CHAMPIONS GATE, Fla. -- The U.S. sugar program, which is supposed to protect cane and beet growers by limiting imports, is struggling under current conditions and may face forfeitures of sugar to the government this year, a panel of experts said at the International Sweetener Colloquium sponsored by the Sweetener Users Association.

The basic problems are a world oversupply that has left prices so low it makes sense for industrial sugar users to import sugar and slowing demand due to the popularity of GLP-1 drugs, which lead people to eat less. The world price for raw sugar is now 14 cents per pound, half of what it was a year ago, and U.S. support prices are higher.

But Paul Farmer, president of CSC Sugar, a provider of raw sugar to cane refineries, said the structure of the program itself has become a problem. U.S. sugar growers do not grow enough to meet the demands of the U.S. market, and Farmer noted USDA does not set quotas for imports until March, which is later than many of his customers want. His customers, Farmer said, would prefer to pay the 15-cent tariff on sugar that does not come in under the quota to make sure they have the raw sugar they need. They often lock in an agreement to buy sugar a year or more in advance and "once the relationship is built, that is not going to get unlocked no matter what the U.S. price is," he said. "The high-tier sugar has a long tail."

But if domestic supplies are in surplus, "the government has a problem," Farmer said, because U.S. cane and beet growers have the right to take out USDA nonrecourse loans and deliver the sugar to the government if the price is below support levels.

Noting that he does not have a position on the tariff, Farmer said one possible solution is to raise the tariff, but the political process of raising it "would take years," he said. Farmer said he does not want the taxpayer to have to pay for the sugar.

Barb Fecso, who retired from USDA on Friday after running the U.S. sugar program, said the current situation has evolved over decades and the pattern of importing high-tier sugar started with shortages due to hurricanes and other production problems. The situation became further complicated after the North American Free Trade Agreement (NAFTA) initially allowed unlimited imports of sugar from Mexico. Later, the U.S. International Trade Commission found Mexico had subsidized and dumped sugar into the United States, and rather than accept antidumping and countervailing duties, Mexico agreed to suspension agreements that limit the amount of sugar it sends to the United States. Those agreements remain in place through 2030.

Fecso said when she was managing the sugar program, she sometimes imagined herself as "the little Dutch boy with his finger in the dike."

Under current law, if there is an expectation of forfeitures, the government is required to purchase surplus sugar and sell it to bioenergy producers. But when the government did that in 2013, ethanol plants complained they were not used to using sugar as a feedstock and that it "gummed up" the equipment, Fecso said.

At that time, the government sold the sugar for two cents, but this year, because there is a corn surplus, "we might have to pay people to take sugar off our hands," Fecso explained. If the government waives repaying loans and tells farmers not to plant sugar and there is a bad crop, "that would be bad press," she added.

"We are in a situation that is probably not good," she said.

Rob Johansson, director of economic and policy analysis at the American Sugar Alliance, which represents beet and cane growers, noted both growers and users had agreed to support an increase in the sugar loan rates in the One Big Beautiful Bill Act that will go into effect this fall. The agreement reflected an increase in the cost of production as well as higher storage, delivery and machinery costs.

"Managing the program has become more difficult over time," Johansson acknowledged, but without a strong domestic supply, food production would be affected. He noted under current law the stocks-to-use ratio for sugar is supposed to be between 13.5% and 15.5%, but is currently at 15.8% for the marketing year. Still, that's down from 2024-25 when stocks-to-use hit 19.9%.

"Falling consumption is making all these management decisions more difficult," Johansson added. The Trump administration's dietary guidelines, which discourage sugar consumption, may add to the problems, particularly if the government limits sugar in school meals, he said.

Asked if the upcoming review of the U.S.-Mexico-Canada Agreement (USMCA) could lead to a change in the suspension agreements, Johansson said he would "disassociate" the two policies.

Fecso said the current situation also reflects a change in how farm policy is made.

"In the old days, we had long-term farm policy that was well thought out," Fecso said. "In recent years, it has been more politics-driven."

If sweetener users want a domestic supply of sugar, which they say they do, they are going to have to buy domestic sugar instead of high-tier sugar, she said. At the same time, U.S. producers need to sell sugar "cheaper, and our industry has to understand that" Fecso concluded.

DTN Ag Policy Editor Chris Clayton contributed to this report.

Jerry Hagstrom can be reached at jhagstrom@nationaljournal.com

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