Author: Michael Deliberto

  • The 2025 Sugar Market Domestic Supply and Outlook 

    The 2025 Sugar Market Domestic Supply and Outlook 

    On May 12, 2025, the USDA released its World Agricultural Supply and Demand Estimates (2025) report which provides the first 2025/26 fiscal year (FY) estimate of United States sugar production. United States domestic sugar production, which consists of sugar extracted from both sugarbeets and sugarcane, is estimated at 9.285 million short tons raw value (STRV) for the 2025/26 FY (USDA WASDE, 2025). Domestic beet sugar production is estimated at 5.180 million STRV, or 56% of total domestic production, and domestic cane sugar production is estimated at 4.105 million STRV, or 44% of total domestic production (Figure 1). 

    Total domestic use of sugar is predicted to be 12.355 million STRV which includes estimated domestic sugar production of 9.285 million STRV, U.S. sugar imports of 2.475 million STRV, and net stocks usage (beginning stocks minus ending stocks) of 0.596 million STRV (USDA WASDE, 2025). Thus, net stocks usage plus domestic sugar production is estimated to account for about 80% of the domestic use of sugar.  

    The estimated FY 2025/26 domestic sugar production (9.285 million STRV) represents a 26,000 STRV reduction from last year’s total domestic production of 9.311 million STRV (Figure 1). The 2025/26 FY has an estimated slight increase in cane sugar production that is offset by a decrease in beet sugar production, ultimately resulting in the slight year-over-year decrease in overall domestic sugar production. 

    Beet sugar production is estimated at 5.180 million STRV, a 154,000 STRV decrease (2.9%) from the year prior. Sugarbeets are produced in the Upper Midwest, Great Lakes, Great Plains, and Far West regions of the country. United States estimated 2025/26 FY sugarbeet planted area (1.104 million acres) is based on the USDA National Agricultural Statistics Service (NASS) (2025) March Prospective Plantings report. The estimated harvested area (1.081 million acres) is derived using a 10-year average of harvested-to-planted ratio. The sugarbeet shrink (6.76%) and recovery rate (14.78%) are both projected based on the 10-year national average.

    Sugarcane is now produced in only two states- Florida and Louisiana. Cane sugar output is forecast at 4.105 million STRV, up 128,000 STRV (3.2%) from the year prior. Louisiana’s output is projected at 2.088 million STRV, reflecting six consecutive years of increase, and four years of surpassing Florida sugar production. Sugarcane acres in Louisiana have been increasing due to the attractiveness of sugar compared to other alternative crops, availability of custom harvest groups, and acreage expansion northward in the central region of the state. Florida’s cane sugar production is projected at 2.017 million STRV (USDA WASDE, 2025). 

    Figure 1. United States sugar production by source, 2016/17 FY through estimated 2025/26 FY.

    Source: USDA WASDE (2025). Notes: Parentheses show cane and beet sugar production as a percentage of total domestic sugar production. 

    Like many other agricultural sectors, the sugar sector has faced challenges. Namely, the tightening of operating margins due to rising costs of production (Deliberto and DeLong, 2024a) and flat or falling prices (Deliberto, DeLong, and Fischer, 2024b). This is most evident in the recent closures of sugar processing facilities in several states. Since 2000, roughly 40% of United States sugar mills, refineries, and sugarbeet factories have closed (i.e., 29 closures with 42 remaining open) (American Sugar Alliance, 2025; Louisiana Sugarcane Industry, 2025; Fischer, Outlaw, Raulston, and Herbst, 2022). 

    Most recently, there have been three notable closures. In 2023, the Sidney Sugar Company in Montana closed due to falling prices for sugarbeets (Western Ag Network, 2023).  Next in 2024, the Rio Grande Valley Sugar Growers, Incorporated ceased operations (Food Business News, 2024). The facility terminated operations due to Mexico’s failure to comply with the provisions of the 1944 Water Treaty between the U.S. and Mexico that governs water sharing between the two nations on the Colorado River and the Lower Rio Grande. Most recently, it was announced that the last remaining sugarbeet processing facility in California will be decommissioned at the end of this season – the Spreckels Sugar Company, Incorporated in Brawley, California (Southern Minnesota Beet Sugar Cooperative, 2025). 

