Sugar requirements and quotas STATUS OF PROGRAM The Sugar Act provides that the Secretary of Agriculture shall determine in December of each year the consumers' requirements of sugar for the succeeding year and make such revisions of the initial estimate as necessary. The requirements or total quotas, for the calendar year 1956 were initially established at 8,350,000 short tons, raw value, to maintain fair prices and orderly marketing of sugar. To preserve a stable and healthy domestic market and to provide adequate supplies to consumers, sugar quotas were increased 8 times during the calendar year 1956 to 9 million tons. Initial quotas for calendar year 1957 were established at 8,800,000 tons to provide a supply adequate to meet a normal rate of sugar consumption and maintain year-end stocks of quota sugar at about the same level as at the end of 1956. To prevent further rises in domestic sugar prices, sugar quotas were increased to 9 million tons, effective January 18, 1957, to 9,100,000 tons effective June 20, 1957, and to 9,300,000 tons effective July 10, 1957. On August 14, 1957, the quotas were reduced to 9,200,000 tons, as the upward price trend reversed itself and offerings of supplies became adequate. Quotas were further reduced, effective October 12, 1957, to 9,050,000 tons, and also effective December 7, 1957, to 8,975,000 tons to assure continued stability in domestic sugar prices. At the time United States requirements were increased to 9 million tons the Department announced it was taking 3 additional steps. These were (1) authorizing an increase in the national sugar beet acreage limitation from 932,000 acres to 950,000 acres; (2) asking the International Cooperation Administration and other Government agencies to review their programs to make certain that the foreign aid and credit programs of the Government would not have the effect directly or indirectly of supporting the inflationary trend in world sugar prices; and (3) considering the advisability of export controls to prevent the exportation of domestic sugar while world prices remain above a parity with those in the United States. As of June 30, 1957, no export controls had been imposed. Consumers' sugar requirements for calendar years 1956 and 1957 were distributed quotawise in accordance with the Sugar Act as amended by Public Law 545, 84th Congress, approved May 29, 1956. This law, which with certain exceptions became effective as of January 1, 1956, restored to the domestic areas their historic right to share in the growth of the United States sugar market. Foreign areas not only retained the quotas assigned to them at the time the amendments became effective but also share in the future growth of the United States market. Beginning in 1956 market growth in excess of 8,350,000 tons is shared 55 percent by domestic areas and 45 percent by foreign countries. Cuba now supplies about 30 percent of the market growth and full-duty countries as a group about 15 percent. Sugar quotas for the calendar years 1956 and 1957 are shown in the following table: 1 Expected deliveries. Despite declaration of deficits, full basic quotas are available to these areas as follows: Hawaii, 1,087,373; Puerto Rico, 1,136,987; Virgin Islands, 15,505; and Republic of the Philippines, 980,000, short tons, raw value. Marketing allotments Section 205 (a) of the act provides that the quota for any area shall be allotted to persons who market or import sugar when necessary to insure orderly marketing and to afford interested persons an equitable opportunity to market sugar within such quota. In the domestic beet and mainland cane sugar areas, available supplies on January 1, 1957, together with 1957 crop prospects, were such that the Secretary found that allotment of the 1957 quotas for those areas was necessary to prevent disorderly marketing and to assure all persons who market sugar an equitable opportunity to do so. Allotment orders regulating the marketings within the quotas for the domestic beet and mainland cane sugar areas were in effect on June 30, 1957. Allotments of the quotas restricting shipment of Puerto Rican sugar to the United States mainland and for local consumption in Puerto Rico were made effective January 1, 1957, but were removed on June 6, 1957 when it became evident that supplies would be less than the total Puerto Rican quotas. Allotments were retained, however, on sugar shipped to the mainland for use without further refining. Payments to producers Payments are made to domestic producers of sugar beets and sugarcane who comply with certain requirements with respect to child labor, wage rates, proportionate shares (acreage allotments), and in the case of processor producers, the payment of fair and reasonable prices for sugar beets or sugarcane purchased from other producers. Pursuant to title III of the Sugar Act of 1948, conditional payments on the 1956 crops totaling $64,065,400 were made to about 66,330 sugar beet and sugarcane producers in 24 States, Hawaii, Puerto Rico, and the Virgin Islands (table I). TABLE I.