quotas,

US lowers sugar quotas, again

THE slowly declining American sugar quotas for Fiji and Papua New Guinea have been reduced yet again.

The quotas allow a foreign govern ment to ship a limited amount of sugar to the States for sale at the protected price level set for American ’ sugar producers, which is about twice the level of the free world price. Recent New York quotations for these two prices were S4lB per metric tonne (2,204 lbs) for the US price as opposed to $237 for the world price.

Fiji and PNG try to avoid selling any sugar at the world price, and typically sell much of their sugar to Europe, at prices which are usually better than those in the US market. Fiji, for example, sold much of its 1990 crop in Europe for $BBO a tonne.

Nevertheless the US quotas are useful to the sugar industry in the two countries, and they were always utilised by the producers. US allocations for the October 1, 1993 —Sept. 30, 1994 period were 8,838 tonnes for Fiji and 6,114 tonnes for PNG, each down about 15 per cent from the prior year, and each less than half of the quotas of ten years ago.

The coming year’s allocations, when worked out in gross US dollars for the product delivered to the States at the quoted prices, come to $4,250,000 for Fiji and $2,940,000 for PNG. The net to island sugar producers* is lower, as there are shipping, insurance and brokerage costs to be absorbed.

As of late October, Fiji had shipped its full 1992 —1993 quota, but none of its 1993 —1994 allocation. Of its two-year allocation, PNG had shipped only an odd 24 tonnes. PNG’s quota is so small that it makes commercial sense to put two-year’s allocation of sugar in a single shipload.

On a longer horizon, there is a possibility that the North American Free Trade Treaty (NAFTA) would elimin ate protected island shipments to both the US and Canada, should NAFTA be approved by the US Congress. This would happen because Mexico would simply crowd out all overseas sugar producers. There is, however, a 15-year status quo arrangement that would protect other sugar-producing nations from NAFTA’s impact. □