of the URAA, each country was required to maintain “current access” (CA) (at the

time of negotiation) to their markets and if that access was not at least 5 percent of domestic

consumption in the base period (1986-88), then the country was required to make a “minimum

access commitment” (MAC) of 3 percent of domestic consumption in the base period,

increasing to 5 percent by the year 2000. 

The TRQ was selected by the WTO members as an acceptable policy instrument that met the

criteria for both ending absolute quotas and ensuring market access. Thus, several countries

scheduled TRQs with the WTO and agreed to increase access (or maintain access if already

at 5 percent) to MAC levels during the 5-year implementation period. Because the United

States had already converted its absolute import quotas to TRQs for sugar years earlier, the

country officially scheduled their TRQ levels for raw and refined sugar with the WTO. 

Each year, the USDA calculates TRQ levels and the USTR announces the yearly country-bycountry allocation amounts. The United States tends to announce actual TRQ levels that

exceed the scheduled minimum TRQ amounts each year for both raw and refined sugar. Table
 

84 NAFTA TRQs are included in the actual annual TRQ allocation, but are considered to be in

addition to the WTO TRQ.

 

85 See D.S. Boughner, “The Economics of Two-tiered Tariff-rate Import Quotas: An Empirical

Application to the United States Dairy Industry,” M.S. thesis, Cornell University, 1999 for details

on U.S. dairy TRQs.

45

17 provides the scheduled WTO (and NAFTA)84 TRQs versus the actual announced TRQ

amounts for 1996 through 2000. 

Table 17

Raw and refined sugar: U.S. access commitment levels under the URAA and actual TRQ

allocation levels

Fiscal year URAA commitment Actual TRQ allocation1 Difference 

 –––––––––––––– Metric tons ––––––––––––––

Raw sugar:

 1996 .................

 1997 .................

 1998 .................

 1999 .................

 2000 .................

1,117,195

1,117,195

1,117,195

1,117,195

1,117,195

2,167,160

2,100,001

1,600,000

1,164,937

1,135,000

1,049,965

982,806

482,805

47,742

17,805

Refined sugar:

 1996 .................

 1997 .................

 1998 .................

 1999 .................

 2000 .................

22,000

22,000

22,000

22,000

22,000

22,000

47,000

50,000

50,000

60,000

0

25,000

28,000

28,000

38,000

 1 Mexico is included in these actual TRQ allocations. 

Note.—Mexico is allocated 25,000 metric tons of the raw sugar TRQ and 25,000 metric tons of the refined sugar

TRQ; however, Mexico is limited to shipping 25,000 metric tons in total of either raw or refined sugar. Thus,

Mexico’s TRQ is double allocated in this table. USTR double allocated to Mexico in the years 1995-2000.

Table 18 lists total TRQ imports along with individual country allocations and TRQ fill rates.

In aggregate, the TRQs for raw and refined sugar have high fill rates–the overall fill rate

reached almost 96 percent in 1999. Quota holding countries have an incentive to fill their

portion of the TRQ, as the TRQ effectively raises the export price to the foreign producer

equal to the difference between the domestic price in the United States and the world price

(i.e., the exporting country captures virtually all of the economic rents created by the TRQ).

The Dominican Republic, Brazil, Philippines, and Australia hold the largest allocations and

generally export the entire amount of their llotments. Most other individual country allocations

also exhibit high fill rates, although there are some exceptions. Some countries that own

minuscule amounts of the TRQ (e.g., Haiti, Gabon, and Cote D’Ivoire) appear to have

difficulty filling their quota each year. These amounts are not reallocated to other countries,

but rather go unused. There are no use-it-or-lose-it provisions as in the case of U.S. dairy

TRQs,85 so countries receive the same prorated share of the yearly TRQ regardless of whether

or not their quota was filled in the previous year. 
46

Table 18

U.S. raw and refined sugar TRQ allocations and actual imports, by country, 1996-99 

1996 1997 1998 1999

Country

TRQ

allocation

Actual

imports

Fill

rate

TRQ

allocation

Actual

imports

Fill

rate

TRQ

allocation

Actual

imports

Fill

rate

TRQ

allocation

Actual

imports

Fill

rate

––– Metric tons ––– Percent ––– Metric tons ––– Percent ––– Metric tons ––– Percent –––– Metric tons –––– Percent

Raw cane sugar:

Dominican 

Republic .......... 350,940 329,516 93.9 357,060 355,454 99.6 268,350 267,130 99.5 190,657 190,621 100.0

Brazil .............. 323,271 323,268 100.0 294,169 294,207 100.0 221,084 220,358 99.7 157,076 157,076 100.0

Philippines .......... 237,422 237,110 99.9 273,881 254,431 92.9 205,837 202,090 98.2 146,243 145,448 99.5

Australia ............ 185,044 185,044 100.0 168,386 168,756 100.2 126,552 127,062 100.4 89,912 89,402 99.4

Guatemala .......... 107,014 107,014 100.0 97,380 97,884 100.5 73,186 72,907 99.6 51,997 51,997 100.0

Argentina ........... 95,867 95,867 100.0 87,236 87,226 100.0 65,563 65,517 99.9 46,581 45,178 97.0

Peru ............... 91,407 91,407 100.0 83,179 83,310 100.2 62,513 62,578 100.1 44,415 44,350 99.9

Panama ............ 57,825 48,158 83.3 58,834 55,049 93.6 44,217 44,138 99.8 31,415 31,412 100.0

El Salvador .......... 57,966 57,966 100.0 52,748 52,748 100.0 39,643 39,925 100.7 28,165 27,961 99.3

Colombia ........... 53,506 53,126 99.3 48,690 53,177 109.2 36,593 33,751 92.2 25,999 23,685 91.1

Mexico2............. 7,258 6,973 96.1 25,000 23,892 95.6 25,000 25,000 100.0 25,000 23,715 94.9

South Africa ......... 51,278 51,278 100.0 46,661 46,385 99.4 35,069 35,173 100.3 24,915 24,915 100.0

Nicaragua ........... 46,819 45,901 98.0 42,604 42,417 99.6 32,019 32,137 100.4 22,749 22,584 99.3

Swaziland ........... 35,673 35,673 100.0 32,460 32,720 100.8 24,395 24,480 100.3 17,332 17,332 100.0

Costa Rica .......... 33,411 33,441 100.1 30,431 30,519 100.3 22,871 22,835 99.8 16,249 16,249 100.0

Thailand ............ 31,213 31,212 100.0 28,403 28,481 100.3 21,346 21,313 99.8 15,166 15,109 99.6

Mozambique ......... 28,983 25,686 88.6 26,374 26,689 101.2 19,821 20,083 101.3 14,083 14,083 100.0

Guyana ............. 26,754 26,754 100.0 24,345 24,558 100.9 18,297 18,329 100.2 12,999 12,999 100.0

Taiwan ............. 26,754 26,754 100.0 24,345 24,374 100.1 18,297 18,300 100.0 12,999 12,999 100.0

Zimbabwe ........... 26,754 26,754 100.0 24,345 24,420 100.3 18,297 18,244 99.7 12,999 12,999 100.0

Mauritius ............ 26,754 23,695 88.6 24,345 24,488 100.6 18,297 18,526 101.3 12,999 5,941 45.7

Belize .............. 24,523 24,524 100.0 22,316 22,420 100.5 16,772 16,796 100.1 11,916 11,916 100.0

Ecuador ............ 24,523 24,523 100.0 22,316 22,353 100.2 16,772 16,772 100.0 11,916 11,916 100.0

Jamaica ............ 24,523 24,523 100.0 22,316 22,068 98.9 16,772 16,616 99.1 11,916 11,742 98.5

Honduras ........... 22,294 20,173 90.5 20,288 20,339 100.3 15,247 15,317 100.5 10,833 10,833 100.0

Malawi ............. 22,294 17,970 80.6 20,288 10,847 53.5 15,247 11,968 78.5 10,833 10,833 100.0

Fiji ................. 20,065 20,065 100.0 18,259 18,355 100.5 13,722 10,795 78.7 9,750 9,750 100.0

Bolivia .............. 17,835 17,660 99.0 16,230 16,339 100.7 12,198 11,413 93.6 8,666 8,555 98.7

India ............... 15,951 14,311 89.7 16,230 16,076 99.1 12,198 12,554 102.9 8,666 8,503 98.1

Trinidad-Tobago ...... 15,606 15,606 100.0 14,201 14,164 99.7 10,673 10,946 102.6 7,583 7,249 95.6

Barbados ........... 12,311 0 0 11,359 0 0 7,830 0 0 7,583 0 0

Uruguay ............ 7,258 7,023 96.8 7,258 6,997 96.4 7,258 7,404 102.0 7,258 7,258 100.0

Papua New Guinea .... 7,258 0 0 7,258 7,362 101.4 7,258 104 1.4 7,258 7,258 100.0

Madagascar ......... 7,258 7,258 100.0 7,258 7,307 100.7 7,258 7,312 100.7 7,258 7,059 97.3

See footnotes at end of table.
47

Table 18–Continued

U.S. raw and refined sugar TRQ allocations and actual imports, by country, 1996-99 

1996 1997 1998 1999

Country

TRQ

allocation

Actual

imports

Fill

rate

TRQ

allocation

Actual

imports

Fill

rate

TRQ

allocation

Actual

imports

Fill

rate

TRQ

allocation

Actual

imports

Fill

rate

––– Metric tons ––– Percent ––– Metric tons ––– Percent ––– Metric tons ––– Percent –––– Metric tons –––– Percent

Paraguay ............. 7,258 7,258 100.0 7,258 5,934 81.8 7,258 5,023 69.2 7,258 6,976 96.1

Congo ............... 7,258 5,643 77.7 7,258 7,312 100.7 7,258 7,296 100.5 7,258 6,891 94.9

St. Kitts and Nevis ...... 7,258 4,096 56.4 7,258 7,219 99.5 7,258 7,237 99.7 7,258 0 0

Cote D'Ivoire .......... 7,258 80 1.1 7,258 7,289 100.4 7,258 31 0.4 7,258 0 0

Haiti ................ 7,258 0 0 7,258 0 0 7,258 0 0 7,258 0 0

Gabon ............... 7,258 0 0 7,258 0 0 7,258 0 0 7,258 0 0

 Total raw came .... 2,167,160 2,073,310 95.7 2,100,001 2,043,566 97.3 1,600,000 1,547,460 96.7 1,164,934 1,112,794 95.5

Refined sugars:3, 4

Mexico (NAFTA) ....... — — 25,000 23,892 95.6 25,000 25,000 100.0 25,000 23,715 94.9

Mexico (WTO) ......... — — — — — 2,954 2,954 100.0 2,954 2,954 100.0

Canada .............. — — — — — 10,300 9,521 92.4 10,300 10,300 100.0

Specialty sugar ........ 1,656 129 7.8 1,656 1,656 100.0 4,656 4,367 93.8 4,656 4,656 100.0

Other refined

 sugars ............. 20,344 20,344 100.0 20,344 20,344 100.0 7,090 7,090 100.0 7,090 7,090 100.0

 Total refined ....... 22,000 20,473 93.1 47,000 22,000 46.8 50,000 48,932 97.9 50,000 48,715 97

Grand total ............ 2,189,160 2,093,783 95.6 2,147,001 2,065,566 96.2 1,650,000 1,571,392 95.2 1,189,934 1,137,794 95.6

1

 The raw cane sugar TRQ of 1,117,195 metric tons applies to tariff line 1701.11.10 found in additional note 5(a), Chapter 17 of the Harmonized Tariff

Schedule. The TRQ amount announced yearly by USTR differs from what is listed in the HTS.

2

 Mexico may ship either raw or refined sugar totaling 25,000 metric tons; however Mexico is allocated 25,000 metric tons of both the raw cane sugar TRQ and

25,000 metric tons of the refined sugar TRQ.

3

 The refined sugar TRQ of 22,000 metric tons applies to tariff lines 1701.12.10, 1701.91.10, 1701.99.10, 1702.90.10, 2106.90.44 found in additional note 5(a),

Chapter 17 of the Harmonized Tariff Schedule. The TRQ amount announced yearly by USTR differs from what is listed in the HTS.

4

 The refined sugar TRQ set at 50,000 metric tons for 1998 and 1999 was allocated as follows: Canada 10,300; Mexico 25,000 under NAFTA and 2,954 under

WTO; FCFS 7,090; and FCFS specialty sugars of 4,656.

Note.—TRQs are allocated on a fiscal-year basis.

Source: USDA, ERS, Sugar and Sweetener Situation and Outlook Report, May 2000.
 

86 USITC, Sugar from the European Union; Sugar from Belgium, France and Germany; and

Sugar from Canada, Investigation Nos. 104-TAA-7 (Review); AA1921-198-200 (Review); and

731-TA-3 (Review), Publication 3238, Sept. 1999.

 

87 “PSE,” as defined by the OECD, is an indicator of the value of monetary transfers to

agriculture resulting from agricultural policies in a given year. Total PSE is the total value of

transfers and “percentage PSE” is the total value of transfers as a percentage of the total value of

production, adjusted to include direct payments and to exclude levies on production.

48

Government trade-related investigations

On October 1, 1998, pursuant to the provisions of section 751(c) of the Tariff Act of 1930

(19 U.S.C. § 1675 (c)), the Commission instituted 5-year reviews (i.e., “Sunset Reviews”) of

the antidumping orders covering sugar from Belgium, France, and Germany; the

countervailing duty order covering sugar from the EU; and the antidumping orders covering

sugar and syrups from Canada. Based upon response from the interested parties illustrating

a sufficient willingness to participate and to provide information in a full review, the

Commission determined on January 7, 1999, that it would conduct full 5-year reviews of the

aforementioned orders.86

Based upon the reviews, the Commission found that the revocation of the antidumping orders

in place against Belgium, France, and Germany and the countervailing duty orders in place

against the EU would, within a reasonably foreseeable time, likely lead to the continuation or

recurrence of material injury to the domestic sugar industry. The Commission determined that

the revocation of the antidumping orders in place against Canada, however, would not likely

lead to the continuation or recurrence of material injury to the domestic sugar industry within

a reasonably foreseeable time. As a result, the U.S. Department of Commerce revoked the

order against imports from Canada.

Foreign Industry Profile

Overview of World Market

Sugar is produced in nearly 200 nations and is consumed in almost every country in the world;

however, the international market is concentrated among a few countries. The top 10

producing nations are responsible for over 71 percent of the world’s total output, and the top

3 produce approximately 41 percent of total production (figure 6). Since 1995, world sugar

production has been on the rise, showing a 12-percent increase in 5 years. The primary

contributor to the increases in world production has been Brazil. Brazil increased its output

by almost 50 percent in the last half of the 1990s, going from production of 12.5 mmt in 1995

to 18.3 mmt in 1999. 

