SUGAR AND SWEETENER YEARBOOK                              January 13, 1998
December 1997, SSS-222
                 Approved by the World Agricultural Outlook Board
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SUGAR AND SWEETENER YEARBOOK is published annually by the Economic Research
Service, U.S. Department of Agriculture, Washington, DC 20036-5831.  This
release contains only the text of the report -- tables and graphics are not
included.

Printed copies of this report are available from the ERS-NASS order desk. 
Call, toll-free, 1-800-999-6779 and ask for stock # SSS-222, $22.  ERS-NASS
accepts MasterCard and Visa.
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Summary released December 18, 1997. The next Sugar and Sweetener Situation 
and Outlook report summary is scheduled for release on May 19, 1998. 
Subscriptions to the published report are available from the ERS-NASS order
desk.  Call, toll-free, 1-800-999-6779 and ask for stock #SSS, $22/year. 
ERS-NASS accepts MasterCard and Visa.


Contents

Summary
Special Articles
 Sweetener Flows in the North American Region
 Cuba's Sugar Industry: An Update
Autofax Access to Sugar-Related Data
Internet Access to Sugar-Related Data
List of Tables

Report Coordinator
Jacqueline Salsgiver
(202) 694-5263    FAX (202) 694-5884
E-mail: JSALSGIV@ECON.AG.GOV

Principal Contributors
Ron Lord
Nydia Suarez

Database Coordinator/Graphics & Table Design
Fannye Lockley-Jolly

Layout & Text Design
Wynnice Napper


Summary

U.S. sugar production in 1997/98 (October 1997-September 1998) is projected at
7.86 million short tons, raw value, up 9 percent from 7.2 million tons in
1996/97. If realized, this would be only 1 percent below the record U.S. sugar
production of 1994/95.

Beet sugar production is forecast at 4.4 million tons, raw value, representing
56 percent of total expected sugar production and up 10 percent from last year.
The beet sugar production forecast is 100,000 tons above the September forecast
based on better-than-expected beet production and higher sugar content. Beet
acreage harvested is 1.43 million acres, 107,000 acres above last year, and on
par with 1992/93 through 1995/96. Beet acreage was up in all major growing
states. The increase in acreage was due in part to higher sugarbeet prices and
lower prices of competing crops. The season average price for sugarbeets in
1996/97 was $43.90 per ton, up $5.80 per ton (15 percent) from the year before.

Cane sugar production is forecast at 3.46 million tons, raw value, up 265,000
tons from last year. Louisiana is forecast to produce 1.25 million tons, which
would be up 200,000 tons from last year. Louisiana's forecast of acreage
harvested is a record 375,000 acres, up 12 percent, and sugarcane yield is
forecast at 29 tons per acre, 4 percent above last year, the previous record.
The implied yield of 3.3 tons of sugar per acre would exceed last year's record
by 6 percent. A new variety is contributing to higher per-acre cane yields. The
crop was about 68 percent harvested by the end of November. Weather had been
excellent in October and early November, but rains in late November hampered
the harvest and increased trash and mud entering the mills. Most mills will
finish by the end of the year, with a few likely to operate into early January.

Florida's sugar production is forecast at 1.75 million tons, up 71,000 tons
from last year. The forecast sugarcane yield is 34 tons per acre, from 419,000
acres harvested for sugar, resulting in 14.2 million tons of cane, up 3.2
percent from last year. The implied recovery rate, 12.28 percent, would be 10
percent above last year and the 5-year average. Florida's season runs from
October through March or early April, with January-March production averaging
57 percent of the total.

U.S. sugar consumption, measured by deliveries, for 1997/98 is forecast at 9.95
million tons, up 1.85 percent or 181,000 tons from the revised estimate for
1996/97. Consumption has been increasing 160,000 tons, or about 1.9 percent per
year since 1985/86. Among industrial users, 1996/97 sugar use by the baking,
cereal, and allied products category grew 9 percent, to 2.1 million tons, while
sugar used in beverages fell 12 percent, to 169,000 tons.

The raw cane sugar tariff-rate quota (TRQ) for 1997/98 was set at 1.8 million
metric tons, raw value, with an initial allocation of 1.2 million. The refined
sugar TRQ was set at 50,000 tons,  raw value, with 25,000 allocated to Mexico
under North America Free Trade Agreement (NAFTA) provisions. 

In short tons, imports under the TRQ are forecast at 1.96 million, including a
forecast shortfall of 50,000. Other forecast imports include 300,000 tons for
re-export programs; 10,000 for polyhydric alcohol; 50,000 under tariff code
1702.90.40.00; and 5,000 of high-tariff sugar.

U.S. sugar stocks at the end of 1997/98 (September 30, 1998) are forecast at
1.52 million short tons, up slightly from 1996/97. Stocks reflect a projected
total supply of 11.67 million tons and total use of 10.15 million.

U.S. raw sugar prices (New York No.14 contract) averaged 21.90 cents per pound
in November, compared with 22.12 cents in November 1996, and 22.27 cents in
October 1997. Refined beet sugar list prices in October-December averaged about
25 cents per pound, compared with 29.00 cents a year ago.