    In recent months, U.S. wholesale prices for beet and cane sugar have been falling (USDA Economic Research Service, 2025). Coupled with the rising costs of producing sugarbeets and sugarcane and processing them into sugar, this has created very tight operating margins for sugar producers (Deliberto and DeLong, 2024a). Looking ahead to the next growing season, farmers are optimistic that a new Farm Bill will strengthen the farm safety net and that growing conditions will be favorable for sugarbeets and sugarcane. 

    References

    American Sugar Alliance. (2025). Sugar’s Coast-to-Coast Reach. Retrieved from: https://sugaralliance.org/us-sugar/sugars-coast-to-coast-reach

    Deliberto, M., and K.L. DeLong. (2024a). “Examining Sugarcane and Sugarbeet Production Costs.” Southern Ag Today. Retrieved from: https://southernagtoday.org/2023/12/11/examining-sugarcane-and-sugarbeet-production-costs/.

    Deliberto, M., K.L. DeLong, and B. Fischer. (2024b). “Analyzing World and U.S. Sugar Price Dynamics.” https://southernagtoday.org/2024/05/20/analyzing-world-and-u-s-sugar-price-dynamics/.  

    Fischer, B.L., J.L. Outlaw, J.M. Raulston, and B.K. Herbst. (2022). “Economic Impact of the U.S. Sugar Industry.” Retrieved from: https://sugaralliance.org/wp-content/uploads/2022/06/Sugar-Report.pdf

    Food Business News. (2024). Retrieved from: https://www.foodbusinessnews.net/articles/25615-last-sugar-cane-grower-in-texas-to-close.

    Louisiana Sugarcane Industry. Production Data 1984-2023. Retrieved from: https://amscl.wpenginepowered.com/wp-content/uploads/2024/11/Production-Data-1984-to-2023.jpg

    Southern Minnesota Beet Sugar Cooperative. (2025). Southern Minnesota Beet Sugar Cooperative to Decommission Spreckels Sugar Company, Inc. in California. Retrieved from: https://www.smbsc.com/ourstory-2/SMBSCMediaReleaseReSpreckelsSugarCompany2025.04.22.pdf.

    USDA Economic Research Service. (2025). World, U.S., and Mexican Sugar and Corn Sweetener Prices. Tables 5 and 5a. Retrieved from: https://www.ers.usda.gov/data-products/sugar-and-sweeteners-yearbook-tables.

    USDA National Agricultural Statistics Service (NASS). (2025). Prospective Plantings. Retrieved from: https://usda.library.cornell.edu/concern/publications/x633f100h

    USDA World Agricultural Supply and Demand Estimates. (2025). Retrieved from: https://www.usda.gov/about-usda/general-information/staff-offices/office-chief-economist/commodity-markets/wasde-report.

    Western Ag Network. (2023). “Sydney Sugars to Begin Closure Procedures in April.” Retrieved from: https://westernagnetwork.com/sidney-sugars-to-begin-closure-procedures-in-april


    Deliberto, Michael, and Karen L. DeLong. “The 2025 Sugar Market Domestic Supply and Outlook.Southern Ag Today 5(22.3). May 28, 2025. Permalink

  • Analyzing World and U.S. Sugar Price Dynamics

    Analyzing World and U.S. Sugar Price Dynamics

    It is critical to consider the relationship between macroeconomic forces and the balance of global sugar supply and demand when examining sugar markets. Global economic expansion, along with a world population that is growing at approximately 1% per year  (U.S. Department of Commerce, 2024), supports strong sugar demand globally, which typically also supports world prices. However, falling energy prices and/or a worldwide recession could push global sugar prices lower. 

    The world raw sugar price is somewhat reflected in the Sugar No. 11 futures contract (Figure 1). The Sugar No. 11 contract price does not include the transportation costs associated with delivering sugar to destination ports. As stated in the specifications for the Intercontinental Exchange (2024) Sugar No. 11 futures contract, “the contract prices the physical delivery of raw cane sugar, free-on-board the receiver’s vessel to a port within the country of origin of the sugar.” 

    Major sugar-producing countries like Brazil, India, and Thailand provide subsidies and other support for their sugarcane sector, which can have a strong influence on the Sugar No. 11 futures contract price.  This is especially true when production fluctuates due to weather conditions or when governmental policies dictate a diversion of sugar into ethanol production. 