In general, the leading sugar producing nations consume their domestically produced sugar.

Practically all of the major sugar producing nations afford their industries high levels of

protection from imports or receive some sort of government assistance. Australia is the

exception, with a percentage Producer Subsidy Equivalent (PSE) of only 4 percent.87
 

88 F.O. Licht, “The Evolving Industrial Organization of World Sugar in the Light of the WTO

Process,” International Sugar and Sweetener Report, Vol. 132, No. 12, Apr. 14, 2000.

 

89 Ibid.

49

Figure 6

Sugar: Country shares of world production, 1999

Source: USDA, ERS, Sugar and Sweetener Situation and Outlook Report, Jan. 2000.

Not all of the leading producers are major exporters of sugar; however, the top five exporters

make the top 10 list of producers (i.e., Brazil, EU, Thailand, Australia, and Cuba). These top

five exporters hold 73 percent of the world export market for sugar.

The international markets for sugar are not well integrated. Only five multinational companies

in the international market exist and, in total, they are responsible for just over 9 percent of

world production–Tate & Lyle of the United Kingdom (UK), Südzuker of Germany, Eridania

Beghin Say of France, British Sugar of the UK, and Danisco of Denmark. National

boundaries tend to determine markets because of the special support and protection the

commodity receives from domestic governments, and because of the intricate domestic

regulations that serve as barriers to entry for foreign investors.88 Generally, the national

markets are concentrated among a few seasoned participants (i.e., grower cooperatives, state

entities, or private companies). For example, in the United States, six companies operate all

of the cane refineries in the nation. In the EU, grower cooperatives own 37 percent of the

production quotas.89 In Cuba, China, and India, the state controls production, processing, and

marketing operations.
 

90 H. Ahfeld, “Sugar Markets in Disarray,” paper presented at the 2000 International

Sweetener Colloquium, Feb. 2000.

 

91 ABARE, Sugar: International Policies Affecting Market Expansion, 1999.

 

92 Ibid.

 

93 P. Buzzanell, “Mexico–U.S. and NAFTA: Bumpy Road to A Common Sweetener Market,”

paper presented at the 2000 International Sweetener Colloquium, Feb. 2000.

50

The world sugar market has been coined a ‘Market in Disarray,’90 as world sugar prices have

plunged and as the level of surplus stocks has soared. Figure 4 illustrates the difference in the

trend in world prices in the first half of the 1990s from the trend in the second half on the

1990s. From 1991 to 1995, market prices experienced an overall increase, but as a result of

increased sugar production in the latter half of the decade, world prices for raw and refined

sugar have been steadily falling since 1995. The raw sugar price has fallen by over 50 percent,

from 13.44 to 6.54 cents per pound in 5 years (table 12). The year 1998 was the first time that

the world raw sugar price had dipped below 10 cents since the end of 1992. The refined sugar

price mirrored the drop in raw sugar prices, plummeting by 49 percent during the same period.

Several explanations for the depressed world sugar market situation have been provided, such

as recent economic turmoil in regions such as Asia, Latin America, and Russia; application

of internal domestic sugar policies that provide production incentives; imposition of import

barriers such as state trading enterprises (STEs), import licensing regulations, TRQs and high

over-quota tariffs that afford countries high levels of protection; overcapacity due to massive

expansion in production; and slow growth rates in world consumption (only 0.06 percent in

1999). All of the aforementioned reasons have led to an active and heated international

dialogue on the state of the world sugar market, and on the suggested remedies.

In the next round of WTO agricultural negotiations, sugar is expected to be a commodity

under scrutiny. The major participants will be pressured to reduce domestic support (e.g., the

United States, Japan, and the EU) and to eliminate export subsidies (e.g., the EU).91 Also,

countries will be pressured to increase market access by lowering prohibitive over-quota

tariffs and increasing TRQ quantities.92

Country Profiles

Mexico

Mexico, a sugarcane-producing nation, is seventh in world production of sugar, growing close

to 4 percent of overall world sugar production. The nation also ranks seventh in world

consumption, and consumed an average of 77 pounds per capita in 1999. The sugar industry

is one of the largest agricultural industries in Mexico, employing almost 320,000 workers,

approximately 100,000 of whom are temporary cane cutters. Mexico operated 61 factories

in 1999, located in 15 States. Forty percent of sugar production in 1999 was concentrated

within the State of Veracruz, where 22 of the 61 factories are situated. In 1999, Mexico

produced almost 5 mmt of sugar, up 9 percent since 1995 and 61 percent since 1990. Higher

sugar production levels have resulted from increases in sugarcane area planted, harvested

area, sugarcane yield, factory yield, and sugar recovery rates.93
 

94 OECD, Review of Agricultural Policies in Mexico, National Policies and Agricultural

Trade, 1997, p. 66.

 

95 LMC International, “A Study of Sugar Policy in Selected Countries,” Aug. 1997.

 

96 The reference price for sugar was set at 20 cents per pound and the minimum price for

sugar cane was 57 percent of the reference price in 1999. 

 

97 LMC International, “A Study of Sugar Policy in Selected Countries,” Aug. 1997.

 

98 F.O. Licht, “Mexico: Sugar Industry in Crisis,” International Sugar and Sweetener Report,

Vol. 132, No. 34, Nov. 2000.

51

The sugar industry in Mexico has a long history of government control;94 however, between1988 and

1993, the industry was privatized, allowing individual mills to assume responsibility for the

marketing of their own sugar. Although the industry is operated by private firms, the

government still regulates particular aspects of the industry. Trade volumes are controlled by

the government through the import program (i.e., TRQs and tariffs) and the Temporary

Export Program (TEP).95 Also, minimum sugarcane prices received by growers are set by the

government and domestic prices for sugar are determined by the government through the

setting of the sugar ‘reference price.’96 The government offers marketing subsidies, crop

insurance premiums, input subsidies, and technical assistance as well.97 In all, the OECD

estimated that producers of sugar in Mexico received a 66 percent PSE from the programs

administered by the government in 1999.

Regardless of the high levels of government support, the Mexican sugar industry is in

upheaval,98 facing excess capacity and extreme financial problems. Sugar mills have accrued

major debt and have been unable to finance that debt. The industry attributes the debt to a

drop in domestic sugar consumption, low world sugar prices, and increasing costs of

production. Consumption trended downward during the 1990s, due in part to high sugar prices

and growth in substitution of HFCS for soft drinks (until 1997 when compensatory import

duties were applied).

Mexico has long been a participant in the world market for sugar, but its role has not always

been clearly defined. The country fluctuated between net exporter and net importer status in

the 1980s. From 1989 to 1994 Mexico was a net importer of sugar, as the government-run

industry could not keep up with domestic demand. The United States was the major exporter

of sugar to Mexico during that time. Since 1995, however, a sugar surplus has resulted under

the privatized industry, and Mexico has served purely as an exporter, not importing any sugar

from outside markets. 

Trade in sugar in Mexico is regulated by the state through Azucar, S.A., but actual trade is

conducted by private traders. Mexico exports most of its surplus sugar to the United States

at preferential NAFTA rates and under a preferential NAFTA TRQ (see table A-1 and A-2).

In years of surplus, traders are exempt from paying export taxes under the TEP. Mexico

exports mostly refined sugar to the United States, even though it is allowed to ship either raw

or refined under the U.S. sugar TRQ. Mexico does ship some raw sugar to the United States

as part of the refined sugar re-export program (consult the “U.S. trade measures”

section of this summary for specifics on Mexico’s access to the U.S. sugar market pursuant

to NAFTA and the URAA). 
 

99 Agriculture and Agri-Food Canada, Food Bureau, The Canadian Cane and Beet Sugar

Industry: Sub-sector Profile, 1999.

 

100 Ibid.

 

101 USDA, FAS, Global Agriculture Information Network Report #CA0055, May 2, 2000.

 

102 Ibid.

 

103 USDA, FAS, Global Agriculture Information Network Report #CA9048, Apr. 29, 1999.

 

104 Agriculture and Agri-Food Canada, Food Bureau, The Canadian Cane and Beet Sugar

Industry: Sub-sector Profile, 1999.

 

105 Canada was also allocated 90 percent of the SCP TRQ (59,250 metric tons) under the same

agreement. 

 

106 United States Trade Representative, press release No. 97-82, Sept. 8, 1997.

52

Canada

Canada accounts for only 1 percent of the output quantity of sugar in North America and

merely 0.15 percent of total world output. The Canadian sugar industry is composed of sugar

beet producers, one sugar beet plant, and four cane sugar refineries. The sole Canadian beet

plant is located in Alberta (the major sugar beet producing province in Canada), while the

cane-sugar-processing facilities are in Vancouver, Toronto, Saint John, and Montreal.

Approximately 90 percent of Canada’s domestic white sugar production is derived from

imported raw cane sugar, with the remaining 10 percent derived from domestically grown

sugar beets.99 About 20 percent of domestic production sold within Canada is sold on the

retail market, with the remaining 80 percent sold to industrial users.100

Canada is a net importer of sugar, most of which is raw cane sugar. In 1999, its total imports

of raw cane sugar were approximately 1.1 mmt, up 5.5 percent from 1998.101 The main

sources of Canadian raw sugar imports are Australia, Brazil, and Cuba. Imports of refined

sugar in 1999 were up almost 31 percent from 1998 levels–from 17,607 to 23,000 metric

tons–but were only a fraction of total sugar imports.102 The United States and Brazil are the

two major sources of refined sugar for Canada. Exports of refined sugar from the United

States to Canada have fallen substantially since 1995, by roughly 81 percent. In 1995, the

United States exported over 100,000 metric tons of refined sugar to Canada, mostly under the

RSREP, but in 1996, the total amount of U.S. refined sugar exports to Canada dropped to just

below 30,000 metric tons as a result of the imposition of high anti-dumping duties on U.S.

sugar companies by the Deputy Minister of National Revenue on July 7, 1995.103 Aside from

the antidumping duties (and countervailing duties on the EU) on refined sugar, the Canadian

sugar industry is not afforded domestic protection in the form of domestic or trade policies.

That is, Canada does not operate any price supports or subsidy regimes, no TRQs are applied

for sugar, and the tariff rates are rather low. 

Although Canada is a net sugar importer, Canadian producers have exported minimal amounts

of refined sugar to the United States in recent years under the U.S. refined sugar TRQ. Any

exports to markets other than the United States are normally conducted on the spot market

when shortages occur.104 Subsequent to the URAA, the United States and Canada entered into

a bilateral agreement (Sept. 4, 1997) under which Canada was allocated 10,300 metric tons

of the U.S. refined sugar TRQ, and has filled the TRQ each year since.105 Canada also

competes for the unallocated portion of the U.S. global TRQ for refined sugar.106 In total, its

access to the refined sugar market in the United States is limited by the TRQs.
 

107 USDA, ERS, Sugar and Sweetener Situation and Outlook Report, Sept. 2000.

 

108 Sugar Letter, “U.S. Beet Industry to Appeal Heartland Sugar Syrup Ruling,” Vol. 8, No.

13, Feb 11, 2000.

 

109 USDA, FAS, Global Agriculture Information Network Report, #AS9017, Apr. 12, 1999.

 

110 Ibid.

53

Exports of Canadian refined sugar to the United States are limited by TRQs and the higher

over-quota tariff rates; however, there is one product imported into the United States from

Canada that is not technically “refined sugar,” but from which refined sugar (or a refined

sugar syrup) can be extracted. The importation of this product has been a major point of

contention between the U.S. sugar industry and the Michigan-based company that extracts the

sugar from the Canadian sugar syrup. The refined SCP is imported under tariff line

1702.90.40 of the HTS (see table A-1), and is not subject to the refined sugar TRQ. The

product is imported as a sugar syrup, derived from sugar cane or sugar beets, not containing

added flavoring or coloring, that contains 6 percent or more by weight of total soluble nonsugar solids. The sugar syrup has been coined “stuffed molasses” and is essentially raw sugar

mixed with molasses and water. Once imported into the United States, the molasses is

extracted, leaving the refined sugar syrup that competes with domestically produced refined

sugar. The molasses is then re-exported to Canada where sugar and water are once again

added, beginning the process over again. The USDA estimates a 113,000 metric ton raw value

increase in the U.S. sugar supply as a result of the sugar syrup exports from Canada.107

U.S. Customs reclassified the sugar syrup so as to be counted toward the TRQ; however, the

United States Court of International Trade (USCIT) overruled the reclassification by

Customs, claiming that the product’s initial classification was accurate. The outcome of the

decision by the USCIT was that an act of the U.S. Congress would be required to reclassify

the sugar syrup. The U.S. sugar industry appealed the ruling to the U.S. Court of Appeals for

the Federal Circuit, and has actively lobbied members of Congress to close what they see as

a “loophole” in the TRQ provisions. Legislation was drafted for inclusion in the Trade and

Development Act of 2000, reclassifying the syrup, but was omitted from the final bill that was

passed on the floor. Thus, to date, Canada is able to export the refined sugar-containing syrup

free of duty to the United States in unlimited quantities, while the U.S. sugar industry argues

Canada is circumventing the refined sugar TRQ.108

Australia

Australia was the eighth-largest producer of sugar in the world in 1999, capturing 3.7 percent

of world production quantity (table 10). The major role of Australia’s sugar industry in the

world market is that of a raw sugar exporter. Approximately 96 percent of the quantity of

Australia’s exports are in the form of raw cane sugar. In 1999, Australia placed third in world

exports of sugar, trailing Brazil and the EU, and exported slightly over 11 percent of total

world exports (table 10). Table 10 shows that Australia experienced a slight overall decline

in exports from 1995 to 1999; however, for part of that period exports increased (i.e., from

1996 to 1998). Major importers of Australia’s sugar include the Republic of Korea, Malaysia,

Japan, Canada, and Iran.109 Rapid growth in sugar consumption in Asia has lead Australia to

focus its marketing efforts on these economies in recent years.110 In 1999, Australia’s exports

to Asia comprised 60 percent of the country’s total exports, for an increase from 57 percent

in 1998. 
 

111 Ibid.

 

112 USDA, FAS, Global Agriculture Information Network Report, #AS0013, Mar. 31, 2000.

 

113 T.C. Sheales, “Australia’s sugar industry: operating in a free market environment,”

ABARE, Canberra, Australia, 1999.