High fructose corn syrup (HFCS) production in 1997 is forecast at 8.6 million
short tons, dry basis, up 5.3 percent from 1996. The HFCS-42 spot price has
been about 10.5 cents per pound, dry basis, for most of 1997, down about 28
percent from 14.5 cents in 1996. The HFCS industry expanded capacity
significantly between 1995 and 1997, putting downward pressure on prices. U.S.
HFCS consumption has grown at 4 to 5 percent a year, below the rate of capacity
growth. U.S. exports of HFCS to Mexico continue to grow despite increased
tariffs in 1996 and the imposition of provisional anti-dumping duties earlier
this year. 

Sweetener Flows in The North American Region 

by
Nydia R. Suarez 1/

---------------
1/ Agricultural economist, Specialty Crops Branch, Economic Research Service,
USDA.
---------------

Abstract: Sugar trade volumes between the United States, Canada, and Mexico are
important to the respective countries, though not very large compared with each
country's production and consumption, except for Canada. Mexico has shifted
from being a deficit to a surplus sugar producer in recent years. Changing
trade rules and patterns have caused trade frictions. The United States and
Canada recently settled a dispute over market access issues, while a Mexican
Government announcement on an anti-dumping case against U.S. HFCS exporting
companies is expected by the end of 1997.

Keywords: Canada, Mexico, the United States, the North American Free Trade
Agreement, high fructose corn syrup, trade, sugar, imports, exports.

Introduction

Trade in sugar between the United States, Canada, and Mexico is strongly
influenced by the three countries' respective sugar policies. Canada's sugar
tariffs are relatively low, and Canada does not have a sugar price support
program. Between the United States and Mexico, trade in sugar has in the past
occurred in both directions. The United States and Mexico support sugar prices
in part by restricting imports while Mexico also subsidizes exports.

High fructose corn syrup (HFCS) trade between the three countries varies. Trade
is negligible between Mexico and Canada, while the United States exports to
Mexico. HFCS tariffs between the three countries are relatively low. The recent
increase in U.S. HFCS exports to Mexico has raised concerns in the Mexican
sugar industry. There is two-way trade in HFCS between the United States and
Canada, and U.S. HFCS exports to Canada have been steady except for years of
higher Canadian sugar prices, such as in 1991. Canada at one time exported the
majority of its HFCS production to the United States, but less has been
exported in recent years due in part to low HFCS prices in the United States.

Mexico-U.S. Sweetener Trade

When the United States implemented a sugar quota program in 1982, Mexico was
allocated a "minimum boatload" share of the U.S. sugar import quota (and from
1990, under the tariff-rate quota), which amounted to 7,000-10,000 tons in most
years. From 1982 to 1994, most of Mexico's sugar exports to the United States
were under both the U.S. sugar quota/tariff-rate quota (TRQ) and imported by
U.S. refiners for re-export.

The North American Free Trade Agreement (NAFTA), which became effective in
January 1994, contains provisions affecting sugar trade between the United
States and Mexico. For purposes relating to access to the other country's sugar
market, a formula in the NAFTA defines Mexico (or the United States) as being a
net surplus producer when projected sugar production minus projected domestic
consumption is positive. According to a side letter to the original NAFTA
document, HFCS is included in the net surplus producer formula, but on the
consumption side only. As a result, Mexico would have to produce sugar in
excess of its consumption of both sugar and HFCS in order to attain net surplus
producer status. Until September 30, 2000, Mexican low-duty sugar access to the
United States is limited to the amount of Mexico's net surplus of sugar, as
defined by the net surplus production formula, up to a limit of 25,000 metric
tons, raw value. From October 1, 2000 until September 30, 2008, the low-duty
access limit is the net surplus of sugar, but not more than 250,000 tons. After
October 1, 2008, the high tariff on sugar between the two countries will have
declined to zero, and there will be free trade in sugar.

Mexico was classified as a net surplus sugar producer and given a NAFTA
allocation of 25,000 tons for 1996/97 and also for 1997/98. The sugar can be
shipped as either raw or refined.

Although Mexico was a net sugar importer in the early 1990s, beginning in
1994/95, Mexico again began to export significant amounts. Exports are
currently forecast to reach 750,000 tons in 1997/98, compared with imports of
80,000 tons. Factors contributing to the surplus sugar include higher
production in the wake of government deregulation and privatization in the
early 1990s, lower consumption due in part to the economic decline which
followed the peso devaluation of December 1994, and rising HFCS consumption in
the last few years. These factors were reinforced by increased sugar prices in
Mexico, in particular as measured in pesos, providing higher returns for
producers and dampening sugar consumption.

The price of sugar in Mexico is now sufficiently high so that HFCS is an
attractive substitute for many sweetener users. In the United States, almost
all manufacturers who can utilize a liquid sugar have switched to HFCS. A
similar loss of sugar's market share to HFCS could occur in Mexico,
particularly if the price of sugar remains relatively high.