    Worldwide sugar deficits have occurred in three out of the last four years. In turn, a tightening global stocks-to-use ratio has supported world sugar prices. As world raw sugar prices have moved upward, so too have U.S. raw sugar prices, which are reflected in the Sugar No. 16 futures contract price (Figure 1). The Sugar No. 16 futures contract does include transportation costs associated with delivering sugar to the destination port and, thus, the contract incorporates physical delivery into its price.

    Figure 1. Sugar No. 11 and Sugar No. 16 Futures Contract Prices, their relationship, and the Tier 2 Tariff, 2020 to 2024. Source USDA ERS, 2024.

    At present, Mexico’s ability to export sugar to the U.S. is hindered by drought, and Mexican production is expected to be significantly reduced again this year. As such, Mexican sugar exports into the U.S. market are expected be at a decade-and-a-half low at only 497,000 tons, according to the May USDA (2024) World Agricultural Supply and Demand Estimates report.

    Under the terms of the World Trade Organization (WTO) and several free trade agreements, sugar imports are allowed duty free under a Tariff-rate Quota (TRQ) system. In situations where raw sugar is imported outside of the TRQ, importers must pay a 15.36-cents-per-pound tariff in addition to the world raw sugar price plus transportation costs. This tariff is referred to as a tier-2 sugar import tariff and is shown as the green line in Figure 1. 

    The red line in Figure 1 demonstrates the world raw sugar price plus transportation costs to the U.S. plus the tier-2 tariff. If the expected U.S. sugar supply falls and pushes domestic prices up to the point that they exceed that level, higher levels of tier-2 raw sugar will be attracted to the U.S. Thus, the red line represents the effective cap on U.S. raw sugar prices. For example, the existence of substantial demand for sugar beyond what Mexico can supply has resulted in large amounts of tier-2 imports [see Deliberto et al. (2024) for more information]. Those imports will enter the U.S. whenever the price for world sugar plus transportation costs plus the tier-2 tariff (red line, Figure 1) falls below the cost of procuring raw sugar supplies from preferential-access imports or domestic supplies (including Mexican production). Again, that relationship effectively caps the wholesale price of domestic raw sugar in the U.S. (red line, Figure 1).  

    Conversely, if supply was expected to rise relative to demand in the U.S. (e.g., due to higher-than-expected domestic production or imports from Mexico) then the demand for tier-2 sugar would fall, bringing domestic prices further below the tier-2 cap. But, so long as demand for tier-2 sugar exceeds zero, the price in the U.S. for raw sugar will be driven by world prices plus transportation costs plus the tier-2 tariff of 15.36 cents per pound (red line, Figure 1). It should be noted that the figure depicts monthly prices as well as a static assumption of transportation costs of five cents per pound. There have been significant amounts of tier-2 sugar entering the U.S. over the past several years, which likely represents arbitrage opportunities to bring in tier-2 raw sugar due to pricing relationships or transportation cost adjustments that are occurring on a daily basis.

    We observe that the same relationship frames the prices for wholesale refined sugar in the U.S., which is capped at the world price, or the Sugar No. 5 futures contract price for refined sugar plus the tier-2 refined tariff (16.21 cents per pound) plus transportation costs of shipping refined sugar to the U.S. With falling world refined prices coupled with the expectation of near-record high sugarbeet production, the U.S. wholesale refined sugar price has recently followed the world Sugar No. 5 price downwards. Midwest refined beet sugar spot prices have ranged between 55 to 58 cents per pound. When pricing the 2024 expected crop, refined sugar prices have held steady in the 53 to 55 cent range, which is considerably lower than prices in the prior 18 months that reached as high as 70 cents per pound. 

    Overall, raw and refined sugar prices in the U.S. are currently driven by transportation costs associated with shipping bulk raw sugar and containerized refined sugar to the U.S., and factors that are affecting the global sugar market. Those factors include, among others, foreign subsidies [e.g., World Trade Organization (2024)], demand for ethanol as a transportation fuel [e.g., Bloomberg (2024)], and global growing conditions for sugarbeets and sugarcane crops [e.g., USDA FAS (2024)].