 

114 Ibid.

 

115 ABARE, Sugar: International Policies Affecting Market Expansion, 1999.

 

116 Ibid.

54

Although production of sugar in 1999 in Australia is shown to have declined from 1995 levels

in table 10, the country’s sugar industry has actually been expanding in recent years owing

to significant increases in acreage assigned to cane growing and to new growers entering the

industry.111 Milling capacity has increased in conjunction with increases in sugarcane

production and the average mill is able to crush approximately 500 metric tons per hour, up

127 percent since 1970.112

Australia maintains no import protection for sugar whatsoever. The country abolished its

import tariffs on sugar in July 1997, and does not administer any TRQs. Australian sugar

producers receive world market prices for their product.113 The OECD estimates that

Australian sugar producers receive limited support from the government through administered

policies. In 1999, Australia’s percentage PSE for sugar was an estimated 4 percent. 

All raw sugar in Australia is marketed both domestically and internationally by Queensland

Sugar Corp. (Queensland). Queensland acquires all raw sugar in the State of Queensland and

from Western Australia under a commercial arrangement and sells it to domestic refineries

and foreign markets. Queensland markets the sugar on behalf of the cane growers and mill

owners, pools the revenues from sales, adjusts for marketing costs, and issues net payments

to the growers and mill owners.114

Brazil

Sugar is of vital importance to the Brazilian economy. The commodity contributes 2 percent

of the value to the country’s GDP, accounts for 17 percent of the value of Brazil’s agricultural

product, and employs over one million people.115 Brazil is the largest producer and exporter,

and third-largest consumer of sugar in the world. Brazil does not import any sugar. In 1999,

Brazil’s world production share hovered just above 14 percent (table 10). Sugar production

and exports have increased significantly in the last 5 years. Since 1995, Brazil has increased

its production of sugar by 46 percent. In 1999, sugar production in Brazil totaled 18.3 mmt

(table 10), of which nearly 48 percent was exported. Exports of Brazilian sugar rose by 103

percent from 1995 to 1999. Brazil is by far the largest world exporter, accounting for

25 percent in 1999 (table 10). In comparison, the next closest competitor, the EU, holds only

15 percent of the export market. Not only are production and exports soaring, consumption

has been climbing in Brazil since the early 1960s and has increased by 14 percent since 1995.

Increases in consumer incomes, population growth, and high-sugar diets have been responsible

for the steady rise in consumption levels.116
 

117 P. Buzzanell, “Latin America’s Big Three Sugar Producers in Transition: Cuba, Mexico,

Brazil,” USDA, ERS, Agriculture Information Bulletin Number 656, Sept. 1992. 

 

118 ABARE, Sugar: International Policies Affecting Market Expansion, 1999.

 

119 USDA, FAS, Global Agriculture Information Network Report #BR9022, Oct. 1, 1999 and

#BR0008, May 17, 2000.

 

120 ABARE, Sugar: International Policies Affecting Market Expansion, 1999.

 

121 F.O. Licht, “Leaders and Laggards in the World Sugar Markets,” International Sugar and

Sweetener Report, Vol. 132, No. 19, June 28, 2000.

 

122 ABARE, Sugar: International Policies Affecting Market Expansion, 1999.

 

123 2000 Agra Europe (London) Ltd., Agra Europe, “Brazil Driving Need for Sugar Policy

Reform,” May 19, 2000.

 

124 F.O. Licht,“Leaders and Laggards in the World Sugar Markets,” International Sugar and

Sweetener Report, Vol. 132, No. 19, June 28, 2000.

 

125 USDA, FAS, Global Agriculture Information Network Report, #BR0008, May 17, 2000.

55

The rapid expansion of the Brazilian sugar market can be attributed to grower expansion of

cane area.117 Sugarcane production has increased by nearly 25 percent since 1995, reaching

308 mmt in 1999. Several reasons have been cited as to why the expansion of cane area has

occurred, such as the devaluation of the Real by 40 percent in January 1999, elimination of

export taxes, debt cancellation by the government, increases in cane quality, inexpensive labor

costs, low land prices, partial mechanization of harvesting, and the indirect subsidization of

the fuel alcohol industry.118 The last reason is the most contentious among competing

countries.

Approximately 58 percent of the cane produced in Brazil was converted into fuel alcohol in

1999, down from 64 percent in 1998.119 The fuel alcohol and sugar industries are closely

linked by policies and market factors. Although the sugar industry is no longer supported by

policies such as price supports, production controls, and production subsidies, the fuel alcohol

industry receives subsidies.120 Fuel alcohol subsidies have provided production incentives,

implicitly subsidizing cane producers, and forcing surplus sugar onto the world market.121 In

1999 an oversupply of alcohol resulted, and the government purchased some of the excess

supply from the market in an effort to provide assistance to the producers.122 Lately, world

sugar prices have remained high relative to alcohol prices and the cost of production has

remained extremely low (about 5 cents per pound),123 which has encouraged production of

sugar over alcohol, and which has resulted in higher export levels for sugar.124

Brazil chiefly exports raw sugar to markets with refining capacity. Primary markets for

Brazil’s raw sugar are Russia, Egypt, Iran, and the United Arab Emirates, in that order.

Brazil owns a portion of the preferential EU sugar quota and of the U.S. raw sugar TRQ.

Exports to the United States total only 2 percent of Brazil’s raw sugar exports and are sourced

solely from the Northeast region of the country.125 Brazil produces two types of refined sugar,

crystalline (granulated) and amorfo (powdery colored sugar), but only the crystalline is

exported. The amorfo is sold on the domestic market. Egypt, Nigeria, India, Sri Lanka, and

Yemen are the primary markets for refined sugar exports. 

In the years to come, Brazil is likely to remain a tough competitor in global markets. Costs

of production are low due to large scale farming and processing operations making Brazilian

sugar attractive on the world market at lower prices, producers have room to expand, and
 

126 2000 Agra Europe (London) Ltd., Agra Europe, “Brazil Driving Need for Sugar Policy

Reforms,” May 19, 2000.

 

127 ABARE, Sugar: International Policies Affecting Market Expansion, 1999.

 

128 Ibid.

 

129 USDA, FAS, Global Agriculture Information Network Report #E20041, Apr. 10, 2000.

 

130 ABARE, Sugar: International Policies Affecting Market Expansion, 1999.

 

131 B. Vrolijk, “Sugar Regime of the European Union,”paper presented at the Cuba/FAO

International Sugar Conference, Havana, Cuba, 7-9 Dec. 1999.

 

132 Agra Europe, CAPMONITOR, 2000.

 

133 ABARE, Sugar: International Policies Affecting Market Expansion, 1999.

 

134 USDA, FAS, Global Agriculture Information Network Report #E20041, Apr.10, 2000.

 

135 Ibid.

56

technological advances in harvesting and production are being made.126 Much depends upon

access to foreign markets and the country’s fuel alcohol policy.127

European Union

The EU is the second-largest producer of sugar in the world and in 1999 produced nearly

14 percent of total world output (table 10). In 1999, the EU produced approximately 17.8

mmt of sugar, roughly 135 percent more than what was produced in the United States in that

year. Most of the production is from sugar beets; however, minimal amounts of cane are

produced in Spain and in the French Overseas Departments of Guadeloupe, Martinique and

Réunion.128 The five major producers of beet sugar in the EU are France, Germany, Italy, the

UK, and Spain–they are responsible together for approximately 75 percent of total EU

production.129

The EU sugar regime has been internationally scrutinized and is alleged to provide production

incentives that discourage consumption and create surplus stocks that, when released onto the

world market, depress prices.130 In 1999, the percentage PSE for sugar in the EU was 58

percent, up 32 percent from 1997 levels. The EU sugar regime is composed of an intricate set

of policy tools: (1) a TRQ regime; (2) price supports (price guarantees); (3) production

quotas; and (4) export subsidies.131,132

The EU regime for sugar involves four types of TRQs (preferential, special preferential,

Most-favored-nation (MFN), and Overseas Country and Territories (OCT)); low or duty-free

in-quota tariffs; highly prohibitive over-quota tariffs; and an import licensing scheme with

short periods of validity.133 “Preferential” import quotas guarantee 1,304,700 metric tons of

duty-free access for Asian, Caribbean, Pacific (ACP) countries that are beneficiaries of the

Lomé Protocol on Sugar (Protocol 8) and 10,000 metric tons of duty-free access for India

(under a special bilateral agreement).134 In 1999, the EU imported 1.87 mmt of sugar,

approximately 1.7 mmt of which entered as “preferential sugar” exported from ACP countries

under Protocol 8. The major ACP beneficiaries of duty-free access to the EU sugar quota

were Mauritius, Fiji, Guyana, Jamaica, and Swaziland.135 Once the ACP sugar is imported

into the EU, it is freely circulated and is eligible for the same subsidies as EU produced sugar.

If an ACP country does not fill its allocation of the preferential TRQ, then the size of its quota

is reduced by the undelivered quantity in the following year. “Special preferential” TRQ

provide access at special reduced rates of duty for imports of raw cane sugar that originate

in ACP states or India and that are designated for processing into refined sugar. Entities in

only four EU countries (Finland, continental France, mainland Portugal, and the UK) are
 

136 USDA, FAS, Global Agriculture Information Network Report #E29036, Mar. 29, 1999.

 

137 “A” and “B” quota amounts are also allocated to each isoglucose-producing (corn syrup)

operation and each inulin syrup-producing operation in member countries.

 

138 Agra Europe, CAPMONITOR, 2000.

 

139 ABARE, Sugar: International Policies Affecting Market Expansion, 1999.

 

140 USDA, ERS, Sugar and Sweetener Situation and Outlook Report, Jan. 2000.

 

141 USDA, FAS, Global Agriculture Information Network Report #E20041, Apr. 10, 2000.

 

142 Agra Europe, CAPMONITOR, 2000.

57

permitted to import under this “special preferential” TRQ. “MFN” TRQs are annual quotas

that are designed for imports of raw cane sugar from third countries (i.e., not ACP countries

or India) that supply EU refineries. In 1999, the “MFN” TRQ was fixed at 85,465 metric

tons, of which Cuba received 69 percent, Brazil 28 percent, and other third countries received

3 percent.136 The fourth and final sugar TRQ is the “OCT” TRQ that applies to shipments of

sugar that originate in ACP countries, are processed in OCT, and then exported to the EU.

The EU’s internal price support program guarantees a fixed price for a fixed quantity of

production to processors of refined sugar. The quantity of production that receives the price

support is limited by production quotas–“A” and “B” quotas–that were implemented on July

1, 1968. EU member states allocate “A” and “B” quota amounts to each sugar-producing

operation in their country.137 In 1999, the “A” quota for sugar was 11.98 mmt and the “B”

quota was 2.61 mmt. The “intervention price” (IP) is then used to determine the effective price

support for each production quota category. “A” quota sugar production receives the highest

price support and “B” quota sugar production receives a lower price support. The producers

of “A” quota sugar are levied a tax equal to 2 percent of the IP; thus, their effective price

support is 98 percent of the IP. Producers of “B” quota sugar are levied a tax equal to

32 percent of the IP, so their effective price support is equal to 68 percent of the IP. Any sugar

produced beyond the “A” and “B” sugar quotas is considered “C” sugar production and

receives no price support. “C” sugar must be sold on the world market without an export

subsidy or carried over in inventory to the following marketing year.138

The IP operates similarly to the CCC loan rate program in the United States in that the price

is set at a level above the world price and in that it serves as a guaranteed purchase price

(price floor) for producers so that when (or if) the domestic market price falls below the IP,

government agencies will purchase the sugar at the IP and store the sugar. The IP is

maintained through limiting imports via high tariffs and import quotas and via subsidizing

exports (i.e., offering refunds/restitution to EU exporters of sugar) to prevent excess stocks

from accruing and driving down the domestic market price.139

In 1999, the EU exported about 5.3 mmt of sugar onto the world market (table 10).140 Primary

export markets for the EU are Algeria, Syria, Israel, United Arab Emirates, and Iraq, in that

order.141 Both production surplus in the EU (i.e., EU production minus overall EU

consumption) and the amount of ACP imports under the preferential import quota are

exported onto the world market with export subsidies, while “C” sugar is exported without

EU assistance.142 Production surplus sugar and ACP sugar is granted a refund equal to the

difference between the domestic market price in the EU and the world market price. Each

week exporters bid for the level of restitution needed in order to make their sugar competitive

on the world market. In accordance with the URAA, the EU could export 1.3863 mmt of

sugar plus an amount equivalent to the quantity of ACP imports under subsidy in 1999;
 

143 The restriction does not apply to exports of sugar that are displaced by preferential quota

imports, which in 1999, were equal to 1.68 mmt. 

 

144 USDA, FAS, Global Agriculture Information Network Report #E20041, Apr. 10, 2000.

 

145 B. Vrolijk, “Sugar regime of the European Union,” Paper presented at Cuba/FAO 1999

International Sugar Conference, Dec. 1999.

 

146 P. Buzanell, “ Latin America’s Big Three Sugar Producers in Transition: Cuba, Mexico,

Brazil,” 1992.

 

147 Ibid.

 

148 USDA, FAS, Sugar: World Markets and Trade, June 1994.

58

however, 1.5461 mmt plus the ACP quantity were exported under subsidy instead.143 Also,

the URAA limited the EU to spending 592.7 million euros in 1999, whereas 794.8 million

euros were spent. Thus, the EU exceeded its quantity and budget outlay commitments to the

WTO for subsidized exports by 11.5 and 31.4 percent in 1999.144 The current EU sugar

policy calls for an automatic reduction of “A” and “B” production quotas by member states

if the EU becomes constrained by URAA export subsidy commitments.145

Cuba

Cuba has long been an active participant in world sugar markets, serving as a producer and

net exporter of raw and refined cane sugar. In the years preceding the 1959 revolution, Cuba

exported an average of 5 mmt of sugar per year and dominated almost one-third of the global

export market for sugar.146 After the United States revoked Cuba’s access to the U.S. sugar

market in July 1960, Cuba needed to find alternative markets for what equated to about onehalf of its yearly production. Cuba turned to the Soviet Union (USSR) as a market for the

country’s exports. A barter agreement was made where Cuba shipped raw sugar to the USSR

in exchange for oil, which, in essence, subsidized Cuban sugar. In 1961, Cuban exports of

sugar to the USSR increased by nearly 110 percent. In the 5 years prior to 1960, average

exports to the USSR averaged around 298,000 metric tons and in the 5 years after 1960, they

averaged about 2.2 mmt.147 With access to oil and other needed inputs from the USSR, Cuba

was able to maintain average yearly production levels at 5.5, 6.35, and 7.74 mmt during the

1960s, 1970s, and 1980s, respectively. Until 1991, Cuba maintained approximately 20

percent of the world export share.148 Cuba suffered as a result of the collapse of the Soviet

Union in the early 1990s. Without access to necessary resources such as oil and fertilizer, both

Cuban production and exports fell. From 1992 to 1993, production fell by almost 40 percent

(from 7 to 4.3 mmt) and Cuba’s export market share dropped to 12.9 percent. From 1993 to

1999, sugar production in Cuba has not surpassed 4.5 mmt. 

