| In the biggest round of Florida sugar forfeitures this year,
three major producers said Friday they will hand over 261,147 tons of raw
sugar worth almost $94 million to the U.S. government Monday.
For U.S. Sugar Corp. in Clewiston, the 35,000-ton, $12.6 million
forfeiture is its first since 1985, spokeswoman Judy Sanchez said. The
companies are surrendering the sugar to satisfy their federal loans. Sugar
prices are at a 25-year low, and it was selling for 19.6 cents a pound
Friday, representing a break-even point for producers. The default price
is calculated at about 18 cents a ton.
"It's not our preference. We'd much rather sell our sugar on the
market. Foreign trade imports have destroyed our market," Sanchez
said.
The U.S. demand for sugar is about 10 million tons. But 9 million tons
are produced domestically, and 1.5 million tons are imported under global
trade agreements.
Florida produces about 2 million tons of sugar.
While U.S. Sugar's 850,000 tons per year makes it South Florida's
biggest grower, the largest forfeiture was announced Friday by the Sugar
Cane Growers Cooperative of Florida in Belle Glade.
The cooperative will forfeit 122,496 tons worth $44 million to satisfy
its federal loans, spokeswoman Barbara Miedema said.
The cooperative representing 55 Palm Beach County growers forfeited
11,000 tons worth $4 million in August.
That brings its total forfeiture to 133,000 tons, or 38 percent of the
350,000 tons it produced this past season.
"Earlier, we had 200,000 tons under loan," Miedema said.
"We sold 65,000 of it. We've always seen forfeiture as a last resort.
When you're experiencing prices at a 25-year low, it forces you to make
this economic decision."
Florida Crystals Corp., the Palm Beach-based sugar grower owned by the
Fanjul family, will forfeit 103,651 tons worth $37.3 million, said
spokesman Jorge Dominicis.
That follows the 36,000 tons it forfeited in August out of a crop
totaling 732,000 tons.
"We're hopeful at this point that the prices will come up to more
normal levels of about 22.5 cents per pound," Dominicis said.
Sugar not forfeited next week will be marketed, the producers said.
The three companies combined had 460,000 tons of sugar under loan; they
ended up forfeiting 308,000 of those tons.
Dalton Yancey, executive vice president of the Florida Sugar Cane
League in Washington, which represents major growers including Florida
Crystals and U.S. Sugar, said the forfeiture could be the largest ever for
South Florida growers, but he did not have the figures for forfeitures
that occurred in 1985 and in 1978-79.
"When we had the forfeitures the first time, the government sold
it back into the market and made $80 million," Yancey said.
"The commodity does have value. There's a possibility the
government could make money on it, and there's the possibility it could
lose money on it. So far, they've got a 50-50 chance," Yancey said.
Although sugar has been as low as 16 cents a pound in the past year,
Yancey said the bargain prices have not trickled down to consumers.
"The impact of the forfeitures to consumers is going to be
zero," Yancey said. "We hope it's going to strengthen the sugar
market."
South Florida's growers are part of a nationwide group of sugar cane
and sugar beet processors with loans on a total of 900,000 tons due today.
In the past couple of months, 168,000 tons have been forfeited, said Jack
Roney, chief economist of the American Sugar Alliance in Washington.
The U.S. Agriculture Department has predicted 500,000 to 600,000 tons
of sugar will be forfeited this year. Roney said that based on that
estimate, forfeitures could total 400,000 tons by the end of the day
Monday, the deadline for processors to forfeit. Growers planning to pay
their loans had to notify the USDA by Friday.
"We're looking at taking a sizable amount of sugar out of the open
marketplace," Roney said.
Although the government will own the forfeited sugar, it doesn't
actually take possession of it. Instead, growers are required to provide
storage, and the USDA pays rent. Both the cooperative and Florida Crystals
have had to build or lease additional space to store the surplus.
All the companies forfeiting sugar are also paying a forfeiture penalty
of 1 cent a pound, or $20 a ton. If 500,000 tons are forfeited, Roney
said, the government will be due $10 million.
While sugar growers are lamenting the low prices their product brings,
the food and beverage manufacturers to whom they sell the sugar are
calling for an end to the loan program that gives growers the forfeiture
option.
"We think it's a failed program," said Tom Hammer, president
of the Sweetener Users Association in Washington.
"We don't fault the growers for following the procedure allowed.
They're not doing anything wrong. We fault the government for allowing it
to occur," he said. |