    References

    Bloomberg. 2024. Tereos Brazil to Keep High Sugar Output as Peers Endure Drought. Retrieved from: https://www.bloomberg.com/news/articles/2024-04-01/tereos-brazil-to-keep-high-sugar-output-as-peers-endure-drought

    Deliberto, M., K.L. DeLong, and B. Fischer. “Navigating U.S. Sugar Imports From 70 Countries.” Retrieved from: https://southernagtoday.org/2024/04/18/navigating-us-sugar-imports-from-70-countries/

    Intercontinental Exchange. 2024. Sugar No. 11 Futures. https://www.ice.com/products/23/Sugar-No-11-Futures  Date accessed: May 3, 2024.

    USDA. 2024. May WASDE. Retrieved from: https://www.usda.gov/oce/commodity/wasde

    USDA ERS. 2024. “Sugar and Sweeteners Yearbook Tables.” Retrieved from: https://www.ers.usda.gov/data-products/sugar-and-sweeteners-yearbook-tables/ Date updated: April 2, 2024. Date accessed: April 18, 2024. 

    USDA FAS. 2024. Global Agricultural Information Network: Sugar Annual. Retrieved from: https://apps.fas.usda.gov/newgainapi/api/Report/DownloadReportByFileName?fileName=Sugar%20Annual_Managua_Nicaragua_NU2024-0002.pdf

    U.S. Department of Commerce. 2024. “Census Bureau Projects U.S. and World Populations on New Year’s Day.” Retrieved from: https://www.commerce.gov/news/blog/2024/01/census-bureau-projects-us-and-world-populations-new-years-day#:~:text=The%20projected%20world%20population%20on,the%20U.S.%20and%20world%20populations. Date updated: January 3, 2024. Date accessed: April 18, 2024. 

    World Trade Organization. 2024. India’s Measures to Provide Market Price Support to Sugarcane. Retrieved from: https://web.wtocenter.org.tw/downFiles/12294/398060/00k37djfolGb0l5OnjSaA8xFnrwmAEQAiLp0Y7SoysK00000tZTwiAmB3qaIG9YFD0000073wLiCTUqy9oiKW087r8sHXz4A==


    Deliberto, Michael, Karen L. DeLong, and Bart L. Fischer. “Analyzing World and U.S. Sugar Price Dynamics.Southern Ag Today 4(21.1). May 20, 2024. Permalink

  • Navigating U.S. Sugar Imports From 70 Countries

    Navigating U.S. Sugar Imports From 70 Countries

    The United States (U.S.) is the fifth largest sugar producing country in the world, but also the third largest sugar importer (U.S. Department of Agriculture (USDA) Foreign Agricultural Service (FAS), 2024). Last year, the U.S. imported sugar from more than 70 countries and met roughly 29% of demand through preferential-access imports and high-tier (also known as tier-2) imports. When domestic production rises, the U.S. will import less sugar and vice-versa. An important aspect of the U.S. trade in sugar are the Suspension Agreements[1] on sugar with Mexico, which went into place in 2014 and were revised in 2017 (USDA Economic Research Service (ERS), 2024). 

    As part of U.S. sugar supply, preferential access is granted to trading partners through the World Trade Organization (WTO) or through free trade agreements (FTAs). Sugar that enters under those agreements arrive under a tariff-rate quota (or TRQ), which effectively allows sugar to enter the U.S. duty-free (USDA ERS, 2024). Those who import sugar into the U.S. above the quota are required to pay a duty to the U.S. government (tier-2 duty), which was established in 1994 at the rate of 15.36 cents/pound for raw sugar and 16.21 cents per pound for refined sugar (USDA ERS, 2024). The U.S. is projected to import an average 425,000 tons of tier-2 sugar per year (USDA, 2024).

    Administratively, the USDA Secretary announces the minimum quantity of sugar under its WTO commitments that may be imported at the in-quota tariff rate prior to the start of the fiscal year and may increase that amount of preferential-access sugar as the year progresses depending on the amount of sugar that Mexico (the largest U.S. trading partner for sugar) is anticipated to export to the U.S. and depending on the U.S. supply and demand situation. 

    For fiscal year 2023/24, total sugar imports into the U.S. are estimated at 3.42 million short tons raw value (STRV), down from last year’s estimate of 3.61 million STRV (henceforth we will refer to STRV as tons) (Figure 1). The USDA recently increased the raw sugar TRQ by 137,789 STRV after determining that additional supplies of raw cane sugar were required in the U.S. market (announced March 7th, Federal Register, 2024).