Today, Cuba no longer dominates world sugar markets. In 1999, Cuba fell to the tenth-largest

producer of sugar in the world, with production levels at just around 3.8 mmt and world

production share at 2.9 percent (table 10). Exports of Cuban sugar in 1999 were at 3.2 mmt,

down 36 percent from pre-revolution years. Even though Cuba no longer leads the world in

production and exports, exported sugar still remains the main source of foreign
 

149 L.P. Castellanos and J. Alvarez, 2000. “The Cuban Sugar Agroindustry and the

International Sweetener Market in the 1990's: Implications for the Future,” University of Florida,

Institute of Food and Agricultural Sciences, International Working Paper Series, IW00-1.

 

150 USDA, ERS, Sugar and Sweetener Situation and Outlook Report, Jan. 2000. Exports are

reported on a raw sugar equivalent and are thus valued at the world price of raw sugar.

 

151 F.O. Licht,“Cuba Decrees 50 Per Cent Cane Price Increase,” International Sugar and

Sweetener Report, Vol. 130, No. 22, July 9, 1998.

 

152 LMC International, “Sugar Industries and Government Policies in the Free Trade Area of

the Americas,” 1998.

 

153 F.O. Licht, “Cuba Decrees 50 Per Cent Cane Price Increase,” International Sugar and

Sweetener Report, Vol. 130, No. 22, July, 9, 1998.

59

earnings for the Cuban economy.149 On average, from 1995 to 1999 Cuba exported

approximately 84 percent of its overall sugar production at an average yearly value of $781

million.150

Cubazucar is the state owned company that is responsible for the sale and export of all Cuban

sugar. The STE is also responsible for the importation of sugar, but even with low tariffs on

raw and refined sugar (15 percent), Cubazucar serves as a nontariff barrier to imports of

sugar from external markets. Cuba has three distinct markets for its sugar: (1) the world

market, where Cuban sugar trades at a discount to the New York No. 11 raw sugar futures

contract price; (2) communist or ex-communist countries with which Cuba generally barters

sugar for other items; and (3) the EU, where Cuba is granted access to128,195 metric tons

of the EU MFN sugar quota at a preferential rate. In general, Cuba has exported the bulk of

its sugar to group (2) above. In 1999, Cuba shipped 78 percent of its total exports to Russia

and China. Russia was the leading importer of Cuban sugar, purchasing 67 percent of total

Cuban sugar exports in 1999. Cuba was, at one time, a principal supplier of sugar to Japan

but, unable to meet Japan’s needs, was replaced by Australia and Thailand.

 The Cuban sugar industry operates under strict government control. The state almost totally

controls production and processing of sugar cane through the Ministry of Sugar (MINAZ).

There is some privatization of farming operations that account for about 30 percent of the

total cane supply.151 The three types of private/independent growers are Agricultural

Production Cooperatives (CPAs) where a number of growers tend to the land, making it a

quasi-private operation; Basic Units of Cooperative Production (UBPCs) where the land is

owned by the state, but sugarcane producers are granted usufruct of the land so as to

collectively produce and market their cane; and Cooperatives of Credit and Service (CSS)

where individual owners hold the land, which is true private sector ownership.

Private/independent farming operations, while somewhat more independent than state-run

farming operations, still heavily rely on state owned and operated mills (to whom they sell

their cane) for production inputs such as fertilizers and chemicals and for contracting. State

control is practically absolute at the milling and processing level. As of 1998, MINAZ

operated 155 sugar mills and 16 refineries.152 The state operated sugar mills, in cooperation

with MINAZ, control all important decisions dealing with production, input use, harvesting,

irrigation, and the like. 

MINAZ administers a price support system that offers a basic cane price paid to growers

throughout the country. In 1998, the basic cane price was increased for a period of 3 years

from approximately $14.17 to $21.65 per metric ton, a 52.8 percent increase.153 Beginning

in 1999, the price received by farmers started to take into account the amount of sucrose in
 

154 LMC International, “Sugar Industries and Government Policies in the Free Trade Area of

the Americas,” 1998.

 

155 Any price estimates are subject to error, as there exists no accepted exchange rate for the

Cuban peso.

 

156 F.O. Licht, “Sugar Statistics,” International Sugar and Sweetener Report, Vol. 132, No.

14, May 5, 2000.

 

157 F.O. Licht, “Sugar Statistics,” International Sugar and Sweetener Report, Vol. 132, No.

14, May 5, 2000 and Vol. 132, No 9, Mar. 20, 2000.

 

158 USDA, FAS, Global Agriculture Information Network Report #CH9020, Apr. 12, 1999.

 

159 Ibid.

 

160 Ibid.

 

161 USDA, FAS, Global Agriculture Information Network Report #CH0016, Apr. 12, 2000.

60

their canes. The internal sugar price is also determined by the government. Retail prices for

sugar are set for state producers, but there also exists a higher free-market price for private

producers. In 1998 the state price was estimated to be approximately 8 cents per pound,

wholesale, and 8.1 cents per pound, retail154–this is lower than the reported world price of

sugar in 1998 (table 12), and the free market price was estimated to be about 14.2 cents per

pound.155 The internal price for sugar in Cuba is not of much relevance, because most of the

country’s production is exported.

China

China is the world’s fourth-largest producer of sugar, producing almost 9 mmt or 6.9 percent

of total world output in 1999 (table 10). China produces both sugar beets and sugarcane. The

three major cane producing provinces are Guangxi, Guangdong, and Yunnan, in that order,

and the three main beet producing provinces are Heilongjiang, Xinjiang, and Inner Mongolia.

China produces and processes most of its own sugar, importing minimal amounts of raw sugar

primarily from Cuba, Brazil, Thailand, and Australia and refined sugar from South Korea,

the EU, and Japan.156 China has strictly limited imports of sugar since 1996. Overall sugar

imports have fallen from 1.94 mmt in 1995 to 0.54 mmt in 1999. In 1999, China imported

roughly 483,000 metric tons of raw sugar, 375,000 of which was imported from Cuba at a

price above the average world price under a special bilateral agreement between the two

governments.157 Refined sugar imports were barely 55,000 metric tons in 1999. China, a net

importer of sugar, exports sugar as well and shipped around 573,000 metric tons in 1999, 90

percent of which was refined sugar. Indonesia, India, Saudi Arabia, and Hong Kong are the

main recipients of refined sugar produced in China.

Sugar production has been climbing in China since 1995.158 Overproduction has been due to

high internal prices, resulting from domestic price supports and limitations on imports (import

quotas).159 In 1996, high sugar prices prompted increases in output and led to the building of

new refineries. Increased capacity, coupled with illegal smuggling of sugar imports and

increased use of artificial sweeteners has pushed the Chinese sugar market to the point of

saturation, prompting the government to purchase and store large amounts of excess sugar in

an attempt to maintain high prices for producers and processors.160 Even with government

purchases of excess production, there has been a sharp decline in domestic prices in recent

years. During 1995 to 1999, prices received by producers fell by 46 percent for cane and

19 percent for beets, while retail prices of sugar fell by 21 percent.161 With
 

162 Ibid.

 

163 Ibid.

 

164 F.O. Licht, “Sugar Smuggling is Biggest Problem in China, Not WTO-CSA,” International

Sugar and Sweetener Report, Vol. 132, No 9, Mar. 20, 2000.

 

165 Ibid.

 

166 LMC International, “A Study of Sugar Policies in Selected Countries,” Aug. 25, 1997.

 

167 Ibid.

61

lower prices, processors have been unable to pay producers of cane and beets and have

issued IOU’s in the place of actual payments. 

In response to the difficulties faced by the sugar industry, the Chinese Government began a

major restructuring of the market in early 1999. The government reduced support to cane and

beet producers and increased support for other cash crops such as fruits and vegetables. The

number of refineries in operation was reduced by 38 percent, from 539 to 392, and small-scale

processing facilities will be closed.162 Also, in 1999, the government closed 9 of the 14

artificial sweetener factories (possibly reducing production by 50 percent), placed a limit of

3,000 metric tons on domestic consumption of artificial sweeteners, and instituted mandatory

labeling of artificial sweeteners for food processors and drink manufacturers to curb

substitution of sugar with artificial sweeteners. In regard to smuggled sugar, the government

has taken measures to sharply reduce illegal imports.163

The restructuring has come at a time when China will also be making changes in its sugar

trade policy as a result of its pending accession into the WTO. China has agreed to provide

more access to its market by lowering tariffs from the current level of 30 percent ad valorem

to 15 percent after its entry, and to 10 percent after an implementation period.164 Also, China

will allow 800,000 metric tons of raw sugar imports in addition to imports from Cuba.165

India

In 1999, India produced 13 percent of the world sugar supply, making it the third-largest

producer in the world (table 10). India produces raw, refined, and noncentrifugal cane sugars.

The noncentrifugal sugars (pan sugars), gur and khandsari, are produced in villages and use

between 34 and 47 percent of the cane grown in India.166 Although India is one of the largest

sugar producers, the country is not a major player when it comes to world markets, as it

imports below 3 percent of world imports and exports zero percent of world exports (table

10). India is the largest consumer of sugar in the world, consuming 16.9 mmt in 1999, and is

a potential market for the world’s sugar; however, in 1999, the country imported only 6

percent of its domestic consumption requirements (table 10). Essentially, India produces for

its own internal needs and protects its domestic market from foreign competition through

complicated domestic and trade policies.

The sugar market is regulated on the production, processing, and marketing levels.167 On the

production level, the supply of cane is regulated through a system of zoning. Cane farming

areas are divided into production zones by a state official in each state. The state government

then allocates zones to individual mills. Each sugar mill is granted exclusive rights to the cane

supplies within the zone they have been allotted. On the processing level, the government

determines the capacity and the location of the mills through a licensing system. Each new

mill, or each expanding mill, must apply for a license from the state. On the marketing level,
 

168 Ibid.

 

169 Ibid.

 

170 Ibid.

 

171 USDA, FAS, Global Agriculture Information Network Report #IN0019, Apr. 10, 2000.

 

172 Ibid.

 

173 URAA schedule of Commitments: Schedule XX-India, Part 1, Section 1-A.

 

174 USDA, FAS, Global Agriculture Information Network Report #IN0019, Apr. 10, 2000.

 

175 LMC International, “A Study of Sugar Policies in Selected Countries,” Aug. 25, 1997.

62

mills may market their domestically produced sugar independently or through cooperative

mills; however the state intervenes with the marketing of imports and exports of sugar.

Imports are chiefly marketed through the Indian Sugar and General Industries Export Import

Corporation, which is a joint venture between the government and milling companies. Releases

of the imported sugar are controlled by the government. The level of exports is determined by

the government and regulated by the government through the issuance of export licenses.

The government operates an intricate set of domestic policy tools in conjunction with the

production, processing, and marketing regulations.168 First, the government administers a fixed

minimum cane price, the Statutory Minimum Price (SMP), which the mills are required to pay

for cane to growers. Then, based upon the SMP, each state sets a State Advised Price (SAP)

that usually exceeds the SMP by 20 to 50 percent, and which serves as the required minimum

price for cane in that state. 

Though the government supports the price of cane, its objective is to keep the price of sugar

to consumers low. Thus, the government requires mills to supply 30 percent of their output

to the state below the market price as “levy sugar.”169 The government then sells this sugar

through a public distribution system. The remaining 70 percent of the sugar may be sold at

the market price subject to monthly quantitative restrictions. The market price is influenced

by the government, as it controls the level of the monthly releases of free sale domestic sugar

and of imported sugar.170 Imported sugar is not permitted for sale except under the directions

of the government. The government further influences the market price by limiting the amount

of imports that enter the country.171 In late 1999, the government raised the tariff on sugar

from 27.5 to 40 percent ad valorem. In February, 2000 the tariff was raised once again to 60

percent ad valorem. The new import duty, as it stands, is 60 percent ad valorem plus a

countervailing duty of $20 per metric ton.172 The tariff is still well within its commitment to

the WTO, as in 2004, India is committed to be at a final rate of 150 percent ad valorem.

173

Thus, India may raise its tariff on sugar even further if it is deemed necessary. As it is, the

current tariff is so exceedingly high that it has been predicted that imports will be nonexistent

for 2000 and 2001.174 India claims that it is in compliance with the WTO on market access

and that the country is exempt from WTO access commitments for agriculture because of its

balance of payments situation.175
 

176 USDA, ERS, Sugar and Sweetener Situation and Outlook Report, Jan. 2000.

 

177 ABARE, Sugar: International Policies Affecting Market Expansion, 1999.

 

178 USDA, ERS, Sugar and Sweetener Situation and Outlook Report, Jan. 2000.

 

179 Japan is the second-largest producer of HFCS in the world, behind the United States.

 

180 ABARE, Sugar: International Policies Affecting Market Expansion, 1999, and USDA,

ERS, Sugar and Sweetener Situation and Outlook Report, Jan. 2000.

 

181 OECD, “Agricultural Policies in OECD Countries: Measurement of Support and

Background Information,” 2000.

 

182 Ibid.

 

183 ABARE, Sugar: International Policies Affecting Market Expansion, 1999.

 

184 Ibid.

 

185 LMC International, “A Study of Sugar Policies in Selected Countries,” Aug. 25, 1997.

 

186 Calculated from price data in USDA, FAS, Global Agriculture Information Network

Report #JA0039, Apr. 18, 2000.