Two Mexican companies, both affiliated with U.S. companies, have recently built
facilities to manufacture HFCS in Mexico and now produce an estimated 250,000
tons 2/

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2/ For HFCS, units are commercial weight (not dry basis).
---------

a year, up from almost zero 2 years ago. U.S. exports of HFCS to Mexico were
90,000 tons in 1994, fell to 60,000 when Mexico was in recession in 1995, then
rose to 184,000 in 1996.

With HFCS use rising rapidly, on February 26, 1997, the Mexican Government
initiated an anti-dumping investigation regarding imports of HFCS from the
United States at the request of its National Sugar Industry Chamber, the
association of Mexico's sugar producers. On June 24, Mexico issued a
preliminary ruling and imposed provisional duties on U.S.-based companies
exporting HFCS to Mexico. These duties, as high as $175 per ton, were imposed
while investigation of 17 major firms for disloyal trade practices and dumping
of HFCS at below production costs continued. According to the Mexico Trade
Ministry, the duties are equivalent to an average dumping margin of 102.2
percent for grade-42 syrup and 61.1 percent for grade-55 fructose. The United
States requested World Trade Organization (WTO) consultations on the issue in
September, and the Mexican Government is expected to announce a final decision
in early 1998.

Meanwhile, even with the anti-dumping duties in place since June, U.S. exports
of HFCS to Mexico in 1997 have continued strong, with January-October exports
totaling 161,000 tons, compared with 135,000 for the same period in 1996. There
have been trade reports of an agreement between Mexican sugar mills and soft
drink bottlers to limit their use of HFCS for the next 3 years.

Canada-U.S. Sweetener Trade

The United States exported over 50,000 tons of sugar annually to Canada from
the mid-1980s to 1992, mostly under the U.S. refined sugar re-export program,
and over 100,000 tons from 1993 to 1995. Then in November 1995, Canada imposed
anti-dumping duties on U.S. sugar companies, ranging from 69 to 85 percent.
Subsequently, U.S. sugar exports to Canada fell, from over 100,000 tons in 1995
to about 20,000 in 1996, and only 4,000 tons from January through October 1997.

The decline in imports of refined sugar from the United States has enabled
Canadian sugar refiners to increase imports of raw sugar and capture a larger
share of the domestic market for refined sugar: in 1996, Canadian raw sugar
imports exceeded 1 million tons, 20 percent greater than the previous year.
Canada has maintained generally low tariffs on both raw and refined sugar
imports, but tariffs on refined sugar are higher than raw sugar, a policy which
favors Canada's cane sugar refining industry. Refined sugar imports from
countries with most-favored-nation (MFN) status pay a duty of CAN$30.86 per ton
and CAN$22.05 to CAN$25.57 per ton on raw sugar, depending on the polarization
of the sugar.

Though Canada is a net sugar importer, Canadian sugar producers have at times
exported sugar to the United States where the price is higher. To be considered
Canadian in origin, the sugar must be produced from Canadian-grown sugarbeets,
since raw cane sugar from another country, even if refined in Canada, is not
considered to be of Canadian origin. From 1989 through 1995, Canada exported
between 25,000 and 60,000 tons of refined beet sugar, raw value, to the United
States annually. The tariff charged on this beet sugar was the low tariff
established under the 1989 U.S.-Canada Free Trade Agreement, in 1995 US0.20
cents a pound.

Beginning in 1995, the year in which the Uruguay Round of the General Agreement
on Tariffs and Trade (GATT) was implemented, low-duty Canadian sugar could
enter the United States only as part of the U.S. TRQ for refined sugar, which
for 1995/96 and 1996/97 was 22,000 tons, raw value. Refined sugar above the TRQ
level, whether from Canada or elsewhere, was charged the high duty (in 1997,
17.65 cents a pound). The U.S. refined sugar TRQ in 1995/96 and 1996/97 was not
allocated, but was on a first-come, first-served basis: Canadian sugar
exporters competed for a share of the total with other potential suppliers of
refined sugar, and the refined TRQ was generally filled the day it opened,
October 1 in fiscal 1997 and fiscal 1998.

In September 1997, the United States and Canada finalized the terms of a
settlement under which overall Canadian access to U.S. sugar TRQs remain
unchanged. Beginning with the 1997/98 TRQ period, the United States will
allocate to Canada 10,300 metric tons, raw value, for sugar that is a product
of Canada, which is an amount based on the historic trade. Canada will also be
permitted to compete for any quantity of the refined sugar TRQ that is not
allocated among supplying countries and is not reserved for specialty sugar,
without regard to whether the share allocated to Canada for that period has
been filled.

An agreement was also reached on a trade dispute concerning sugar-containing
products. Canada had claimed that certain
sugar-containing products being shipped from the United States to Canada under
the U.S. sugar-containing products re-export program were in violation of
NAFTA. Canada also noted that after 1995, when the United States reclassified
some products into a TRQ for sugar-containing products, exports of these
products from Canada to the United States had declined.

Beginning with the 1997/98 sugar-containing product TRQ, the United States will
allocate 59,250 metric tons to Canada based on historic trade. The total annual
sugar-containing product TRQ is 64,709 metric tons. Canada has dropped its
current NAFTA challenge to the U.S. sugar-containing product re-export program.