    While the overall amount of sugar imported into the U.S. has not changed dramatically from year to year, it is notable to consider the period post-free trade with Mexico as well as several anomalous years (Figure 1). Under NAFTA, Mexico had the ability to send unlimited amounts of sugar to the U.S. market if that sugar was not subsidized by the Mexican government or dumped on the U.S. market.  Following the more than 2 million tons of sugar exports to the U.S. in fiscal years 2012/13 and 2013/14, the U.S. sugar industry sued Mexico at the International Trade Commission, which found Mexico guilty of subsidizing and dumping sugar in the U.S and causing significant damage to American sugarbeet and sugarcane farmers.  The two countries negotiated Suspension Agreements to manage that trade (both with respect to quantity and price) following 2014 (U.S. International Trade Administration, 2024). More recently, Mexico has suffered drought, and thus the amount of sugar they supply to the U.S. market has been sharply constrained. As a result, the amount of tier-2 sugar entering the U.S. market has been increasing (Figure 1). 

    Figure 1. Total U.S. sugar imports by source. USDA, 2024.

    While Mexico is still the largest foreign supplier of sugar to the U.S., over the past few years the crop in Mexico has been limited due to drought conditions and high fertilizer costs.  As a result, and as mentioned above, there have been large amounts of sugar arriving, both under preferential access (e.g., WTO and FTA trade agreements) and through tier-2 imports. As reported by USDA (2024), in fiscal year 2022/23 Mexico was still the largest exporter to the U.S. with more than 1.1 million tons of sugar shipped to the U.S.  Other countries exporting more than 100,000 tons of sugar to the U.S for the period included Brazil, Guatemala, Dominican Republic, Columbia, El Salvador, Costa Rica, and Argentina (U.S. Census Bureau, 2024). Overall, in fiscal year 2022/23 the U.S. imported 3.61 million tons of sugar from more than 70 countries (USDA, 2024).

    Given forecast sugar use in the U.S. of 12.56 million tons and exports of at least 197,000 tons, the carryover this year is expected to be 1.72 million tons of sugar, or roughly 3.44 billion pounds of sugar (Deliberto and DeLong, 2024; updated for April WASDE). That brings the forecast of stocks-to-use to 13.5%. Of course, throughout the remainder of this year, there will be adjustments to both supply and demand that will typically result in a stocks-to-use that will likely fall within the USDA target range of 13.5% to 15.5% by the end of the year.

    Based on the production of 9.22 million tons relative to demand – plus total use of closer to 12.75 million tons – the U.S. will likely import about 3.42 million tons of sugar this year, or 26.8% of total use. That would keep the U.S. as the fifth largest sugar producer and the third largest sugar importer in the world.  

    [1] For more on the Suspension Agreements with Mexico, see this previous article in Southern Ag Today.

    References

    Deliberto, M. and K.L. DeLong. 2024. “The 2024 Sugar Market Domestic Supply and Outlook.” Southern Ag Todayhttps://southernagtoday.org/2024/04/01/the-2024-sugar-market-domestic-supply-and-outlook/

    Office of the U.S. Trade Representative. 2024. USTR Announces FY 2024 Allocation of Additional TRW Volume for Raw Cane Sugar. Retrieved from: https://ustr.gov/about-us/policy-offices/press-office/press-releases/2024/march/ustr-announces-fiscal-year-2024-allocation-additional-tariff-rate-quota-volume-raw-cane-sugar

    U.S. Census Bureau. 2024. USA Trade Online. Retrieved from: https://usatrade.census.gov/

    USDA. 2024. World Agricultural Supply and Demand Estimates. Retrieved from: 

    https://www.usda.gov/oce/commodity/wasde/wasde0424.pdf

    USDA, ERS. 2024. Sugar and Sweetener Policy. Retrieved from: https://www.ers.usda.gov/topics/crops/sugar-and-sweeteners/policy/

    USDA, FAS. 2024. Sugar: World Markets and Trade. Retrieved from: https://apps.fas.usda.gov/psdonline/circulars/sugar.pdf