63

Japan

Japan produced approximately 846,000 metric tons of sugar–just over one-half of one percent

of the world sugar output–in 1999.176 Approximately 80 percent of Japan’s domestic

production comprises of beet sugar. Beets are grown primarily on the island of Hokkaido

while sugar cane is grown mainly on the southern islands.177 Incapable of meeting domestic

consumption requirements with low domestic production levels, Japan imports most of its

sugar. Japan is a net importer of sugar, the fifth-largest importer in the world behind the

Russia, EU, Indonesia, and the United States, in that order. Raw sugar comprises nearly 100

percent of the country’s sugar imports. Japan has 26 cane refineries (mostly on the east coast

of Honshu Island) to process the raw sugar for domestic use. In 1999, Japan imported close

to 1.5 mmt of raw sugar, down 10 percent from 1995 levels.178 Falling import levels are

attributed to the downward trend in sugar consumption that has occurred throughout the

1990s as a result of changes in consumer preferences and direct substitution out of sugar into

HFCS.179 Also, imports of refined sugar have fallen owing to an increase in imports of SCPs

in an effort by exporters to avoid high tariffs on sugar.180

The Japanese sugar producers received one of the highest levels of support among OECD

sugar-producing countries in 1999.181 In 1999, Japan’s percentage PSE for sugar was 67

percent, up from 61 percent in 1998.182 The domestic sugar policy includes price supports for

sugarcane, sugar beet, and sugar; production controls on sugar beets; and indirect government

assistance (i.e., loans, credit subsidies, and grants).183

Support prices are maintained for cane, beets, and sugar through a price stabilization

mechanism.184 The Sugar Price Stabilization Agency (SPSA) establishes an internal price for

sugar and a required purchase price (price support) that processors must pay for sugarcane

and sugar beets. Once the cane or beets are processed, the sugar is sold to the SPSA by the

processor, and then the SPSA resells it back to the processor or miller at a lower price, which

in turn, provides a direct subsidy to the processor. The subsidy is partly funded by the tariffs

collected on imports of raw sugar and HFCS.185 In fiscal year 1999, the average internal price

for refined sugar was approximately 60 cents per pound,186 compared with a world refined

sugar price of 9.13 cents per pound. The SPSA maintains the high
 

187 LMC International, “A Study of Sugar Policies in Selected Countries,” Aug. 25, 1997.

 

188 ABARE, Sugar: International Policies Affecting Market Expansion, 1999.

 

189 LMC International, “A Study of Sugar Policies in Selected Countries,” Aug. 25, 1997.

64

internal price for sugar through the imposition of high tariffs and through taxation of

producers of HFCS and sugar refiners.187

 High domestic prices create production incentives for producers that would otherwise not

exist.188 The incentives are greater for sugar beet producers than for cane. Therefore, to curtail

the over-expansion of sugar beet production, the government has placed a ceiling of 72,000

hectares on yearly beet area planted.

Although the primary assistance provided to the sugar industry is through price supports, the

industry does receive indirect assistance through loans, credit subsidies and grants.189 The

government provides noninterest loans to those entering agriculture as well as credit subsidies

to farmers that have taken loans for land improvements or who have displayed good

management practices. Also, each year the government allocates funds for research and for

structural improvements within the industry.
APPENDIX A

HARMONIZED TARIFF SCHEDULE

SUBHEADINGS
A-2

Table A-1

Sugar: Harmonized Tariff Schedule subheadings; description;1 U.S. column 1 rate of duty as of January 1, 2000; U.S. exports, 1999; and

U.S. imports, 1999 

HTS

subheading Suffix

Col. 1 rate of duty as of Jan. 1, 2000 Exports

1999

Imports

Brief description General Special 1999 2

Value (1,000 dollars)

1212.91.00 00 Sugar beet .................................... 39.7¢/ton Free (A+,CA,E,IL,J,MX) 287 0

1212.92.00 00 Sugarcane .................................... $1.24/ton Free (A,CA,E,IL,J,MX) 173 168

1701.11.05 00 Cane sugar, raw, in solid form, no added flavoring or

coloring, described in general note 15 of the HTS and

entered pursuant to its provisions, not counted toward

tariff-rate quota ................................ 1.4606¢/kg less

0.020668¢/kg for each

degree under 100

degrees and fractions of

a degree in proportion,

but not less than

0.943854¢/kg

Free (A*,CA,E*,IL,J,MX) (

5

) 80

1701.11.10 00 Cane sugar, raw, in solid form, no added flavoring or

coloring, counted toward tariff-rate quota amount of

1,117,195 metric tons3........................... 1.4606¢/kg less

0.020668¢/kg for each

degree under 100

degrees and fractions of

a degree in proportion,

but not less than

0.943854¢/kg

Free (A*,CA,E*,IL,J,MX) (

5

) 424,960

1701.11.20 00 Cane sugar, raw, in solid form, no added flavoring or

coloring, to be used for the production of polyhydric

alcohols, or to be refined and re-exported in refined form in

sugar-containing products, or to be substituted for

domestically produced raw cane sugar that has been or

will be re-exported, not counted toward tariff-rate quota . 1.4606¢/kg less

0.020668¢/kg for each

degree under 100

degrees and fractions of

a degree in proportion,

but not less than

0.943854¢/kg

Free (A*,CA,E*,IL,J,MX) (

5

) 103,120

See footnotes at end of table.
A-3

Table A-1—Continued

Sugar: Harmonized Tariff Schedule subheadings; description;1 U.S. column 1 rate of duty as of January 1, 2000; U.S. exports, 1999; and

U.S. imports, 1999 

HTS

subheading Suffix

Col. 1 rate of duty as of Jan. 1, 2000 Exports

1999

Imports

Brief description General Special 1999 2

Value (1,000 dollars)

1701.11.50 00 Cane sugar, raw, in solid form, no added flavoring or

coloring, out-of tariff rate quota, subject to special

safeguard duty rates4 in subheadings 9904.17.01-

9904.17.07 ...................................

33.87¢/kg 28.247¢/kg less 0.4¢/kg for

each degree under 100

degrees and fractions of a

degree in proportion, but

not less than 18.256¢/kg

(MX)

(

5

) 14,558

1701.12.05 00 Beet sugar, refined, in solid form, no added flavoring or

coloring, described in general note 15 of the HTS and

entered pursuant to its provisions, not counted toward

tariff-rate quota ................................ 3.6606¢/kg less

0.020668¢/kg for each

degree under 100

degrees and fractions of

a degree in proportion,

but not less than

3.143854¢/kg

Free (A*,CA,E*,IL,J,MX) (

6

) 0

1701.12.10 00 Beet sugar, refined, in solid form, no added flavoring or

coloring, counted toward tariff-rate quota of 22,000 metric

tons3........................................ 3.6606¢/kg less

0.020668¢/kg for each

degree under 100

degrees and fractions of

a degree in proportion,

but not less than

3.143854¢/kg

Free (A*,CA,E*,IL,J,MX) (

6

) 136

See footnotes at end of table.
A-4

Table A-1—Continued

Sugar: Harmonized Tariff Schedule subheadings; description;1 U.S. column 1 rate of duty as of January 1, 2000; U.S. exports, 1999; and

U.S. imports, 1999 

HTS

subheading Suffix

Col. 1 rate of duty as of Jan. 1, 2000 Exports

1999

Imports

Brief description General Special 1999 2

Value (1,000 dollars)

1701.12.50 00 Beet sugar, refined, in solid form, no added flavoring or

coloring, out-of tariff rate quota, subject to special

safeguard duty rates4 in subheadings 9904.17.08-

9904.17.16 ...................................

35.74¢/kg 28.247¢/kg less 0.4¢/kg for

each degree under 100

degrees and fractions of a

degree in proportion, but

not less than 18.256¢/kg

(MX)

(

6

) 0

1701.91.05 00 Cane or beet sugar and chemically pure sucrose, in solid

form, containing added coloring, no added flavoring,

described in general note 15 of the HTS and entered

pursuant to its provisions, not counted toward tariff-rate

quota ....................................... 3.6606¢/kg less

0.020668¢/kg for each

degree under 100

degrees and fractions of

a degree in proportion,

but not less than

3.143854¢/kg

Free (A*,CA,E*,IL,J,MX) (

7

) 3

1701.91.10 00 Cane or beet sugar and chemically pure sucrose, in solid

form, containing added coloring, no added flavoring,

counted toward tariff-rate quota of 22,000 metric tons3... 3.6606¢/kg less

0.020668¢/kg for each

degree under 100

degrees and fractions of

a degree in proportion,

but not less than

3.143854¢/kg

Free (A*,CA,E*,IL,J,MX) (

7

) 23

See footnotes at end of table.
A-5

Table A-1—Continued

Sugar: Harmonized Tariff Schedule subheadings; description;1 U.S. column 1 rate of duty as of January 1, 2000; U.S. exports, 1999; and

U.S. imports, 1999 

HTS

subheading Suffix

Col. 1 rate of duty as of Jan. 1, 2000 Exports

1999

Imports

Brief description General Special 1999 2

Value (1,000 dollars)

1701.91.30 00 Cane or beet sugar and chemically pure sucrose, in solid

form, containing added coloring, no added flavoring, out-of

tariff rate quota, subject to special safeguard duty rates4 in

subheadings 9904.17.08-9904.17.16 ................ 35.74¢/kg 28.247¢/kg less 0.4¢/kg for

each degree under 100

degrees and fractions of a

degree in proportion, but

not less than 18.256¢/kg

(MX)

(

7

) 371

1701.91.42 00 Cane or beet sugar and chemically pure sucrose, in solid

form, containing over 65 percent by dry weight of sugar,

containing added flavoring whether or not containing

added coloring, described in general note 15 of the HTS

and entered pursuant to its provisions, not counted toward

tariff-rate quota ................................ 6% Free (A*,CA,E,IL,J,MX) (

8

) 11

1701.91.44 00 Cane or beet sugar and chemically pure sucrose, in solid

form, containing over 65 percent by dry weight of sugar,

containing added flavoring whether or not containing

added coloring, counted toward tariff-rate quota of “none” 6% (

8

) 0

1701.91.48 00 Cane or beet sugar and chemically pure sucrose, in solid

form, containing over 65 percent by dry weight of sugar,

containing added flavoring whether or not containing

added coloring, out-of tariff rate quota, subject to special

safeguard duty rates4 in subheadings 9904.17.17-

9904.17.48 ...................................

33.9¢/kg + 5.1% See 9906.17.03-

9906.17.05 (MX)

(

8

) 2,078

1701.91.52 00 Cane or beet sugar and chemically pure sucrose, in solid

form, containing over 10 percent by dry weight of sugar,

containing added flavoring whether or not containing

added coloring, described in general note 15 of the HTS

and entered pursuant to its provisions, not counted toward

tariff-rate quota ................................ 6% Free (A,CA,E,IL,J,MX) (

9

) 0

See footnotes at end of table.
A-6

Table A-1—Continued

Sugar: Harmonized Tariff Schedule subheadings; description;1 U.S. column 1 rate of duty as of January 1, 2000; U.S. exports, 1999; and

U.S. imports, 1999 

HTS

subheading Suffix

Col. 1 rate of duty as of Jan. 1, 2000 Exports

1999

Imports

Brief description General Special 1999 2

Value (1,000 dollars)

1701.91.54 00 Cane or beet sugar and chemically pure sucrose, in solid

form, containing over 10 percent by dry weight of sugar,

containing added flavoring whether or not containing

added coloring, counted toward tariff-rate quota of 64,709

metric tons ................................... 6% Free (A*,CA,E,IL,J) (

9

) 13,573

1701.91.58 00 Cane or beet sugar and chemically pure sucrose, in solid

form, containing over 10 percent by dry weight of sugar,

containing added flavoring whether or not containing

added coloring, out-of tariff rate quota, subject to special

safeguard duty rates4 in subheadings 9904.17.49-

9904.17.65 ...................................

33.9¢/kg + 5.1% See 9906.17.39-

9906.17.41 (MX)

(

9

) 4,168

1701.91.80 00 Other cane or beet sugar and chemically pure sucrose, in

solid form, containing added flavoring whether or not

containing added coloring, not counted toward tariff-rate

quota ........................................ 5.1% Free (A,CA,E,IL,J,MX) 2,832 227

1701.99.05 00 Other cane or beet sugar and chemically pure sucrose, in

solid form, described in general note 15 of the HTS and

entered pursuant to its provisions, not counted toward

tariff-rate quota ................................ 3.6606¢/kg less

0.020668¢/kg for each

degree under 100

degrees and fractions of

a degree in proportion,

but not less than

3.143854¢/kg

Free (A*,CA,E*,IL,J,MX) 1,186 27

See footnotes at end of table.
A-7

Table A-1—Continued

Sugar: Harmonized Tariff Schedule subheadings; description;1 U.S. column 1 rate of duty as of January 1, 2000; U.S. exports, 1999; and

U.S. imports, 1999 

HTS

subheading Suffix

Col. 1 rate of duty as of Jan. 1, 2000 Exports

1999

Imports

Brief description General Special 1999 2

Value (1,000 dollars)

1701.99.10 00 Other cane or beet sugar and chemically pure sucrose, in

solid form, counted toward tariff-rate quota of 22,000

metric tons3................................... 3.6606¢/kg less

0.020668¢/kg for each

degree under 100

degrees and fractions of

a degree in proportion,

but not less than

3.143854¢/kg

Free (A*,CA,E*,IL,J,MX) 26,230 22,246

1701.99.50 00 Other cane or beet sugar and chemically pure sucrose, in

solid form, out-of tariff rate quota, subject to special

safeguard duty rates4 in subheadings 9904.17.08-

9904.17.16 ...................................

35.74¢/kg 28.247¢/kg less 0.4¢/kg for

each degree under 100

degrees and fractions of a

degree in proportion, but

not less than 18.256¢/kg

(MX)

12,453 2,111

1702.90.05 00 Other sugars, derived from sugar cane or sugar beets,

containing non-sugar solids (excluding any foreign

substances that may have been added or developed in the

product) equal to 6 percent or less by weight of total

soluble solids, described in general note 15 of the HTS

and entered pursuant to its provisions, not counted toward

tariff-rate quota ................................ 3.6606¢/kg of total

sugars

Free (A,CA,E*,IL,J,MX) (

10) 42

1702.90.10 00 Other sugars, derived from sugar cane or sugar beets,

containing non-sugar solids (excluding any foreign

substances that may have been added or developed in the

product) equal to 6 percent or less by weight of total

soluble solids, counted toward tariff-rate quota of 22,000

metric tons3 .................................................................

3.6606¢/kg of total

sugars

Free (A,CA,E*,IL,J,MX) (

10) 0

See footnotes at end of table.
A-8

Table A-1—Continued

Sugar: Harmonized Tariff Schedule subheadings; description;1 U.S. column 1 rate of duty as of January 1, 2000; U.S. exports, 1999; and

U.S. imports, 1999 

HTS

subheading Suffix

Col. 1 rate of duty as of Jan. 1, 2000 Exports

1999

Imports

Brief description General Special 1999 2

Value (1,000 dollars)

1702.90.20 00 Other sugars, derived from sugar cane or sugar beets,

containing non-sugar solids (excluding any foreign

substances that may have been added or developed in the

product) equal to 6 percent or less by weight of total

soluble solids, out-of tariff rate quota, subject to special

safeguard duty rates4 in subheadings 9904.17.08-

9904.17.16 ................................... 35.74¢/kg 28.247¢/kg (MX) 

(

10) 6

1702.90.35 00 Invert molasses, derived from sugar cane or sugar beets

containing non-sugar solids (excluding any foreign

substances that may have been added or developed in the

product) equal to 6 percent or less by weight of total

soluble solids .................................. 0.35¢/liter Free (A*,CA,E,IL,J,MX) (

10) 3,258

1702.90.40 00 Other sugars, derived from sugar cane or sugar beets,

containing non-sugar solids (excluding any foreign

substances that may have been added or developed in the

product) equal to 6 percent or less by weight of total

soluble solids .................................. 0.35¢/liter Free (A*,CA,E,IL,J,MX) (

10) 39,954

1702.90.52 00 Other sugars, described in general note 15 of the HTS and

entered pursuant to its provisions, not counted toward

tariff-rate quota ................................ 6% Free (A,CA,E,IL,J,MX) (

11) 28

1702.90.54 00 Sugar syrups, blended, not containing added flavoring or

coloring matter, blended syrups, counted toward tariff-rate

quota of “none” ................................ 6% (

11) 0

1702.90.58 00 Sugar syrups, blended, not containing added flavoring or

coloring matter, over tariff-rate quota, subject to special

safeguard duty rates4 in subheadings 9904.17.66-

9904.17.84 ...................................