An interesting trade pattern in Canadian sugarbeets has also developed whereby
sugarbeets planted in Ontario are processed in the United States, and this
sugar becomes part of the U.S. supply. For the 1997/98 season, about 3,000
acres of Ontario sugarbeets were delivered to a factory in Michigan. The U.S.
duty on Canadian sugarbeets was US17.6 cents per metric ton in 1996, 8.8 cents
in 1997, and will be zero beginning in 1998.

Conclusion

The level of sugar trade between Mexico and the United States will reflect the
limits established in the NAFTA access schedule, which rises to a maximum of
250,000 tons after the year 2000. While U.S. exports of HFCS to Mexico are
likely to continue to increase, the rate of the increase will depend on future
government decisions.

Sugar, HFCS, and sugar-containing product trade between the United States and
Canada is important to the sweetener industries of both countries. Friction
between the United States and Canada over trade in sugar and sugar-containing
products was greatly reduced by a settlement in September 1997.

Cuba's Sugar Industry: An Update

by Ron Lord 1/

----------
1/ The author is an agricultural economist in the Specialty Crops Branch,
Economic Research Service, USDA.
----------

Abstract: Cuban sugar production in 1997/98 is projected to fall to 3.9 million
metric tons, raw value, below the 1996/97 level of 4.2 million tons. The Cuban
Government has announced that it will focus on rebuilding the long-run health
of the industry instead of attempting to maximize short-run output as was done
in recent years. Cuba's share of world exports is forecast to fall below 10
percent in 1997/98.

Keywords: Sugar, sugar trade, Cuba, sugarcane, Helms-Burton Act.

Introduction

For many decades prior to the U.S. embargo of Cuba in 1960, the sugar economies
of the United States and Cuba were tightly integrated, and Cuba often sent over
half of its total exports to the United States, which in turn relied on Cuba
for more than one-third of its foreign supplies. 2/

------------
2/ See previous article on Cuba in the March 1992 Sugar and Sweetener Situation
and Outlook report for more details.

------------
After the U.S. embargo of Cuba, the USSR and various countries in Central and
Eastern Europe provided a market for much of Cuba's sugar. Cuban sugar
production was generally in the
4- to 8-million ton 3/

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3/ In this article, all tons are metric tons, equal to 2,204.62 pounds.
----------

range through the 1960s, 1970s, and 1980s. Importation of large volumes of
Cuban sugar by the USSR and its former satellites was in part driven by
political decisions to support Cuba, and the price paid to Cuba was often well
above prevailing world sugar prices, often consummated with barter agreements
for equipment and oil.

Since 1990, Cuba has earned a much lower return for its sugar, receiving either
the prevailing world market price or its approximate equivalent under barter
agreements. This decline in revenues, combined with other disruptions brought
on by the decline in trading relationships with the former East Block
countries, resulted in a sharp drop in Cuban sugar production, from 8 million
tons in 1989/90 to 3.3 million tons in 1994/95. Since then, there has been some
recovery, and production is estimated to have been 4.2 million tons in 1996/97,
after 4.45 million tons the previous season.

There are 156 operable cane sugar mills in Cuba. Many have equipment that dates
back to the early part of this century, and only eight mills have been built
since 1959. The harvesting process was largely mechanized in the 1970s, and
today about 80 percent of the harvest is done by machines. 

The sugar industry employs one-tenth of the workforce, or about 400,000 people.

In September 1993, the government set up a new form of farm-level cooperative,
the Unidades Basicas de Produccion Coopertiva ( Basic Unit of Cooperative
Production, or UBPC). By the end of 1993, more than 98 percent of sugarcane
agricultural workers became members of UBPCs (Castellanos and Alvarez, p. 65).
While the UBPCs were in part designed to tie worker payments to productivity,
improvements in productivity have not yet occurred, and in 1997 most UBPCs are
still not profitable (CubaNews, p. 7).

Sugarcane is typically harvested from November/December to April/May. If the
harvest continues past April or May, it is often disrupted by heavy rains.

Sugar and the Cuban Economy

Sugar is Cuba's largest export product. From 1990 through 1992, sugar accounted
for 75 percent of Cuba's total exports. However, as sugar exports fell in the
early 1990s, tourism replaced sugar as the largest source of foreign exchange.
Tourism has grown at 20 percent a year since 1990, and in 1996 earned about
$1.45 4/

----------
4/ All revenues are expressed in U.S. dollars.
----------

billion in foreign exchange, compared with about $900 million from sugar.
Another source of revenue for Cuba is remittances from Cubans abroad, estimated
at $530 million in 1995 and $627 million in 1996 (UPI).