    U.S. International Trade Administration. 2024. Enforcement and Compliance. Retrieved from: https://enforcement.trade.gov/agreements/sugar-mexico/#:~:text=Suspension%20Agreement%20on%20Sugar%20from,845%2C%20C%2D201%2D846&text=Description%3A,investigation%20on%20sugar%20from%20Mexico

    Federal Register. 2024. Fiscal Year 2024 Raw Cane Sugar Tariff-Rate Quota Increase. 89, Fed. Reg. 16524.  March 7, 2024. Retrieved from:  https://www.federalregister.gov/documents/2024/03/07/2024-04903/fiscal-year-2024-raw-cane-sugar-tariff-rate-quota-increase


    Deliberto, Michael, Karen DeLong, and Bart L. Fischer. “Navigating U.S. Sugar Imports From 70 Countries.Southern Ag Today 4(16.4). April 18, 2024. Permalink

  • The 2024 Sugar Market Domestic Supply and Outlook

    The 2024 Sugar Market Domestic Supply and Outlook

    The domestic production of sugar in the United States (U.S.) originates from sugarcane harvested in Florida, Louisiana, and Texas and sugarbeets harvested across the Upper Midwest, Central Plains, Mountain states, Pacific Northwest, and California. Sugarcane is harvested from October to March and sugarbeets are harvested in the late summer through fall, except for California where sugarbeets are harvested in the spring through the summer. Earlier this year, the U.S. Department of Agriculture (USDA) forecasted a record domestic sugar crop for fiscal year (FY) 2023/24, which is from October 2023 to September 2024. The USDA later lowered its FY 2023/24 forecast to 9.24 million short tons raw value (STRV) of sugar (Figure 1) because of unseasonably warm weather in the Upper Midwest and a severe drought in Louisiana and Texas (USDA, 2024b). 

    U.S. beet sugar production for FY 2023/24 is now estimated at 5.17 million STRV, which is consistent with previous FYs (Figure 1). In earlier USDA reports, the beet sugar production forecast was as high as 5.41 million STRV, but unseasonably warm temperatures in the Red River Valley during the months of December and February led to a portion of sugarbeet piles having to be discarded due to spoilage. This contributed to increased beet shrink, which rose from 7.88% in February to 9.00% in March, and decreased sucrose extraction which fell from 15.26% to 15.02% month-over-month (USDA, 2024c). As a result, USDA lowered projections of beet sugar production this year, from 5.41 million STRV in January to 5.17 million STRV in March (a reduction of almost 240,000 tons in two months).

    U.S. cane sugar production for FY 2023/24 is estimated at 4.07 million STRV. This would be the highest level of cane sugar production since FY 2019/20. Increases from the state of Florida and a better-than-expected crop in Louisiana (which was hard hit by drought during the growing season) contributed to FY 2023/24’s production eclipsing last year’s level. Prior to the onset of drought conditions in Louisiana, the state was poised to post its third consecutive year of strong, record setting production, overtaking Florida for two consecutive years for the first time. However, current estimates of cane sugar production from Louisiana are down about 65,194 tons from last year’s production to 1.94 million tons.

    Figure 1. U.S. Beet and Cane Sugar Production.

    Source USDA 2024a.

    Lastly, the lack of both rainfall and irrigation water for agricultural producers in the Rio Grande Valley of South Texas over the past several years has caused cane sugar production from Texas to fall from as much as 169,000 STRV in 2017 to as few as 40,000 STRV this year. In February, the Board of Directors from the Rio Grande Valley Sugar Growers announced that this would be the last year of cane sugar production in Texas. Given the uncertainty regarding the administration of the 1944 Water Treaty between Mexico and the U.S., which governs water sharing on both the Colorado River as well as the Lower Rio Grande, growers could not count on irrigation water supply, making purchasing crop insurance uncertain and making necessary investments into the sugar mill and farming operations too risky (USDA, 2024c; San Antonio Express News, 2024). 

    In total, U.S. sugar production in FY 2023/24 is estimated to be 9.24 million STRV, which would be the third largest crop behind FY 2017/18 (9.29 million STRV) and last year’s crop (9.25 million STRV). With expected domestic demand of 12.6 million STRV and some exports going to Mexico, total use is projected at 12.7 million STRV (USDA, 2024a) which would, suggest ending stocks of 1.7 million STRV, and a stocks-to-use ratio of 13.4%, all else being equal. On average, the USDA’s estimates of ending stocks-to-use have been low in March relative to the final estimate in December by 1.2% over the past six years, suggesting a final stocks-to-use of approximately 14.6%, and ending stocks of 1.85 million STRV, or 3.7 billion pounds of sugar.

