05-20960. Domestic Sugar Program-2004-Crop Cane Sugar and Sugar Beet Marketing Allotments and Company Allocations

AGENCY:

Commodity Credit Corporation, USDA.

ACTION:

Notice.

SUMMARY:

The Commodity Credit Corporation (CCC) is issuing this notice which sets forth the establishment and adjustments to the sugar overall allotment quantity for the 2004 crop year (FY 2005) which runs from October 1, 2004, through September 30, 2005. Although CCC already announced all of the information in this notice, CCC is statutorily required to publish in the Federal Register determinations establishing or adjusting sugar marketing allotments. CCC set the 2004-crop overall allotment quantity (OAQ) of domestic sugar to 8.100 million short tons raw value (STRV) on July 16, 2004. On September 28, 2004, CCC allocated the allotments to cane-producing States and allocations to cane and beet sugar processors. On April 29, 2005, CCC revised State cane sugar allotments and cane sugar processor allocations to reflect updated FY 2005 raw cane production forecasts. On June 30, 2005, CCC further revised State cane sugar allotments and cane sugar processor allocations to reflect updated raw cane production forecasts. On August 19, August 30 and September 9, 2005, CCC increased the 2004-crop OAQ by 250,000, 225,000 and 105,000 STRV, respectively, to release blocked refined beet sugar stocks into the tight summer market. Because the cane sector was unable to fulfill its share of the allotment increases on each occasion, the cane shortfall was reassigned first to the CCC inventory and then to imports, as required by the Agricultural Adjustment Act of 1938.

ADDRESSES:

Barbara Fecso, Dairy and Sweeteners Analysis Group, Economic Policy and Analysis Staff, Farm Service Agency, USDA, 1400 Independence Avenue, SW., STOP 0516, Washington, DC 20250-0516; telephone [phone]; FAX [phone]; e-mail: [e-mail].

FOR FURTHER INFORMATION CONTACT:

Barbara Fecso at [phone].

SUPPLEMENTARY INFORMATION:

Section 359b(b)(1) of the Agricultural Adjustment Act of 1938, as amended, (7 U.S.C. 1359bb(a)(1) requires the Secretary to establish, by the beginning of each crop year, an appropriate allotment for the marketing by processors of sugar processed from sugar beets and from domestically produced cane sugar at a level the Secretary estimates will result in no forfeitures of sugar to the CCC under the loan program.

Because Puerto Rico forecast zero production for the 2004 crop, its FY 2005 allotment was reassigned to all other cane processors based on their respective shares of the cane sugar allotment. However, Hawaii did not receive a share of Puerto Rico's reassignment because it was not expected to use all of its own allotment.

When CCC announced an 8.100 million ton OAQ in July 2004, it noted the existence of sugar market uncertainties and that the OAQ could be adjusted as warranted. In April and June, based on updated production, imports, marketing and stocks forecasts in the World Agriculture Supply and Demand Estimates April and June reports (WASDE), CCC merely transferred perceived excess state allotments from Louisiana and Hawaii to Florida and Texas. However, as the severe shortage of sugar became more evident with each summer WASDE report, CCC incrementally released more sugar into the domestic market via OAQ and import increases.

On August 12, 2005, when anomalies in the market indicated a much tighter supply than earlier anticipated, CCC increased the FY 2005 OAQ by 250,000 STRV. On August 19, 2005, the OAQ increase was allotted to cane states and allocated to cane and beet processors and the cane sugar sector supply shortfall was estimated at 141,567 STRV. Of this, 17,120 STRV was reassigned to the CCC inventory (FY 2004 forfeited sugar sold in FY 2005), 40,000 STRV to NAFTA tier 2 imports, and 84,447 STRV to the FY 2005 raw Tariff Rate Quota (TRQ).

Because the domestic sugar shortage continued to persist due to Hurricane Katrina, CCC increased the FY 2005 OAQ another 225,000 tons on August 30, 2005. Since the CCC inventory had been sold, the cane sector shortfall of 102,713 tons was reassigned to imports; another 70,000 tons to tier 2 imports, 22,000 tons for early release of the FY 2006 refined sugar minimum TRQ, and 10,713 tons for later reassignment to the FY 2006 refined TRQ.

Still, as threats continued from domestic sugar users of factory closings due to refined sugar shortages, CCC increased the FY 2005 OAQ another 105,000 tons on September 9 to release all deliverable refined beet sugar stocks into the market. At the same time, CCC increased, for early entry, the FY 2006 refined TRQ another 75,000 tons, of which 47,933 tons counted against the cane sector's FY 2005 production shortfall.

Whenever marketing allotments are in effect and the quantity of sugarcane estimated to be produced in Louisiana, plus a reasonable carryover, exceeds the marketing allotment allocation for Louisiana, CCC is required to limit the amount of sugarcane acreage that may be harvested in Louisiana for sugar or seed. This limitation is referred to as a “proportionate share” and is applied to each farm's sugarcane acreage base to determine the quantity of sugarcane that may be harvested on that farm. Because production was expected to be excessive in Louisiana, CCC determined that the proportionate share of a sugarcane acreage base that could be harvested in Louisiana for sugar or seed for the 2004 crop year to be 83.4 percent of each farm's sugarcane acreage base. However, when CCC increased the OAQ on August 12, 2005, CCC determined that Louisiana and the whole cane sector could not fill its FY 2004 crops and Louisiana's proportionate shares were suspended for the 2004 crop.

These actions apply to all domestic sugar marketed for human consumption in the United States from October l, 2004, through September 30, 2005. The established 2004-crop beet and cane sugar marketing allotments are listed in the following table, along with the adjustments that have occurred since:

Signed in Washington, DC on October 6, 2005.

Michael W. Yost,

Executive Vice President, Commodity Credit Corporation.