Foreign investment in the sugar industry, once considered political anathema,
was permitted after the disastrous 1994/95 crop. In September 1995, the Cuban
National Assembly approved Law No. 77, which governs foreign investment in the
economy. Foreign investment in the sugar sector is mostly for the short-run
finance of sugar production at the provincial level (CubaNews, p. 6). In
1995/96, nine of the 13 sugarcane-producing provinces borrowed about $130
million from foreign investors for agricultural activities, and $160 million
for transportation and processing activities. This foreign investment in sugar
comes with high interest rates, due to high risks, and oftentimes requires
repayment with sugar. The Cuban Government claims to have already paid back the
loans for the 1995/96 crop. Foreign loans for the 1996/97 crop amounted to $330
million.

Foreign investment is also being sought for joint ventures in sugar-related
industries. One joint venture with a company from Spain has been established to
produce high-quality alcohol. The installation is estimated to require $6.5
million and produce 150,000 hectoliters of alcohol a year for export.
Currently, Cuba has 16 alcohol plants producing 1.6 million hectoliters a year.

For 1997, Cuba's Gross Domestic Product (GDP) growth is expected at 2.5
percent, down from 1996's 7.8 percent in part due to the disappointing 1996/97
sugar harvest and lower sugar exports. Much of the growth in 1996 was
attributable to the rise in sugar exports from the previous year's extremely
low levels. Following economic reforms in 1993, which included the legalization
of the use of hard currency (U.S. dollars), Cuba's GDP grew at 0.7 percent in
1994, 2.5 percent in 1995, and 7.8 percent in 1996. The economy had contracted
35 percent between 1990 and 1993.

The U.S. "Helms-Burton" Law

"The Cuban Liberty and Democratic Solidarity Act of 1996," commonly known as
the Helms-Burton law, was approved by the U.S. Congress in March 1996 with the
general intent of tightening the U.S. economic embargo of Cuba. Title III of
the act decrees that companies in a third country trading with Cuba can be
liable to pay damages to former owners of confiscated Cuban property or their
successors. For example, if a third-country company traded or bought sugar
produced at a Cuban sugar mill which had been confiscated, the company would
likely be found to be "trafficking" in the confiscated property. A moratorium
is in place on Title III to allow for negotiations with other countries which
have protested the act. Title IV, which is in effect, bars officials from
companies found to be engaged in "trafficking" from entering the United States.

In the wake of Helms-Burton, some banking and investment groups have withdrawn
from participation in loans for the sugar harvest, but many other companies
continue to provide loans. One large sugar trade house halted trading in Cuban
sugar due to possible implications of the act. And despite the European Union's
(EU) large exportable sugar surplus, it continues to import some Cuban sugar.

For many years, Cuban sugar has not been tendered against the most widely used
world sugar futures contract, the No. 11 contract of the New York Coffee Sugar
& Cocoa Exchange, so the act had little direct impact on that market. But the
value of Cuban sugar has probably decreased due to the act. For example,
competition is reduced by limiting the number of nearby destinations willing to
accept Cuban sugar, thereby lowering the net price received. The act has also
increased the degree of secrecy surrounding many dealings with Cuba.

Carlos Lage, the Cuban Vice President in charge of economic affairs, indicated
that the Helms-Burton law had seriously interrupted the foreign financing
needed to begin the 1996/97 harvest and that the harvest started later, with
fewer foreign inputs than planned.

Cuban Sugar Trade, Past and Present

Once the world's largest sugar exporter, Cuba now ranks behind Brazil, the
European Union, Australia, and Thailand. The Cuban share of world exports has
fallen from above 20 percent in 1990/91 to around 10 percent in recent years
(table 1).

During the 1980s, the USSR (primarily Russia) took over half of Cuba's total
sugar exports, averaging 3-4 million tons a year, and Cuba continued to send
large amounts of sugar to Russia under a barter arrangement for Russian oil in
the early 1990s. But in 1996, Russia imported 1.8 million tons of Cuban sugar,
up from only 722,000 tons in 1995 (table 2). The Russian Government
traditionally handled most of this trade directly, but private traders are now
handling more of the business, and the Russian market is increasingly
competitive. Russia will import slightly more than 3 million tons this year,
much of it in the form of white sugar from Ukraine.

In May 1997, the Russian Ministry of Foreign Economic Relations submitted
proposals to hold a tender on an oil-for-sugar contract with Cuba. The
Ministry's proposal was for 4.5 million tons of oil to be traded for 1.5
million tons of sugar in 1997, and 5.1 million tons of oil for 1.7 million tons
of sugar in 1998. It is not known if this barter trade will actually occur.
Russia also imports sugar from Ukraine, Brazil, and other countries. 

The countries of the former USSR are still the primary destination of Cuban
exports, accounting for 55 percent of the total in 1996 (table 2). There has
been a falling off of Cuban exports to the countries of Eastern Europe, which
accounted for 15 percent of total exports in 1985-89, but only 8 percent in
1996. In this group, only Bulgaria and Romania continue to import Cuban sugar.
Even these two countries hope to increase their domestic beet sugar production
and are not likely to provide a growth market for Cuban sugar in the future.

In Asia, Cuba's largest customers have traditionally been China and Japan.
While freight costs are high, there is (or has been) political support in China
to buy Cuban sugar in some years. Japan has been a steady importer of over
100,000 tons a year, probably as a strategy to diversify origins.