                Even though U.S. sugar producers have seen their input costs rise by more than 30% since the last Farm Bill (Deliberto and DeLong, 2023), the U.S. is still the fifth largest producer of sugar in the world producing more than 9 million STRV of sugar (USDA, 2024d). 

    With 12.5 million STRV of sugar consumption, the U.S. is also the third largest importer of sugar in the world (USDA, 2024d). How these dynamics interact with sugar markets and sugar policy will be addressed in a future Southern Ag Today article.


    References

    Deliberto, M and K.L. DeLong. “Examining Sugarcane and Sugarbeet Production Costs.” Southern Ag Today 3(50.1). December 11, 2023. https://southernagtoday.org/2023/12/11/examining-sugarcane-and-sugarbeet-production-costs/

    United States Department of Agriculture (USDA). 2024a. World Agricultural Supply and 

    Demand Estimates. Retrieved from: https://www.usda.gov/oce/commodity/wasde

    USDA. 2024b. World Agricultural Supply and Demand Estimates. Retrieved from: 

    https://www.usda.gov/oce/commodity/wasde/wasde0324.pdf

    USDA. 2024c. Economic Research Service. Sugar and Sweeteners Outlook. Retrieved from: 

    https://www.ers.usda.gov/webdocs/outlooks/108800/sss-m-427.pdf?v=1130.6

    USDA. 2024d. Foreign Agricultural Service. Sugar: World Markets and Trade. Retrieved from: https://apps.fas.usda.gov/psdonline/circulars/sugar.pdf

    San Antonio Express News. 2024. Texas’ Last Known Sugar Mill Shuts Down in Rio Grande 

    Valley, Citing Water Issues with Mexico. Retrieved from: 

    https://www.expressnews.com/news/article/texas-sugar-mill-closes-cites-water-issues-mexico-18687760.php


    Deliberto, Michael, and Karen L. DeLong. “The 2024 Sugar Market Domestic Supply and Outlook.Southern Ag Today 4(14.1). April 1, 2024. Permalink

  • Examining Sugarcane and Sugarbeet Production Costs 

    Examining Sugarcane and Sugarbeet Production Costs 

    Sugarcane and sugarbeet production are highly specialized processes with a unique set of production costs. These crops are grown in limited geographical regions of the country with sugarcane being grown in Florida, Louisiana, and Texas and with sugarbeets being mainly cultivated in the Red River Valley, upper Midwest, Great Plains, Northwest, and in California. Sugarcane is a perennial crop often grown in cycles of between four to six years. Conversely, sugarbeets are often grown in rotation with grain, oilseed, and pulse crops, which typically limits the planting of sugarbeets to once every four years for a particular piece of land. 

    Given that the commodity program safety net for sugarcane and sugarbeet growers is mainly provided through the marketing loan program, this article evaluates sugarcane and sugarbeet production costs relative to loan rates established in the 2018 Farm Bill. Specifically, production costs of Louisiana sugarcane and that of sugarbeets grown in Minnesota and North Dakota are compared for the last several years, subject to available data. 

    In this analysis, Louisiana sugarcane production costs represent the weighted costs per acre for a five-year crop rotation with harvest through stubble, as defined by the LSU AgCenter. Cost data for sugarbeets was obtained from the University of Minnesota FINBIN database which encompasses production and cost data for many sugarbeet-producing farms in Minnesota and North Dakota (the Red River Valley). 

    Since 2018, production costs for sugarcane in Louisiana have risen substantially. The main drivers behind these increases have been mainly due to a 130% increase in the cost of fertilizer and an 82% increase in the cost of diesel fuel since 2018 (Figure 1). 

    Figure 1. Selected direct production expenses for Louisiana sugarcane per acre, 2018 to 2023. 