-Payments under the Sugar Act of 1948 and number of payees, in the domestic sugar-producing areas, crop years 1955 and 1956 1 The act, through an amendment to the Internal Revenue Code, imposes a tax of 50 cents per hundred pounds of sugar, raw value, on all beet or cane sugar processed in or imported into the continental United States for direct consumption. The excise tax on sugar, under Public Law 545, was extended to June 30, 1961. The following table shows taxes collected compared with obligations under the sugar program: Tax collections exceed total program obligations in the amount of $365,287,631 for fiscal years 1938 through 1957. Fair wage and price determinations Among the conditions producers of sugarcane and sugar beets must meet to be eligible for Sugar Act payments are the payment of fair and reasonable wage rates to persons employed on the farm in the production, cultivation, and harvesting of sugarcane or sugar beets, and for producers who are also processors of sugarcane or sugar beets, the payment of rates not less than those established by the Secretary for sugarcane and sugar beets purchased from other producers. The Sugar Act requires that determinations of fair and reasonable wages and prices shall be made by the Secretary after holding public hearings and after making appropriate investigations. Determinations of wages and prices were issued for the following domestic areas: Sugar beet, mainland cane (Louisiana and Florida) and the Virgin Islands. For Hawaii and Puerto Rico fair price determinations are issued annually but the wage determinations have been placed on a continuing basis (Hawaii in 1954 and Puerto Rico beginning in 1957). Under the determinations issued during the 1957 fiscal year, the level of wage rates increased in all areas, except the Virgin Islands. In the sugar beet area, basic hourly rates were increased by 5 cents per hour; piece-work rates for thinning, hoeing, or weeding increased in some districts 50 cents to $1 per acre, depending upon the operation; and the requirement that producers furnish workers the customary perquisites was eliminated. Consideration was being given to a petition of Imperial Valley, Calif., growers to establish Imperial Valley as a separate wage district with lower hourly rates. In Louisiana, basic hourly rates were increased 5 percent and piecework rates 10 percent. For Puerto Rico, specific wage rates were not established but for compliance purposes those agreed upon between the producer and the worker must be paid. The determination was put on a continuing basis in view of local legislation establishing wage rates for the various categories of workers. In Florida, two wage determinations were issued during the 1957 fiscal year. The first, covering the period July 1, 1956, through June 30, 1957, increased basic hourly rates 5 cents per hour, and eliminated the perquisite provision. The second, covering the period July 1, 1957, through June 30, 1958, continued the wage rates applicable to the prior period. Fair price determinations were issued for all domestic sugar producing areas. For Hawaii, two price determinations were issued during the 1957 fiscal year. The first, covering the 1956 crop, included processing rates for a new type of tolling agreement between processors and independent growers. The second, vering the 1957 crop, increased the processing rates for two sugar companies, otherwise remained substantially unchanged. In Puerto Rico, definitions for net surgarcane and trash were included; the formula for determining yield of raw sugar was restated which included a factor tending to reflect the effects of excessive trash in sugar cane and certain shipping allowances on bulk sugar shipments were reduced. No changes were m de in the determinations for other areas, except for the Virgin Islands a fixed deduction was provided in lieu of actual costs for all items of selling and delivery expenses for raw sugar, exclusive of ocean freight and unloading charges at destination. Proportionate share determinations (acreage allotment) Proportionate shares for sugar beet and sugarcane farms must be established for each crop since the marketing of sugar beets or sugarcane within such shares constitutes one of the conditions for payment. Restrictive proportionate shares are required in any area when the indicated sugar production is greater than the quantity needed to fill the quota and provide a normal carryover inventory for such area. Due to supplies and prospective production of sugar in the mainland cane area, a determination was issued on August 14, 1956, continuing restrictive proportionate shares on the 1957 crop. The production limitation was established at approximately the level of the area's estimated quota which included its share of the United States market growth. A determination issued October 31, 1956, established proportionate shares in Puerto Rico at the actual level of production for the 1956-57 crop. The removal of the restrictive proportionate shares which had been effective for the previous four crops was due to the adverse effects on production caused by the hurricane which struck Puerto Rico in August 1956, and to drought. In a determination issued on September 25, 1956, restrictive proportionate shares were continued for the 1957 crop in the domestic beet sugar area. The national acreage limitation was set at 885,000 acres, compared with 850,000 acres in each of the two previous crops. Amendments to the determination issued January 2, 1957, and January 25, 1957, increased this national objective to 932,000 acres and 950,000 acres, respectively. The acreage increased related primarily to quota changes. Also, as was the case of the previous crops, responsibility was