Source: Golden Ten Data
The US faces an impending sugar supply crisis due to Mexico's drought and mismanagement
According to Pro Farmer, the US is facing an impending sugar supply crisis due to Mexico's drought and mismanagement.
In the absence of rapid government intervention, US sugar importers said they might adopt high tariff imports to make up for lower production in Mexico. The US Department of Agriculture's recent forecast shows that Mexico's sugar production will drop drastically in the next year, exacerbating the problem of insufficient supply. As options for expanding tariff quotas on low-tariff sugar imports are limited, US sugar users may be forced to rely on high-tariff alternatives, thereby driving up domestic sugar prices.
The shortage of sugar production in Mexico will affect US imports, and the US Department of Agriculture expects a sharp decline over the next year. Furthermore, severe global weather conditions, such as the El Niño phenomenon, have further increased pressure on sugar producers, leading to a reduction in imports under the US tariff quota program.
Analysts emphasized the urgency of the US government taking action to ease supply constraints and suggested increasing sugar import quotas. However, the USDA's ability to intervene until April was limited, making importers vulnerable to high tariff imports.
The Office of the United States Trade Representative announced last year that the tariff quota for fiscal year 2024 will be 1,117,195 metric tons of the original value, which is the minimum required by the World Trade Organization commitment. According to the Farm Bill, the US Department of Agriculture will not be able to increase tariff quotas on sugar until after April 1, unless it announces an emergency shortage. The Office of the United States Trade Representative and the US Department of Agriculture have accepted recommendations from the Government's Agencies Office (GAO) to re-examine the tariff quota allocation method.