    For Louisiana sugarcane producers, the total cost of production has risen from $551 to $858 per acre over the period of 2018-2023. That is an increase of over $307 per acre since 2018. A unique feature of sugarcane’s cost structure is the acquisition and maintenance of highly specialized farm equipment (e.g., combine billet harvester, planting wagons). Increases in machinery costs coupled with higher interest rates have resulted in overall machinery ownership costs increasing by 55% over the past five years (Figure 2).

    Figure 2. Comparison of Louisiana sugarcane production costs, 2018 versus 2023. 

    Note: FC is defined as fixed cost of machinery ownership and OH is defined as general farm overhead expense.

    As a result of the increase in production costs, the average breakeven selling price for raw sugar has increased from 17.2 cents per pound in 2018 to 28.2 cents per pound in 2023, an increase of 64% (or 11 cents) as noted in Table 1. 

    Table 1. Cost of production for raw sugar in Louisiana, 2018 to 2023. 

    Referencing the uniqueness of the crop, sugarcane must first be processed into raw sugar and then transferred to another facility where it is converted to refined sugar. Sugarbeets omits this intermediate step because after it undergoes initial processing, the finished product is refined sugar. Because of this difference in processing techniques, the production costs for sugarcane are calculated per pound of raw sugar while the cost of sugarbeets are calculated on a per-ton basis.  

    While produced on a slightly larger area than sugarcane, the cost structure for sugarbeets can differ from that of sugarcane based on geographical differences. In the Red River Valley region, the average total cost of production per acre for sugarbeets has increased from $1,099 in 2018 to $1,350 in 2022, an increase of $250 per acre. Large drivers of the increase in production costs were chiefly attributable to a 66% increase in the price of fertilizer and a 37% increase in the price of diesel fuel (Figures 3 and 4). Like sugarcane, sugarbeets have their own set of unique costs (e.g., specialized equipment costs for carts, defoliators, and harvesters), which is reflected in the cost increase over the observed period. 

    Figure 3. Selected direct production expenses for sugarbeets Minnesota and North Dakota, 2018 to 2022. 

    Figure 4. Comparison of sugarbeet production costs in Minnesota and North Dakota , 2018 versus 2022.

    Note: FC is defined as fixed cost of machinery ownership and OH is defined as general farm overhead expense.

    Sugarbeet producers have seen their cost-per-ton estimates increase substantially from the 2018 crop year. The average direct cost per ton of sugarbeets produced has increased from $31.73 in 2018 to $42.19 per ton in 2022. However, the highest cost occurred in 2019, when the average cost of production per ton was $48.21. When comparing the lowest cost of production per ton ($31.73) to the highest ($48.21), this represents an increase of over $16 per ton (52%). Likewise, the total cost plus overhead per ton has increased from $40.07 to $60.25, an increase of greater than $20 per ton (Table 2). The increase in production cost per ton in the 2019 crop year was caused by flooding that disrupted planting followed by a freeze during the harvesting of sugarbeets. This disruption reduced3.50.1- sugarbeet yields causing production costs-per-ton to sharply increase. Since that time, sugarbeet costs have displayed precipitous peaks and valleys. 

    Table 2. Cost of production per ton for sugarbeets in all States, 2018 to 2022. 

    The 2018 Farm Bill sets the raw cane sugar loan rate at 19.75 cents per pound and the refined beet sugar loan rate at 25.38 cents per pound (USDA, 2023). This article provides information that could be useful in Farm Bill discussions regarding sugarbeet and sugarcane loan rates. Since the enactment of the 2018 Farm Bill, costs of production for sugar have drastically increased—by about 30% for sugarbeets (2018-2022) and by about 38% for sugarcane (2019-2023). 


    References 

    Deliberto, M. and B. Hilbun (2023). Projected Costs and Returns for Sugarcane in Louisiana. Louisiana State University AgCenter, Department of Agricultural Economics and Agribusiness, A.E.I.S. Report No. 362, January 2023. 

    FINBIN (2023). Center for Farm Financial Management, University of Minnesota. http://finbin.umn.edu . Date Accessed: November 10, 2023.

    USDA. (2023). Sugar Policy. https://www.ers.usda.gov/topics/crops/sugar-and-sweeteners/policy/. Date Accessed: December 1, 2023.  


    Deliberto, Michael. “Examining Sugarcane and Sugarbeet Production Costs.Southern Ag Today 3(50.1). December 11, 2023. Permalink