In the Middle East and Africa, Cuba's main customers have been Algeria, Egypt,
and Morocco. This region's share of Cuba's total exports grew from 7 percent in
1985-89 to 25 percent in 1994, but has fallen back to 18 percent in 1995 and 17
percent in 1996. Within the last year, two new sugar refineries have opened in
the Middle East, and the region's imports of raw sugar will rise as the
refineries begin to operate closer to capacity, possibly providing a market for
Cuban raw sugar.

In the Western Hemisphere, which was once Cuba's best market, most countries
are sugar exporters and the region's largest importer, the United States,
maintains an economic embargo. However, Canada has been a steady importer of
Cuban sugar, taking an average of 140,000 tons a year during 1985-89, and
almost 500,000 tons in 1992. Since then, Canadian imports have dropped to
140,000 tons in 1996 and appear to be steady at that pace so far in 1997.
Brazil at one time imported some Cuban sugar for refining and re-exporting, 
but stopped after 1993 and is not likely to resume.

Current Sugar Production Situation

The U. S. Department of Agriculture's (USDA) current estimate of Cuba's 
1996/97 production is 4.2 million tons, but a Cuban official recently stated
that production was 4.25 million tons (Reuters, December 13).  There were many
problems with the harvest, including rain, lack of spare parts, and mill
breakdowns, but the key constraint was lack of sufficient cane entering the
mills. Breaking with a longstanding tradition of keeping all the mills 
running, only 140 of the 156 mills operated, with many mills short of cane.

Earlier, Cuban Government forecasts had projected 1996/97 sugar production at 
5 million tons, and the disappointing crop provoked a major review of the
industry. Some of the blame was placed on Hurricane Lili, which battered Cuba
in October 1996, and on the late arrival of supplies such as fertilizer due to
difficulties in obtaining foreign financing. In the wake of the poor crop, a
major government review of the industry occurred, and recent government
announcements have placed emphasis on lowering costs rather than maximizing
output.

In the past, when the government wanted to maximize sugar output during a
harvest, it was sometimes the practice to stretch the harvest into June, and
harvest some cane which would not ordinarily be ready for harvest until the
next crop year. When this was done, the following year's harvest usually
suffered. But in 1996/97, Cuba apparently did not cut immature cane.

In 1997, Cuba planted over 1 million acres, up from 650,000 acres in each of
the past 2 years. However, a drought from January through May delayed much of
the planting until May and June, and this late-planted cane will not be
harvested until 1998/99. Cuba has announced plans to continue an aggressive
planting program through the year 2000 in an attempt to increase output.

The 1997/98 harvest began in November. The Cuban Government announced plans to
have most mills grinding earlier than normal this year in an attempt to avoid
harvesting in May and June of 1998, as the current El Nino phenomenon could
contribute to disruptive rains during April, May, and June of 1998. During the
El Nino of 1982/83, heavy spring rains disrupted the harvest; mechanical
harvesters cannot move through wet fields, a serious problem since over 80
percent of the harvest is now mechanized. In an attempt to lower costs, up to
40 mills may not run in 1997/98, affecting about 20,000 workers. Such a
displacement of the labor force will present a management challenge to the
government. Consideration is even being given to permanently close some mills.

For the 1997/98 harvest, USDA forecasts production at 3.9 million tons, down 
7 percent from last year's 4.2 million tons. Cuban Government sources have
indicated that 1997/98 production is not likely to exceed 1996/97, and 
recently indicated that production would likely be less than 4 million tons
(Reuters, December 13).

Whither the Cuban Sugar Industry?

At the recent Communist Party Fifth Congress in Havana in October, President
Castro pledged that Cuba would never abandon socialism. Many foreign 
investors, apparently undeterred by this rhetoric, are investing in those parts
of the Cuban economy which have been opened by some measure of economic reform.

Sugar plays a unique role in Cuban politics and economics, and President Castro
continues to express the view that the government must continue its control
over the sugar industry. In October 1997, the Cuban Sugar Minister, Nelson
Torres, was replaced by army general Ulises Rosales del Toro, previously first
deputy Defense Minister.

Cuba's sugar production industry has been in decline since 1992. Though it has
a climate well-suited for sugarcane cultivation, it has not kept up with
technological advances in place in many other countries and is hampered by the
lack of foreign exchange. Given the right economic climate, increased
investments in Cuba's sugar industry might be forthcoming. The most critical
question facing the Cuban sugar industry is not technology, however, but the
role of the government, and a return to higher sugar production levels will
probably require improved incentives for both workers and potential investors.