33.9¢/kg of total sugars

+ 5.1%

See 9906.17.21-

9906.17.24 (MX)

(

11) 0

1702.90.64 00 Other sugars, containing over 65 percent by dry weight of

sugar, counted toward tariff-rate quota of “none” ....... 6% (

11) 0

See footnotes at end of table.
A-9

Table A-1—Continued

Sugar: Harmonized Tariff Schedule subheadings; description;1 U.S. column 1 rate of duty as of January 1, 2000; U.S. exports, 1999; and

U.S. imports, 1999 

HTS

subheading Suffix

Col. 1 rate of duty as of Jan. 1, 2000 Exports

1999

Imports

Brief description General Special 1999 2

Value (1,000 dollars)

1702.90.68 00 Other sugars, containing over 65 percent by dry weight of

sugar, out-of tariff rate quota, subject to special safeguard

duty rates4 in subheadings 9904.17.17-9904.17.48 ..... 33.9¢/kg of total

sugars + 5.1%

See 9906.17.18-

9906.17.20 (MX)

(

11) 25

1702.90.90 00 Other sugars; sugar syrups not containing added flavoring

and coloring matter; artificial honey, whether or not mixed

with natural honey; caramel ...................... 5.1% Free (A,CA,E,IL,J,MX) (

11) 8,245

2106.90.42 00 Syrups derived from cane or beet sugar, containing

added coloring but not added flavoring matter, described

in general note 15 of the HTS and entered pursuant to

its provisions, not counted toward tariff-rate quota ...... 3.6606¢/kg of total

sugars

Free (A,CA,E*,IL,J,MX) 0 24

2106.90.44 00 Syrups derived from cane or beet sugar, containing

added coloring but not added flavoring matter, counted

toward tariff-rate quota of 22,000 metric tons3......... 3.6606¢/kg of total

sugars

Free(A,CA,E*,IL,J,MX) 0 24

2106.90.46 00 Syrups derived from cane or beet sugar, containing

added coloring but not added flavoring matter, out-of

tariff-rate quota, subject to special safeguard duty

rates4 subheadings 9904.17.08-9904.17.16 ........... 35.74¢/kg 28.247¢/kg on total

sugars (MX)

0 24

See footnotes at end of table.
A-10

Table A-1—Continued

Sugar: Harmonized Tariff Schedule subheadings; description;1 U.S. column 1 rate of duty as of January 1, 2000; U.S. exports, 1999; and

U.S. imports, 1999 

1

 Some tariff descriptions have been condensed. For the precise legal tariff description see HTS Chapters 12, 17, and 21.

2

 Programs under which special tariff treatment may be provided and the corresponding symbols for such programs as they are indicated in the “Special”

subcolumn are as follows: North American Free Trade Agreement: Goods of Canada (CA); North American Free Trade Agreement, Goods of Mexico (MX);

Caribbean Basin Economic Recovery Act (E) or (E*); United States-Israel Free Trade Act (IL); Andean Trade Preference Act (J); General System of Preferences

(A), (A*), or (A+).

3

 TRQ levels for raw cane sugar and refined sugar, as provided for in additional note 5(a)(i) to chapter 17 of the HTS, differ from (are in excess of) annual

TRQ levels announced by the United States Trade Representative. Additional note 5(a)(ii) grants the Secretary of Agriculture the ability to modify any quantitative

limitations which have previously been established under note 5(a)(i) but does not allow the Secretary to reduce the total amount of the TRQ below the amounts

provided for in 5(a)(i). 

4

 Special safeguard measures were established pursuant to Article 5 of the Uruguay Round Agreement on Agriculture. Section 101 of the Uruguay Round

Agreements Act allows for the imposition of additional duties based upon the value or quantity of goods imported into the United States for certain agricultural

products. Value-based special safeguards are applied automatically to out-of quota imports of (i) raw and refined sugar, (ii) blended syrups and (iii) sugarcontaining products. Quantity-based safeguards apply only if imports reach the trigger level of imports announced in the Federal Register on March 9, 2000. Only

one safeguard, value or quantity, may be applied at a time. Value- and quantity-based special safeguard rates are provided for in chapter 99, subchapter IV of the

HTS. 

5

 The value of U.S. exports is not available for this individual subheading, however the value of exports for raw cane sugar, in solid form, without added

flavoring or coloring (schedule B subheading 1701.11) was $3.9 million in 1999.

6

 The value of U.S. exports is not available for this individual subheading, however the value of exports for refined sugar, in solid form, without added flavoring

or coloring (schedule B subheading 1701.12) was $0.47 million in 1999.

7

 The value of U.S. exports is not available for this individual subheading, however the value of exports for cane or beet sugar and chemically pure sucrose in

solid form, containing added coloring, without added flavoring (schedule B subheading 1701.91.1020) was $1.5 million in 1999.

8

 The value of U.S. exports is not available for this individual subheading, however the value of exports for products containing over 65 percent by dry weight

of sugar and containing added flavoring, whether or not containing added coloring (schedule B subheading 1701.91.1040) was $0.5 million in 1999.

9

 The value of U.S. exports is not available for this individual subheading, however the value of exports for products containing over 10 percent by dry weight

of sugar, containing added flavoring, whether or not containing added coloring (schedule B subheading 1701.91.3020) was $0.6 million in 1999.

10 The value of U.S. exports is not available for this individual subheading, however the value of exports for other sugars derived from sugarcane or sugar

beets, containing non-sugar solids equal to 6 percent or less by weight of total soluble solids (schedule B subheading 1702.90.45) was $3.8 million in 1999.

11 The value of U.S. exports is not available for this individual subheading, however the value of exports for other sugars (schedule B subheading 1702.90.50)

was $16.6 million in 1999.
A-11

Table A-2

Sugar: Harmonized Tariff Schedule preferential NAFTA rates for goods of Mexico1 as of January 1,

2000

HTS

subheading Brief description Special rate of duty

9906.17.03

9906.17.04

9906.17.05

9906.17.39

9906.17.40

9906.17.41

Cane or beet sugar and chemically pure sucrose, in solid form:

 Provided for in 1701.91.48:

 Subject to quantitative limitations specified in U.S. note 18 to this 

 subchapter2...........................................

 Other:

 Valued not over 31.5¢/kg ...............................

 Other ..............................................

 

 Provided for in 1701.91.58:

 Subject to quantitative limitations specified in U.S. note 20 to this 

 subchapter5...........................................

 Other:

 Valued not over 31.5¢/kg ...............................

 Other ..............................................

Free (MX)3

11.4¢/kg (MX)4

31.6% (MX)4

Free (MX)3

11.4¢/kg (MX)4

31.6% (MX)4

9906.17.07

9906.17.08

9906.17.09

9906.17.10

9906.17.12

9906.17.13

9906.17.14

9906.17.15

Other sugars, including chemically pure lactose, maltose, glucose and

fructose, in solid form; sugar syrups not containing added flavoring or

coloring matter; artificial honey, whether or not mixed with natural honey;

caramel:

 Provided for in subheading 1702.20.28 or 1702.30.28:

 Goods of a type described in U.S. note 19 to this subchapter:

 Subject to the quantitative limits specified in U.S. note 19 to this 

 subchapter6.........................................

 

 Other:

 Valued not over 15.8¢/kg .............................

 Other ............................................

 Other .................................................

 

 Provided for in subheading 1702.40.28 or 1702.60.28:

 Goods of a type described in U.S. note 19 to this subchapter:

 Subject to the quantitative limits specified in U.S. note 19 to this 

 subchapter6.........................................

 

 Other:

 Valued not over 31.5¢/kg .............................

 Other ............................................

 Other .................................................

Free (MX)3

5.7¢/kg (MX)4

36.1% (MX)4

Free (MX)7

Free (MX)3

11.4¢/kg (MX)4

36.1% (MX)4

Free (MX)7

See footnotes at end of table
A-12

Table A-2—Continued

Sugar: Harmonized Tariff Schedule preferential NAFTA rates for goods of Mexico1 as of January 1,

2000

HTS

subheading Brief description Special rate of duty

9906.17.18

9906.17.19

9906.17.20

9906.17.21

9906.17.22

9906.17.23

9906.17.24

 Provided for in subheading 1702.90.68:

 Subject to the quantitative limits specified in U.S. note 18 to this 

 subchapter2............................................

 

 Other:

 Valued not over 31.5¢/kg .............................

 Other ............................................

 

 Provided for in subheading 1702.90.58:

 Goods of a type described in U.S. note 19 to this subchapter:

 Subject to the quantitative limits specified in U.S. note 19 to this 

 subchapter6.........................................

 

 Other:

 Valued not over 31.5¢/kg .............................

 Other ............................................

 Other .................................................

Free (MX)3

11.4¢/kg (MX)4

36.1% (MX)4

Free (MX)3

11.4¢/kg (MX)4

36.1% (MX)4

Free (MX)7

1

 Refers to goods of Mexico under the terms of general note 12 of the HTS. 

2

 U.S. note 18 to chapter 99, subchapter 6 sets the following quantitative limits on imports under these tariff lines:

1,739,000 kilograms in 1999; 1,791,000 kilograms in 2000; 1,845,000 kilograms in 2001; 1,900,000 kilograms in

2002. Beginning in calendar year 2003, quantitative limits cease to apply for these items.

3

 In-quota tariff rate for Mexico.

4

 Over-quota tariff rate for Mexico

5

 U.S. note 20 to chapter 99, subchapter VI sets the following quantitative limits on imports under these tariff lines:

14,828,000 kilograms in 1999; 15,273,000 kilograms in 2000; 15,731,000 kilograms in 2001; and 16,203,000

kilograms in 2002. Beginning in calendar year 2003, quantitative limits cease to apply for these items.

6

 U.S. note 19 to chapter 99, subchapter VI sets the following quantitative limits on imports under these tariff lines:

1,739,000 kilograms in 1999; 1,791,000 kilograms in 2000; 1,845,000 kilograms in 2001; 1,900,000 kilograms in

2002. Beginning in calendar year 2003, quantitative limits cease to apply for these items. 

7

 Preferential tariff rate for Mexico for products not subject to the TRQ.

Note.—Preferential in-quota and over-quota tariff rates and quantitative limits (TRQs) are not provided for in chapter

99, subchapter VI of the HTS for raw and refined sugar. Instead, the preferential tariff rates applied to Mexico for raw

and refined sugar are provided for in chapter 17 under tariff lines 1701.11.10 and 1701.12.10, respectively. The

preferential over-quota tariff rates for raw and refined sugar are provided for under tariff lines 1701.11.50 and

1701.12.50, respectively. The TRQs for Mexico are not published in the HTS, but rather in a “side-letter” to the

NAFTA. Mexico is permitted to ship raw or refined sugar under its TRQ. The quantitative limits for raw and refined

sugar are as follows: In years 1-6 (1994-99), 7,258 metric tons or “other country” share of the TRQ if Mexico is not a

surplus producer and 25,000 metric tons if Mexico is a surplus producer. In years 7-14 (2000-07), 7,258 metric tons

or “other country” share of the TRQ if Mexico is not a surplus producer and up to 250,000 metric tons if Mexico is a

surplus producer. The actual amount Mexico will import in years 7-14 is still under negotiation. In 2008, quantitative

limits cease to apply for raw and refined sugar.
A-13

Table A-3

Sugar: Harmonized Tariff Schedule value-based and quantity-based special safeguard

subheadings;1 description; and U.S. additional rate of duty as of January 1, 2000

HTS

subheading Brief description Additional duties2

9904.17.01

9904.17.02

9904.17.03

9904.17.04

9904.17.05

9904.17.06

9904.17.07

Sugars, syrups and molasses, provided for in subheading

1701.11.50:

 If entered during the effective period of safeguards 

 based upon value:

 Valued less than 5¢/kg ...........................

 Valued 5¢/kg or more but less than 10¢/kg ...........

 Valued 10¢/kg or more but less than 15¢/kg ...........

 Valued 15¢/kg or more but less than 20¢/kg ...........

 Valued 20¢/kg or more but less than 25¢/kg ...........

 Valued 25¢/kg or more ...........................

 If entered during the effective period of safeguards based 

 upon quantity announced by the Secretary of Agriculture ....

12.9¢/kg

8.7¢/kg

5.5¢/kg

3¢/kg

1.5¢/kg

No additional duty

11.3¢/kg

9904.17.08

9904.17.09

9904.17.10

9904.17.11

9904.17.12

9904.17.13

9904.17.14

9904.17.15

9904.17.16

Sugars, syrups and molasses, provided for in subheadings

1701.12.50, 1701.91.30, 1701.99.50, 1702.90.20

 If entered during the effective period of safeguards based 

 upon value:

 Valued less than 5¢/kg ...........................

 Valued 5¢/kg or more but less than 10¢/kg ...........

 Valued 10¢/kg or more but less than 15¢/kg ...........

 Valued 15¢/kg or more but less than 20¢/kg ...........

 Valued 20¢/kg or more but less than 25¢/kg ...........

 Valued 25¢/kg or more but less than 30¢/kg ...........

 Valued 30¢/kg or more but less than 35¢/kg ...........

 Valued 35¢/kg or more ...........................

 If entered during the effective period of safeguards based 

 upon quantity announced by the Secretary of Agriculture ....

21.6¢/kg

17.1¢/kg

13.1¢/kg

9.6¢/kg

7.1¢/kg

4.6¢/kg

3.1¢/kg

No additional duty

11.9¢/kg

9904.17.31

9904.17.32

9904.17.33

9904.17.34

9904.17.35

9904.17.36

9904.17.37

9904.17.38

9904.17.39

Articles containing over 65 percent by dry weight of sugars

described in additional U.S. note 2 to chapter 17, provided for in

subheadings 1701.91.48 and 1702.90.68

 If entered during the effective period of safeguards based 

 upon value:

 Valued less than 5¢/kg ...........................

 Valued 5¢/kg or more but less than 10¢/kg ...........

 Valued 10¢/kg or more but less than 15¢/kg ...........

 Valued 15¢/kg or more but less than 20¢/kg ...........

