Resiliency in the Face of Tariff Uncertainty

What do additional tariffs on raw sugar (especially Brazil) mean for US food manufacturers?

As US production of beet and cane sugar is insufficient to meet the needs of US food manufacturers, imports of raw and re

fined sugar have been necessary to keep some of our favorite foods on the shelves.

The United States imports sugar under a system of tariff-rate quotas (TRQs). The TRQs set limits on the volume of sugar that can be shipped to the United States every year from a list of 40 sugar-producing countries.  This system protects domestic producers, and it also guarantees a diverse supply of sugar to US refiners. This system was created as a buffer to disruptions in the national sugar supply, predominantly due to unforeseen weather events.

Beet Sugar Growers Declare Force Majeure

TRQ supply comes in tariff-free.  Imports above this level are subject to a high tariff.  The newly proposed tariffs would be an additional cost.

So what does the announcement of 50% tariffs on Brazil mean for Sugaright customers? What happens if trade talks fail and the tariff actually goes into effect?

• We could see greater pricing volatility in the future, with strengthening of the #16’s in comparison to the world market (#11’s)

• The additional needed supply for the market will come from the most economically viable origin. We expect other global suppliers with whom we actively trade will assume that supply.

• One of the towering strengths of our business is the diversity of our raw sugar supply.  In any given year, we purchase raw sugar from nearly 20 countries. 

• No other supplier in the U.S. industry provides the ability to take massive quantities of domestic sugar when the domestic market is favorable, or lower quality raw sugar from the world market when the U.S. market is in a deficit or force majeure.

• The recent completion of a 100K MT sugar warehouse in Fairless Hills, Pennsylvania, demonstrates our commitment to the continuity of supply.  We have also secured significant warehousing and inventories in other strategic geographies to ensure supply assurance. 

 We encourage our government officials and representatives to reach an agreement that acknowledges the importance of maintaining an adequate supply of a critical ingredient at a reasonable cost.