                              List of Tables

World and U.S. Sugar and Corn Sweetener Prices

1. World refined sugar price, monthly, quarterly, and  by calendar and fiscal
     year
2. World raw sugar price, monthly, quarterly, and by calendar and fiscal year
3. U.S. raw sugar price, duty fee paid, New York, monthly, quarterly, and by
     calendar and fiscal year
4. U.S. wholesale refined beet sugar price, Midwest markets, monthly,
     quarterly, and by calendar and fiscal year
5. U.S. retail refined sugar price, monthly, quarterly, and by calendar and
     fiscal year
6. U.S. spot price for HFCS-42, Midwest markets, monthly, quarterly, and by
     calendar and fiscal year
7. U.S. wholesale list price for glucose syrup, Midwest markets, monthly,
     quarterly, and by calendar and fiscal year
8. U.S. wholesale list price for dextrose, Midwest markets, monthly, quarterly,
     and by calendar and fiscal year
9. U.S. Producer Price Index for HFCS and sugar, monthly
10. U.S. Consumer Price Index for sugar and selected sweetener-containing
     products

U.S. Sugar Supply and Use

11. U.S. sugarbeet crops: Area planted, acres harvested, yield per acre, and
     production, by State and region
12. U.S. sugarcane: Area, yield, production, output, recovery rate, and sugar
     yield per acre, crop years 
13. U.S. beet and cane sugar production by State, quarterly, fiscal, and
     calendar year
14. U.S. production of beet sugar and cane sugar by State, monthly, quarterly,
     fiscal, calendar, and crop year
15. U.S. beet and cane sugar production (including Puerto Rico), fiscal year,
     and share of total
16. U.S. beet and cane sugar deliveries for human consumption (excluding
     importers' direct consumption), quarterly, fiscal, and calendar year
17. U.S. cane and beet sugar deliveries, monthly, quarterly, and by fiscal and
     calendar year
18. U.S. sugar deliveries for human consumption by type of user, quarterly and
     calendar year
19. U.S. sugar imports under tariff-rate quota (TRQ), by country 20. U.S. sugar
     stocks held by primary distributors, by quarters
21. U.S. sugar (including Puerto Rico) supply and use, calendar year
22. U.S. sugar (including Puerto Rico) supply and use, fiscal year

Corn Sweetener Supply, Use, and Trade

23. U.S. wet-milled use of field corn, crop year
24. U.S. high fructose corn syrup (HFCS) production, quarterly, fiscal, and
     calendar year
25. U.S. high fructose corn syrup (HFCS) deliveries, quarterly, fiscal, and
     calendar year
26. U.S. imports of corn sweeteners, selected sweeteners, and molasses
27. U.S. high fructose corn syrup (HFCS) supply and use, calendar year
28. Net cost of corn starch to U.S. wet-millers, Midwest markets

U.S. Consumption of Caloric Sweeteners

29. U.S. (including Puerto Rico) total consumption of caloric sweeteners,
     calendar year
30. U.S. (including Puerto Rico) per capita consumption of caloric sweeteners,
     calendar year

U.S. Molasses Production, Imports, and Price

31. U.S. molasses production from sugarcane and sugarbeet processing
32. U.S. imports of molasses for industrial or feed use
33. U.S. molasses prices

U.S. Honey Production, Use, Prices, and Trade 

34. U.S. honey production, imports, and exports, crop year

High Intensity Sweetener Production, Trade, and Prices

35. U.S. imports of aspartame by country of origin
36. U.S. prices for selected high intensity sweeteners

Special Article Tables

A1.  Sugar production, supply, and distribution
A2.  U.S. corn sweetener exports to Mexico and Canada, calendar years
A3.  U.S. corn sweetener imports from Mexico and Canada, calendar years
A4.  U.S. HFCS trade with Mexico and Canada, monthly 1989-97
A5.  Canada: Imports of sugar by country of origin, 1989-1996
A6.  Canada: Exports of sugar by country of destination, 1989-1996
A7.  Mexico: Imports of sugar by country of origin, 1989-1996
A8.  Mexico: Exports of sugar by country of destination, 1989-1996
A9.  U.S.: Imports of sugar by country of origin, 1989-1996
A10. U.S.: Exports of sugar by country of destination, 1989-96

B1.  Major sugar exporters and Cuba's share of world exports
B2.  Cuba's sugar exports by country and region, 1985-96
B3.  Cuba's sugar exports to major trading partners, 1960-96
B4.  Cuba: Sugarcane area, yield, and production
B5.  Cuba's sugar production, supply, and distribution


References:

Castellanos, Lazaro Pena and Jose Alvarez. "The Transformation of the State
Extensive Growth Model in Cuba's Sugarcane Agriculture." Agriculture and Human
Values: The Journal of the Agriculture, Food, and Human Values Society. Vol.
13, No. 1, Winter 1996.

Bridge News Wire Stories.

CubaNews, Vol. 5, No. 9. The Miami Herald Publishing Co., September 1997.

Godinez, Felix B. "Cuba-Russia Sugar Trade Relations: Disputes and the Market
Struggle." Association of the Study of the Cuban Economy Newsletter, November
1997.

Reuters Wire Story, December 13, 1997.

United Press International, Saturday, October 4, 1997, Press Release.


               ERS Autofax Access to Sugar-Related Data (ERS)

From your fax machine, call (202) 694-5700 and respond to the voice prompts to
have these documents automatically downloaded to your fax machine.  You may
request up to three documents in one phone call.