 Valued 20¢/kg or more but less than 25¢/kg ...........

 Valued 25¢/kg or more but less than 30¢/kg ...........

 Valued 30¢/kg or more but less than 35¢/kg ...........

 Valued 35¢/kg or more ...........................

 If entered during the effective period of safeguards based 

 upon quantity announced by the Secretary of Agriculture ....

20.7¢/kg

16.2¢/kg

12.2¢/kg

8.9¢/kg

6.4¢/kg

4.1¢/kg

2.6¢/kg

No additional duty

11.3¢/kg + 1.7%

See footnotes at end of table.
A-14

Table A-3—Continued

Sugar: Harmonized Tariff Schedule value-based and quantity-based special safeguard

subheadings;1 description; and U.S. additional rate of duty as of January 1, 2000

HTS

subheading Brief description Additional duties2

9904.17.49

9904.17.50

9904.17.51

9904.17.52

9904.17.53

9904.17.54

9904.17.55

9904.17.56

9904.17.57

Articles containing over 10 percent by dry weight of sugars

described in additional U.S. note 3 to chapter 17, provided for in

subheading 1701.91.58

 If entered during the effective period of safeguards based 

 upon value:

 Valued less than 5¢/kg ...........................

 Valued 5¢/kg or more but less than 10¢/kg ...........

 Valued 10¢/kg or more but less than 15¢/kg ...........

 Valued 15¢/kg or more but less than 20¢/kg ...........

 Valued 20¢/kg or more but less than 25¢/kg ...........

 Valued 25¢/kg or more but less than 30¢/kg ...........

 Valued 30¢/kg or more but less than 35¢/kg ...........

 Valued 35¢/kg or more ...........................

 If entered during the effective period of safeguards based 

 upon quantity announced by the Secretary of Agriculture ....

20.7¢/kg

16.2¢/kg

12.2¢/kg

8.9¢/kg

6.4¢/kg

4.1¢/kg

2.6¢/kg

No additional duty

11.3¢/kg + 1.7%

9904.17.66

9904.17.67

9904.17.68

9904.17.69

9904.17.70

9904.17.71

9904.17.72

9904.17.73

9904.17.74

9904.17.75

9904.17.76

9904.17.77

Blended syrups containing sugars derived from sugarcane or

sugar beets, capable of being further processed or mixed with

similar or other ingredients, and not prepared for marketing to

the ultimate consumer in the identical form and package which

imported, provided for in subheadings 1702.20.28, 1702.30.28,

1702.40.28, 1702.60.28 or 1704.90.28:

 If entered during the effective period of safeguards based 

 upon value:

 Valued less than 5¢/kg ...........................

 Valued 5¢/kg or more but less than 10¢/kg ...........

 Valued 10¢/kg or more but less than 15¢/kg ...........

 Valued 15¢/kg or more but less than 20¢/kg ...........

 Valued 20¢/kg or more but less than 25¢/kg ...........

 Valued 25¢/kg or more but less than 30¢/kg ...........

 Valued 30¢/kg or more ...........................

 If entered during the effective period of safeguards based 

 upon quantity announced by the Secretary of Agriculture:

 Provided for in subheading 1702.20.28 ..............

 Provided for in subheading 1702.30.28 ..............

 Provided for in subheading 1702.40.28 ..............

 Provided for in subheading 1702.60.28 ..............

 Provided for in subheading 1702.90.28 ..............

18.1¢/kg

13.6¢/kg

9.9¢/kg

7¢/kg

4.5¢/kg

2.7¢/kg

No additional duty

5.6¢/kg of total sugars + 1.7%

5.6¢/kg of total sugars + 1.7%

11.3¢/kg of total sugars + 1.7%

11.3¢/kg of total sugars + 1.7%

11.3¢/kg of total sugars + 1.7%

1

 Special safeguard measures were established pursuant to Article 5 of the Uruguay Round Agreement on

Agriculture. Section 101 of the Uruguay Round Agreements Act allows for the imposition of additional duties based

upon the value or quantity of goods imported into the United States for certain agricultural products. Value-based

special safeguards are applied automatically to out-of quota imports of (i) raw and refined sugar, (ii) blended syrups

and (iii) sugar-containing products. Quantity-based safeguards apply only if imports reach the trigger level of

imports announced in the Federal Register on Mar. 9, 2000. Only one safeguard, value or quantity, may be applied

at a time. Value- and quantity-based special safeguard rates are provided for in chapter 99, subchapter IV of the

HTS. 

2

 Additional safeguard duties do not apply to Canada or Mexico.
APPENDIX B

UNDERSTANDING THE STRUCTURE OF

THE HARMONIZED TARIFF SCHEDULE

FOR SUGAR 
B-2

Understanding the structure of the Harmonized Tariff Schedule for Sugar

The purpose of this document is to provide a detailed understanding of the structure of the Harmonized

Tariff Schedule (HTS) for Sugar–found in chapter 17. The HTS for sugar is highly complicated due

to policy structure (e.g., tariff-rate quotas (TRQs) and special safeguards (SSGs)), varying tariff-types

(i.e., ad valorem, specific, compound and technical tariffs), preferential agreements (e.g., NAFTA,

CBERA), product identity, and an intricate footnote scheme, to name a few. In the following pages,

issues pertaining to sugar will be covered and examples will be given to clarify the process by which

tariff rates and import quantities are determined.

Prior to detailing each chapter, a basic orientation is needed. First, the HTS comprises:

(1) General Notes (GN);

(2) General Rules of Interpretation;

(3) General Statistical Notes;

(4) Chapters 1 through 99 (includes U.S. notes, subheading notes, 

 and additional U.S. notes);

(5) Appendices;

(6) Alphabetic Index; and

(7) Change Records.

When determining appropriate tariff lines, the starting point is the chapter specific to the commodity

of interest. It should be noted that the HTS is based upon a hierarchical structure that, once

understood, is fairly simple to follow. A tariff line can be traced from the heading to the subheading

by correctly interpreting the article description. To begin, the imported commodity of interest is

determined to be provided for in a general chapter heading (i.e., the 4-digit product category). Once,

the commodity’s 4-digit category is found, the subheading is determined (i.e., 6-digit product

category). After the appropriate subheading based upon the article descriptions is identified, the good

can then be further categorized into an additional subheading–an 8-digit category. 10-digit categories

exist, but tariff rates are only assigned at the 8-digit level. The 10-digit tariff levels are called

“statistical reporting numbers.”

Finding the appropriate tariff heading and subheading within the chapter is the first step. Once it is

determined that the imported product falls under the tariff line, the tariff rate must then be identified

correctly. There may be quantity, country, or commodity-based restrictions, or there may be

preferential rates available. The HTS is very complex, and it is for this reason that the rate should not

simply be read at face value without in-depth investigation. Determining the tariff rate (and often the

allowable quantity) may require referring to GN’s, other chapters, U.S. and additional U.S. notes,

subheading notes, and appendices. It is for the aforementioned reasons that explanations and examples

are given in this document. It is meant as a resource and guide, nothing else. The HTS should be

consulted for tariff rates and article descriptions. 

Chapter 17–Sugars and Sugar Confectionary

Chapter 17 is where the bulk of the tariff rates for sugar are found. Covered in this chapter are: sugars

(both void of and including flavoring and coloring) such as sucrose, lactose, maltose, glucose and

fructose; sugar syrups; artificial honey; caramel; and molasses resulting from the extraction or refining

of sugar or sugar confectionery. 
B-3

Table B-1

HTS subheadings 1701.11.05-1701.11.50

Heading/

Subheading

Stat.

Suffix Article Description

Unit of

Quantity

Rates of Duty

1 2

General Special

1701

1701.11

1701.11.05

1701.11.10

1701.11.20

1701.11.50

00

00

00

00

Cane or beet sugar and chemically pure sucrose in

solid form:

Raw sugar not containing added flavoring or 

coloring matter:

Cane sugar:

Described in general note 15 of the tariff

schedule and entered pursuant to its

provisions .........................

 

Described in additional U.S. note 5 to this

chapter and entered pursuant to its

provisions .........................

Other sugar to be used for the production

(other than by distillation) of polyhydric

alcohols for use as a substitute for sugar in

human food consumption, or to be refined

and re-exported in refined form or in

sugar-containing products, or to be

substituted for domestically produced raw

cane sugar that has been, or will be

exported ..........................

 

Other 1/ ..........................

kg .......

kg .......

kg .......

kg .......

1.4606¢/kg less

.020668¢/kg for

each degree under

100 degrees and

fractions of a

degree in

proportion, but not

less than

.943854¢/kg

1.4606¢/kg less

.020668¢/kg for

each degree under

100 degrees and

fractions of a

degree in

proportion, but not

less than

.943854¢/kg

1.4606¢/kg less

.020668¢/kg for

each degree under

100 degrees and

fractions of a

degree in

proportion, but not

less than

.943854¢/kg

33.87¢/kg

Free (A*, CA,

E*, IL, J, MX)

Free (A*, CA,

E*, IL, J, MX)

Free (A*, CA,

E*, IL, J, MX)

28.247¢/kg

less .4¢/kg for

each degree

under 100

degrees and

fractions of a

degree in

proportion, but

not less than

18.256¢/kg

(MX)

4.3817¢/kg less

.0622005¢/kg for

each degree

under 100

degrees and

fractions of a

degree in

proportion, but

not less than

2.831562¢/kg

4.3817¢/kg less

.0622005¢/kg for

each degree

under 100

degrees and

fractions of a

degree in

proportion, but

not less than

2.831562¢/kg

4.3817¢/kg less

.0622005¢/kg for

each degree

under 100

degrees and

fractions of a

degree in

proportion, but

not less than

2.831562¢/kg

39.85¢/kg

1/ See subheadings 9904.17.01-9904.17.07.

 
 

1

 Most sugar enters above 96 International Sugar Degrees.

 

2

 In determining which GSP countries are given the preferential tariff rate, first consult

General Note 4 (a) and then consult General Note 4 (d) to confirm whether or not the country on

the list in GN 4 (a) is not ineligible for GSP rates for the particular tariff line in question. 

B-4

The four headings in Chapter 17 are as follows:

1701–Cane or beet sugar and chemically pure sucrose, in solid form;

1702–Other sugars, including chemically pure lactose, maltose, glucose and

fructose, in solid form; sugar syrups not containing added flavoring or

coloring matter; artificial honey, whether or not mixed with natural honey;

caramel;

1703–Molasses resulting from the extraction or refining of sugar; and

1704–Sugar confectionery (including white chocolate), not containing cocoa.

The structure of the HTS for sugar and confectionery is quite complicated in chapter 17 because of

TRQs, varying tariff types, and preferential NAFTA rates for Mexico in particular. Because of these

intricacies, examples are provided on how to trace 8-digit tariff lines through the HTS.

Subheading 1701.11 applies to raw, cane sugar without added coloring and flavoring. There are four

8-digit tariff lines that are included under this subheading. For clarity, an explanation of each

subheading under subheading 1701.11 is given below:

1. Subheading 1701.11.05–Described in general note 15 and entered pursuant to its

provision.

• This tariff item is for products that are subject to general note 15. GN 15 is

particular to agricultural products that are (1) subject to a TRQ, and (2) subject to

safeguard measures.

• Amounts imported under this tariff line DO NOT count against TRQ imports.

• GN 15 includes products that enter for government use; personal use; samples for

taking orders or for use at exhibitions, etc.; and blended syrups that enter through a

Foreign Trade Zone.

• The “General” rates of duty in Column 1 for countries with NTR status is

1.4606¢/kg minus .020668¢/kg for each degree (and fractions of thereof) under 100

degrees1; however, if the calculated amount is less than .943854¢/kg, then the tariff

rate applied is .943854¢/kg. This tariff rate is classified as a “technical” rate of

duty.

• “Special” rates in Column 1 are the preferential rates offered to those countries

listed. NAFTA countries, Canada and Mexico, import duty-free along with GSP

countries (excluding India and Brazil)2, CBERA countries, Israel, and ATPA

countries.

• Column 2 is the tariff rate that applies to Afghanistan, Laos, Vietnam, North

Korea, Serbia, Montenegro, and Cuba. If no sanctions are in place, these countries

pay 4.3817¢/kg minus .0622005¢/kg for each degree (and fractions of thereof)

under 100 degrees; however, if the calculated amount is less than 2.831562¢/kg,

then the tariff rate applied is 2.831562¢/kg. As mentioned above, this is a

technical rate of duty.
 

3

 Consult the Federal Register, Vol. 64, No. 29/Friday, February 12, 1999, 7 CFR PART 1530

for the Final Action on the Re-export Program.

 

4

 TRQs are not allocated specifically to countries in chapter 17, but the quota amounts may be

(and generally is) allocated among supplying countries by the USTR. See USTR homepage for

allocation amounts. 

B-5

2. Subheading 1701.11.10–Described in additional note 5 to this chapter and entered

pursuant to its provisions.

• This subheading refers to the amount of raw, cane sugar that can be entered or

withdrawn from stocks for consumption during the current fiscal year.

• No less than 1,117,195 metric tons can be imported under this tariff line.

• The above amount can be allocated to individual countries by the USTR (additional

note 5 (b) (i)). 

• Imports under this subheading are counted toward the current year’s TRQ, but can

be counted toward the previous or subsequent year’s TRQ with special approval

from the Secretary of Agriculture (hereafter “Secretary”).

• The “General”, “Special”, and column 2 rates of duty are identical to those in

subheading 1701.11.05.

• It should be noted that in additional note 5 (b) (ii), the Secretary is given the right to

modify (increase, but not reduce) the quantitative restriction if domestic supply is

inadequate in meeting domestic demand at reasonable prices.

3. Subheading 1701.11.20–Other sugar to be used for the production (other than by

distillation) of polyhydric alcohols for use as a substitute for sugar in human food

consumption, or to be refined and re-exported in refined form or in sugar containing

products, or to be substituted for domestically produced raw cane sugar that has

been, or will be exported.

• This tariff line is essentially an end-use provision requiring re-exportation of the

product.3

• Imports that enter under this tariff line DO NOT count toward TRQ imports.

• Tariff rates are identical to the rates in the two subheadings above.

4. Subheading 1701.11.50–Other

• This tariff rate applies to out-of quota imports, often known as the 2nd tier tariff

rate. Those who do not own the rights to import at the within quota tariff rate in

subheading 1701.11.10, pay this higher tariff rate.4

• These imports DO NOT count toward TRQ imports.

• The rates of duty are substantially higher than the within quota rates. In fact, the

rates listed under 1701.11.50 are not the sole rates of duty because the imports

under this tariff line are also subject to special safeguards, as signified by footnote

1/: “see subheadings 9904.17.01-9904.17.07.”