assigned to ASC State committees for the establishment of individual farm proportionate shares within State acreage allocations. The proportionate share determination for the Virgin Islands was placed on a continuing basis in July 1954. This determination established proportionate shares for each farm in the area at the actual level of production. The determination issued in June 1955, applicable to the 1955 and subsequent crops, established proportionate shares for farms in Hawaii also at the actual level of production. However, the proportionate share for the farm of any processor-producer is conditioned upon the maintenance of the existing relationship between the acreage of sugarcane cultivated by the processor-producer and the acreage cultivated by independent growers. Studies, surveys, and reports Reports were prepared of studies conducted in the previous fiscal year of the costs, returns, profits, investment, and man-hour requirements associated with the production of sugarcane and for the processing of raw sugar in Louisiana and Florida for the years 1952 through 1954. Field work for the study of the costs of producing sugar beets in the domestic beet area for the 1955 crop and for the study of the cost of producing beet sugar within the same area for years 1953, 1954, and 1955 was completed during the fiscal year. Preparation of the report for the beet sugar area had begun at the end of the 1957 fiscal year. During the 1957 fiscal year, investigations dealing with particular aspects of wage and price problems were conducted in all domestic producing areas, prior to public hearings in such areas. Sugar Reports, the monthly publication of the Sugar Division, was issued throughout the 1957 fiscal year. This publication contains the latest data available on both the domestic and world market supply and price situation as well as analysis of special current problems of interest to domestic producers and con sumers. International Sugar Agreement The International Sugar Agreement was revised during the 1957 fiscal year, At 2 United Nations Sugar Conferences, the first in New York in May-June 1956, and the second in Geneva in October 1956, representatives of 63 nations negotiated and adopted amendments designed to make the agreement more workable. The protocol amending the International Sugar Agreement was under consideration by the United States Senate at the turn of the fiscal year. The Senate advised ratification of the amendments to the agreement on August 8, 1957, and the amended agreement was duly ratified by the President on September 3, 1957. Essential features of the amendments are as follows: 1. The principal price range of the agreement is now 3.15 to 4.0 cents per pound, in lieu of the previous range of 3.25 to 4.35 cents. 2. Many of the export quotas assigned the various exporting countries have been adjusted to better meet their individual situations. 3. The quota adjustment provisions have been amended to simplify the administration of the agreement and provide more flexibility in adjusting export quotas, particularly during periods of increasing demand. Of special importance to importers is the fact that export quotas may be increased without limit at any time the world price exceeds 3.45 cents, and that all quotas are automatically suspended when the price averages over 4.0 cents per pound for 17 marketing days. Burdensome world surpluses were reduced gradually during 1955 and early 1956. Then in the fall, the short sugar beet crop in Europe together with the Suez crisis and the Hungarian revolt touched off a wave of sugar buying. Moreover, the Cuban crop then growing was known to be affected by inadequate rainfall. On the basis of these developments, world sugar prices rose sharply from 3.25 cents on November 1 to 6.37 cents on January 15 and to 6.85 cents on April 22 and averaged 6.12 cents in June. In accordance with the revised agreement, quotas became inoperative as of January 25, 1957, when the world price had averaged over the 4-cent level for 17 consecutive market days. The International Sugar Council met five times during the fiscal year. The first two meetings were concerned with the problem of adjusting quotas to maintain prices at not less than 3.25 cents. The last three were concerned with the problem of making adequate supplies available to member importing countries. Also, exporting countries were requested to make all stocks available and to give member importing countries priorities with respect to purchases. Representatives of the United States participated in the Council meetings as well as in the work of the standing committees. Moreover, data relating to production, supplies, and imports of the United States were furnished to the Council monthly. World production, supplies, and consumption were kept under careful review in view of the volatile world price situation. Program administration The sugar program is administered in the counties by elected county and community committeemen and in the States by State agricultural stabilization and conservation committees composed of resident farmers appointed by the Secretary. Administrative expense allocations to States are based on workload data for the previous year adjusted to reflect any contemplated changes in program operations. Workload data Tables II and III set forth the workload data in connection with the 1957 crop (fiscal year 1958). |