Directory Identification Numbers and Titles:

12600- Updated list of all sugar and sweetener documents available on the 
       ERS AutoFax

12626- World Agricultural Supply and Demand Estimates for Sugar

12627- Monthly U.S. Sugar Prices: Wholesale refined beet sugar price, Midwest
       market, 1960-present; U.S. raw sugar price, duty-fee paid New York,
       1960-present; U.S. retail refined sugar price, 1975-present.

12628- Monthly HFCS Prices: Wholesale list price for HFCS-42, Midwest market,
       1975-present; Wholesale spot price for HFCS-42, Midwest market,     
       1995-present; Wholesale list price for HFCS-55, Midwest market,     
       1981-present; Wholesale list price for glucose corn syrup, Midwest  
       market, 1975-present; Wholesale list price for dextrose, Midwest market,
       1975-present; U.S. Producer Price Index for HFCS and sugar,    
       1985-present.

12629- Monthly World Sugar Prices: World raw sugar price, 1960-present; world
       refined sugar price, 1980-present.

12630- U.S. and world sugar prices, starting 1990-present, monthly.

12632- U.S. Sugar (including Puerto Rico) supply and use, fiscal years,    
       1980/81-present.

12633- The Beet Sugar Industry of Minnesota and North Dakota: Current Situation
       and Prospects, by Ron Lord, September 1994 Sugar and Sweetener Situation
       and Outlook report.

12634- Text boxes, graphs, and tables, September 1997 Sugar and Sweetener S&O
       report, "HFCS Trade Dispute with Mexico," by Jacqueline Salsgiver;  
       "Origin of the U.S. Sugar Import Tariff-Rate Quota Shares," by Nydia
       Suarez; and "Changing Structure of the U.S. Refined Sugar Market," by
       Ron Lord and Robert Barry.

Foreign Agricultural Service (FAS)

From your fax machine, dial (202) 720-0876 and listen to the voice prompt. The
following documents are available by using the 2-digits codes:

Code         Document Name

01    List of available documents
05    Fact Sheet--The U.S. Sugar Program
06    USDA FY 1998 Federal Register Notice
07    USDA Press Release: FY 1998 tariff-rate quota
08    USTR Press Release: FY 1998 Raw Sugar Allocations
09    USTR Press Release: January allocations (if any)
10    USTR Press Release: March allocations (if any)
11    USTR Press Release: May allocations (if any)
12    1998 Sugar Imports Tracking Worksheet
13    U.S. Sugar Supply and Demand (WASDE), updated monthly
14    Fact Sheet -- The Sugar-Containing Products Re-export Program
15    Regulations -- Sugar to be Re-exported in Sugar-Containing Products
16    Regulations -- Sugar to be Re-exported in Refined Form
17    Regulations -- Sugar for the Production of Polyhydric Alcohol
18    Application for Specialty Sugar Certificate

                    

               Internet Access to Sugar-Related Data

Home Pages

Main Data Directory:
http://usda.mannlib.cornell.edu/cgi-usda/agency.cgi?ers#s

U.S. Department of Agriculture (USDA):
http://www.usda.gov

Economic Research Service (ERS):
http://www.econ.ag.gov

World Agricultural Outlook Board (WAOB):
http://www.usda.gov/agency/oce/waob/woab.htm

National Agricultural Statistics Service (NASS):
http://www.usda.gov/nass

Reports

ERS Sugar & Sweetener Situation and Outlook Reports (including text of
Yearbook):
http://mann77.mannlib.cornell.edu/reports/erssor/specialty/sss-bb

ERS Sugar Yearbook Data (December 1996):
http://mann77.mannlib.cornell.edu/data-sets/specialty/89019

U.S. Corn Sweetener Statistical Compendium (1993):
http://www.mannlib.cornell.edu/data-sets/specialty/

Farm Sector Cost of Production (including sugarbeets and sugarcane 1992-95, and
processing costs):
http://www.econ.ag.gov/briefing/fbe/car/beets3.htm
http://www.econ.ag.gov/briefing/fbe/car/cane3.htm

World Agriculture Supply and Demand Estimate Report (WASDE):
http://www.usda.gov/oce/waob/wasde/wasde.htm

World Agricultural Outlook Board (WAOB): 1997 USDA Agricultural Outlook Forum
Papers:
http://www.usda.gov/agency/oce/waob/waob.htm

February 1997 Outlook Forum, includes Baseline Table and Speech: 
http://mann77.mannlib.cornell.edu/data-sets/farm/94005/ 
gopher://usda.mannlib.cornell.edu:70/00/reports/waobr/aof/aof97/bbarry.asc

World Ag Production, Foreign Agricultural Service (FAS):
http://ffas.usda.gov/fasprograms/fas-commodity/circular/wap1.html

Foreign Agricultural Service Report from Foreign Countries (includes sugar
reports):
http://www.fas.usda.gov/scriptsw/attacherep/attache_frm.idc

Sweetener Market Data, Farm Service Agency (FSA):
http://www.fsa.usda.gov/ao/epas/dsa/sugar/coversu.htm

National Molasses Report, Agricultural Market Service (AMS): 
http://www.ams.usda.gov/lsg/mncs/ls_othr.htm

END_OF_FILE