• MFN rates are 33.87¢/kg plus the additional safeguard duty. Safeguard rates DO

NOT apply to sugar imports from Canada and Mexico.

• Special rates that apply to Mexico are 28.247¢/kg minus 0.4¢/kg for each degree

below 100 degrees (and a fraction of thereof), but the minimum rate that applies is

18.256¢/kg. 

• Table 2 below shows the additional duties that apply to imports under this

subheading.
 

5

 The numbering of special safeguard tariff lines is as follows: Heading 9904 refers to HTS

chapter 99, subchapter 4; Subheading: refers to HTS chapter and order of tariff line. For

example, the first safeguard tariff line footnoted in HTS chapter 17 can be found in chapter 99,

subchapter 4, subheading 1701. Thus, the special safeguard tariff line is: 9904.17.01.

 

6

 The safeguards were negotiated during the Uruguay Round Agreement on Agriculture. They

can be applied if price falls below the set “trigger price” or if import volume goes above the set

“trigger volume” initially notified to the WTO by the importing country.

B-6

• This table of safeguard rates is found in chapter 99, subchapter IV of the HTS.5

• Table 1 and Table 2 should be used in conjunction to determine the appropriate rate

of duty for out-of quota imports.

• As dictated by the Agreement on Agriculture, safeguards can apply based upon

price or volume.6 Price-based safeguards are automatically effective for U.S. sugar

products unless the Secretary chooses to switch to volume-based safeguards. 

Currently, the safeguards that apply are the price-based safeguards (9904.17.01-

9904.17.06) and are determined by the value of the imported product.

• Notice that the additional safeguard duty decreases as the value of the product being

imported increases.

• Footnote 1/ in Table 2 simply requires that the rates apply on the 8-digit levels and

that the units are the same as those in chapter 17.

Table B-2

Special safeguard rates for subheading 1701.11.50

Heading/

Subheading

Stat.

Suffix Article Description

Unit of

Quantity Additional Duties

9904.17.01

9904.17.02

9904.17.03

9904.17.04

9904.17.05

9904.17.06

9904.17.07

1/

1/

1/

1/

1/

1/

1/

Sugars, syrups and molasses, provided for in subheading

1701.11.50: 

If entered during the effective period of safeguards based

upon value:

Valued less than 5¢/kg .....................

Valued 5¢/kg or more but less than 10¢/kg .....

Valued 10¢/kg or more but less than 15¢/kg ....

Valued 15¢/kg or more but less than 20¢/kg ....

Valued 20¢/kg or more but less than 25¢/kg ....

Valued 25¢/kg or more ....................

If entered during the effective period of safeguards based

upon quantity announced by the Secretary of Agriculture

1/

1/

1/

1/

1/

1/

1/

12.9¢/kg

8.7¢/kg

5.5¢/kg

3¢/kg

1.5¢/kg

No additional duty

11.3¢/kg

1/ See chapter 99 statistical note 1.

Subheading 1701.12 for raw, beet sugar is structured like to subheading 1701.11. Of course the

tariff rates are different, but the same TRQ and safeguard issues apply. 1701.11 and 1701.12 do

not provide an example of how to determine the preferential tariff rates under the NAFTA

agreement, and so, subheading 1701.91.52-1701.91.58 is detailed below to provide for an

understanding.
B-7

Table B-3

HTS subheadings 1701.91.52-1701.91.58 

Heading/

Subheading

Stat.

Suffix Article Description

Unit of

Quantity

Rates of Duty

1 2

General Special

1701.91

1701.91.52

1701.91.54

1701.91.58

00

00

00

Other:

Containing added flavoring or coloring matter:

Containing added flavoring matter whether or not

containing added coloring:

Articles containing over 10 percent by dry

weight of sugar described in additional U.S.

note 3 to chapter 17:

Described in general note 15 of the

tariff schedule and entered pursuant to

its provisions .....................

Described in additional U.S. note 8 to

this chapter and entered pursuant to its

provisions .......................

 Other 2/ .........................

kg .......

kg .......

kg .......

6%

6%

33.9¢/kg +

5.1%

Free (A, CA, E, IL, J,

MX)

Free (A, CA, E, IL, J)

See 9906.17.39 -

99.06.17.41 (MX)

20%

20%

33.9¢/kg +

6%

2/ See subheadings 9904.17.49 - 9904.17.65

1. Subheading 1701.91.52–Described in general note 15 of the tariff schedule and

pursuant to its provisions

• This tariff item is for products that are subject to general note 15, as described

earlier.

• The tariff rate for countries with NTR status is an ad valorem rate of 6%.

• “Special” rates of “Free” are offered to GSP countries (A), Canada (CA),

CBERA countries (E), Israel (IL), ATPA (J) countries and Mexico (MX).

• Column 2 is the tariff rate that applies to Afghanistan, Laos, Vietnam, North

Korea, Serbia, Montenegro, and Cuba. If no sanctions are in place, these

countries pay a 20% ad valorem rate of duty.

2. Subheading 1701.91.54–Described in additional U.S. note 8 to this chapter and

entered pursuant to its provisions

• The products entering under this subheading are subject to a TRQ of 64,709

metric tons for a 12-month period from October 1 in any year to the following

September 30.

• Those countries that own the right to ship under this tariff line pay a 1st tier ad

valorem tariff rate of 6%.

• “Special” duty-free rates are offered to GSP countries (A), Canada (CA), CBERA

countries (E), Israel (IL), and ATPA (J) countries.

• Products of Mexico are not permitted or included under this tariff line, but rather

under subheading 1701.91.58 at a preferential NAFTA rate.
 

7

 The numbering of NAFTA tariff lines is as follows: Heading 9906 refers to HTS chapter 99,

subchapter 6; Subheading: refers to HTS chapter and order of tariff line. For example, the first

NAFTA tariff line footnoted in HTS chapter 18 can be found in chapter 99, subchapter 66,

Subheading 1801. Thus, the NAFTA tariff line is: 9906.18.01.

B-8

Table B-4 below specifies the preferential NAFTA rates for Mexico under subheading

1701.91.58. Both Tables B-3 and B-4 should be read in conjunction with one another along

with the table that outlines additional safeguard duties (not depicted here).7

Table B-4

Preferential NAFTA rates for Mexico for HTS subheading 1701.91.58 

Heading/

Subheading

Stat.

Suffix Article Description

Unit of

Quantity

Rates of Duty

1 2

General Special

9906.17.39

9906.17.40

9906.17.41

1/

1/

1/

Cane or beet sugar and chemically pure sucrose, in

solid form:

Provided for in subheading 1701.91.58: 

Subject to the quantitative limits 

specified in U.S. note 20 to this 

subchapter .......................

 

Other:

Valued not over 31.5¢/kg ...........

Other ...........................

1/

1/

1/

Free (MX)

11.4¢/kg (MX)

36.1% (MX)

1/ See chapter 99 statistical note 1.

3. Subheading 1701.91.58–Other

• This subheading pertains to the out-of quota imports in this product category.

• The 2nd tier tariff rate applied to countries with MFN status (including Canada,

excluding Mexico) is the compound rate of 33.9¢/kg plus a 5% ad valorem tariff

rate plus the additional safeguard rates.

• Safeguards apply to this tariff line as signified by footnote 2/ which refers to

subheadings 9904.17.49 - 9904.17.65 noted in subchapter IV. These are pricebased safeguards similar to those mentioned earlier in which the additional duty

decreases as the value of the product increases. 

• Mexico receives a “Special” preferential tariff rate and has its own TRQ applied

to this product category. This is signified in the “Special” column by referring to

9906.17.39 - 9906.17.41 found in subchapter VI, the subchapter which provides

for NAFTA provisions. 

• 9906.17.39 refers to U.S. note 20 in subchapter VI where Mexico’s TRQ level

can be found. This tariff rate in 9906.17.39 is the 1st tier tariff rate for Mexico’s

individual TRQ. The rate Mexico pays for its within quota imports is “Free.”

• 9906.17.40 and 9906.17.41 are the out-of quota tariff rates Mexico pays if it

exceeds the specified level of TRQ imports in the given year, and are based upon

the value of the product. 

• 9906.17.40 is the 2nd tier tariff rate if the imports are not valued at over 31.5¢/kg. 

The rate is 11.4¢/kg. 9906.17.41 is the 2nd tier tariff rate for imports valued over

31.5¢/kg. This out-of quota rate is an ad valorem rate of 36.1%. Note that no

additional safeguard duties apply to Mexico.
B-9

These examples from chapter 17 provide clarity in understanding the hierarchical structure

of the HTS. Other headings could be covered such as 1702, 1703 and 1704, but the process

of reading the schedule is the same as in those described prior. It should be noted that some

of the tariff lines in chapter 17 have TRQs applied whose quantities are zero. This means

that the within quota rate is not valid and that all suppliers pay the over quota rate.

APPENDIX C

EXPLANATION OF TARIFF AND TRADE

AGREEMENT TERMS
C-2

TARIFF AND TRADE AGREEMENT

TERMS

In the Harmonized Tariff Schedule of the United States (HTS), chapters 1 through 97 cover

all goods in trade and incorporate in the tariff nomenclature the internationally adopted

Harmonized Commodity Description and Coding System through the 6-digit level of product

description. Subordinate 8-digit product subdivisions, either enacted by Congress or

proclaimed by the President, allow more narrowly applicable duty rates; 10-digit

administrative statistical reporting numbers provide data of national interest. Chapters 98 and

99 contain special U.S. classifications and temporary rate provisions, respectively. The HTS

replaced the Tariff Schedules of the United States (TSUS) effective January 1, 1989.

Duty rates in the general subcolumn of HTS column 1 are normal trade relations rates, many

of which have been eliminated or are being reduced as concessions resulting from the Uruguay

Round of Multilateral Trade Negotiations. Column 1-general duty rates apply to all countries

except those listed in HTS general note 3(b) (Afghanistan, Cuba, Laos, North Korea, and

Vietnam) plus Serbia and Montenegro, which are subject to the statutory rates set forth in

column 2. Specified goods from designated general-rate countries may be eligible for reduced

rates of duty or for duty-free entry under one or more preferential tariff programs. Such tariff

treatment is set forth in the special subcolumn of HTS rate of duty column 1 or in the general

notes. If eligibility for special tariff rates is not claimed or established, goods are dutiable at

column 1-general rates. The HTS does not enumerate those countries as to which a total or

partial embargo has been declared.

The Generalized System of Preferences (GSP) affords nonreciprocal tariff preferences to

developing countries to aid their economic development and to diversify and expand their

production and exports. The U.S. GSP, enacted in title V of the Trade Act of 1974 for 10

years and extended several times thereafter, applies to merchandise imported on or after

January 1, 1976 and before the close of September 30, 2001. Indicated by the symbol "A",

"A*", or "A+" in the special subcolumn, the GSP provides duty-free entry to eligible articles

the product of and imported directly from designated beneficiary developing countries, as set

forth in general note 4 to the HTS.

The Caribbean Basin Economic Recovery Act (CBERA) affords nonreciprocal tariff

preferences to developing countries in the Caribbean Basin area to aid their economic

development and to diversify and expand their production and exports. The CBERA, enacted

in title II of Public Law 98-67, implemented by Presidential Proclamation 5133 of November

30, 1983, and amended by the Customs and Trade Act of 1990, applies to merchandise

entered, or withdrawn from warehouse for consumption, on or after January 1, 1984.

Indicated by the symbol "E" or "E*" in the special subcolumn, the CBERA provides duty-free

entry to eligible articles, and reduced-duty treatment to certain other articles, which are the

product of and imported directly from designated countries, as set forth in general note 7 to

the HTS.
C-3

Free rates of duty in the special subcolumn followed by the symbol "IL" are applicable to

products of Israel under the United States-Israel Free Trade Area Implementation Act of

1985 (IFTA), as provided in general note 8 to the HTS. 

Preferential nonreciprocal duty-free or reduced-duty treatment in the special subcolumn

followed by the symbol "J" or "J*" in parentheses is afforded to eligible articles the product

of designated beneficiary countries under the Andean Trade Preference Act (ATPA), enacted

as title II of Public Law 102-182 and implemented by Presidential Proclamation 6455 of July

2, 1992 (effective July 22, 1992), as set forth in general note 11 to the HTS.

Preferential free rates of duty in the special subcolumn followed by the symbol "CA" are

applicable to eligible goods of Canada, and rates followed by the symbol "MX" are applicable

to eligible goods of Mexico, under the North American Free Trade Agreement, as provided

in general note 12 to the HTS and implemented effective January 1, 1994 by Presidential

Proclamation 6641 of December 15, 1993. Goods must originate in the NAFTA region under

rules set forth in general note 12(t) and meet other requirements of the note and applicable

regulations.

Other special tariff treatment applies to particular products of insular possessions (general

note 3(a)(iv)), products of the West Bank and Gaza Strip (general note 3(a)(v)), goods

covered by the Automotive Products Trade Act (APTA) (general note 5) and the Agreement

on Trade in Civil Aircraft (ATCA) (general note 6), articles imported from freely

associated states (general note 10), pharmaceutical products (general note 13), and

intermediate chemicals for dyes (general note 14).

The General Agreement on Tariffs and Trade 1994 (GATT 1994), pursuant to the

Agreement Establishing the World Trade Organization, is based upon the earlier GATT 1947

(61 Stat. (pt. 5) A58; 8 UST (pt. 2) 1786) as the primary multilateral system of disciplines

and principles governing international trade. Signatories' obligations under both the 1994 and

1947 agreements focus upon most-favored-nation treatment, the maintenance of scheduled

concession rates of duty, and national treatment for imported products; the GATT also

provides the legal framework for customs valuation standards, "escape clause" (emergency)

actions, antidumping and countervailing duties, dispute settlement, and other measures. The

results of the Uruguay Round of multilateral tariff negotiations are set forth by way of

separate schedules of concessions for each participating contracting party, with the U.S.

schedule designated as Schedule XX. Pursuant to the Agreement on Textiles and Clothing

(ATC) of the GATT 1994, member countries are phasing out restrictions on imports under

the prior "Arrangement Regarding International Trade in Textiles" (known as the Multifiber

Arrangement (MFA)). Under the MFA, which was a departure from GATT 1947

provisions, importing and exporting countries negotiated bilateral agreements limiting textile

and apparel shipments, and importing countries could take unilateral action in the absence or

violation of an agreement. Quantitative limits had been established on imported textiles and

apparel of cotton, other vegetable fibers, wool, man-made fibers or silk blends in an effort to

prevent or limit market disruption in the importing countries. The ATC establishes

notification and safeguard procedures, along with other rules concerning the customs

treatment of textile and apparel shipments, and calls for the eventual complete integration of

this sector into the GATT 1994 over a ten-year period, or by Jan. 1, 2005.