SIC 2061
CANE SUGAR, EXCEPT REFINING



This classification includes establishments primarily engaged in manufacturing raw sugar, syrup, or finished (granulated or clarified) sugar from sugar cane. Establishments primarily engaged in refining sugar from purchased raw sugar or sugar syrup are classified in SIC 2062: Cane Sugar Refining. Plantations primarily involved in production of sugarcane and sugar beets are classified in SIC 0133: Sugarcane and Sugar Beets.

NAICS Code(s)

311311 (Sugarcane Mills)

Industry Snapshot

The sugar cane industry is confined by the crop's growing conditions and the logistics of transporting sugar cane. Mills that process the sugar cane into raw sugar must be located near cane plantations since cut sugar cane is too bulky and heavy to ship. Mills in this category process cane into crystals of raw sugar that can be transported in bulk, like grain, aboard ships or by land. Therefore, production in the United States is limited to Florida, Hawaii, Louisiana, and Texas and the commonwealth of Puerto Rico. Florida alone accounts for more than 50 percent of total U.S. cane sugar production. For the fiscal 2000 harvest, cane sugar production reached a record 9.035 million short tons, thanks to increased output from Louisiana. According to the U.S. Census Bureau, the value of sugarcane mill industry shipments declined from $1.493 billion in 1999 to $1.485 billion in 2000.

A tropical grass that reaches a maximum height of 10 to 20 feet, sugar cane contains a relatively high level of sucrose. Sugar mills begin the process of extracting sucrose from the sugar cane by washing the stalks of cane and cutting them into shreds with rotating knives. The shredded cane is then run between giant rollers to extract the sugary juice. This juice is then clarified and crystallized into golden raw sugar. The raw sugar that emerges from the sugar mills is more than 95 percent sucrose.

U.S. sugar cane milling profitability depends on federal government subsidies and import controls. Since the late 1700s, producing raw sugar has been a lucrative business for growers and millers. Domestic sugar prices have been government controlled, and foreign imports have been severely limited. Some members of Congress, as well as numerous American agricultural policy critics, have been advocating less government involvement. They have been pushing fordecreased price supports for domestic sugar cane as well as the liftingor easing of foreign sugar quotas. Critics claim import controls hurtsmall sugar-producing Caribbean nations—as well as the Philippines.

Organization and Structure

Sugar mills are located near the plantations on which sugarcane is grown and harvested. In many cases, these are operated by the plantations or as cooperatives by the owners of several sugarcane plantations. United States Sugar Corporation in Clewiston, Florida, for example, is both a grower and manufacturer of raw cane sugar.

Mills run continuously, day and night, from fall until spring, when the last cane is harvested. To facilitate the constant milling, growers cultivate a variety of sugar cane that they can harvest throughout the season. The variety of cane available, however, depends on the soil and climate on a particular plantation.

Government Supports. The U.S. government has supported sugar prices for more than 200 years. In 1789, the federal government imposed an import tariff to raise revenue and, for the next 100 years, this sugar tariff yielded almost 20 percent of all import duties, the main source of government money before the Civil War. The Sugar Act of 1934 regulated domestic sugar production, imports, and prices. Import quotas were assigned to foreign sugar-growing countries.

Price supports were applied sporadically during the 1970s, depending upon the price of sugar on the world market. Temporary suspensions of price controls in 1974 and 1980 resulted in increased sugar prices. Shortages soon followed and, with that, sugar prices plummeted.

As a result, in the Agriculture and Food Act of 1981 the government agreed to purchase raw cane sugar and refined beet sugar for a specific price per pound if commercial prices were not high enough. In order to avoid payments, the government imposed tariffs to discourage imports, limit the supply of sugar and, therefore, keep sugar prices level at or above the government's minimum price. Farmers claim to get no benefit from the subsidies. Industry claims are that U.S. consumers pay 28 percent less for sugar than consumers anywhere else worldwide; however, the U.S. price for sugar in 1995 was more than double the world's price. Subsequent agricultural acts continued to provide price supports for sugar, keeping quotas low and prices high in the domestic market.

In recent decades, the United States has imposed strict quotas on import of foreign sugar, cutting imports 80 percent since 1975. The tariff on sugar imports in excess of the quota was also high enough to discourage imports. This quota has created great controversy regarding U.S. trade with developing nations. More than 110 countries grow sugar cane or sugar beets, and many of the developing nations have become dependent on sugar as a source of employment and income. In the early 1990s, the United States imported less than 1.5 million tons of sugar to make up the difference between the sugar cane produced domestically and the approximately 9 million tons used.

Some critics of U.S. foreign trade policy have blamed the federal sugar support program for the rise in cocaine traffic into the United States. These critics claimed that not only did the sugar program hurt other countries financially, but the loss of sugar trade with the United States contributed to increased coca (from which cocaine is derived) production in Bolivia and Peru. U.S. sugar producers disputed this claim, maintaining a primary factor in the decline was nationalization of Peru's sugar industry, not cuts in U.S. sugar imports.

Price supports for sugar in the United States are provided in the form of nonrecourse loans so that sugar growers can borrow money with the crop as collateral. The government sets the value of the crop collateral at a minimum price per pound, guaranteeing that the sugar producer will receive at least that price, even if the commodity price drops. Loans are made to the processor because the raw sugarcane must be milled before being sold or stored. When the raw sugar is sold, the growers reportedly receive payment as well. In many cases the processor and the grower are the same concern. In 1996, to protest U.S. policies surrounding subsidies, the Sugar Cane Growers Cooperative of Florida said it would decline $28,000 in government payments.

Processing. The harvesting of sugar cane poses many challenges to producers. Harvesting is either carried out by hand cutting or machine cutting. While harvesting by machine costs half as much as harvesting by hand, mills complain that machine-harvested sugar includes too much debris—such as roots, dirt, leaves, and dead animals—according to Alec Wilkinson in his book Big Sugar, Seasons in the Cane Fields of Florida. He notes that mill owners estimate machine-harvested sugar cane includes 7 to 10 percent trash, while hand-cut cane includes only about 2 percent. Mill owners complain that trash costs them money because it clogs the machines and absorbs juice during milling. According to Wilkinson, mill owners claim machines leave too much cane in the field; machines cannot cut as close to the ground as the hand cutters. Owners claim that every acre left with half-inch cane stubble would have made another half ton of cane to be milled.

Sugar cane stalks are transported to nearby mills in trucks or railroad cars to be washed and shredded then placed in crushing machines or vats of hot water to dissolve the sugar. Crushing machines break open the cane and squeeze out the sugary juice. Water dissolves more of the sugar in the stalk, creating a sugary mixture called cane juice. The cane juice is heated, and lime is added to settle impurities; next, carbon dioxide is used to remove the lime. The clear juice moves on to giant evaporator tanks. After removing most of the water, the thickened mixture is transferred to a vacuum pan where the mixture is heated to remove still more water. When crystals form in the syrup, the mixture is transferred to a centrifuge. The mixture is spun at high speeds to separate large sugar crystals from the thick syrup. The crystals, 97 to 99 percent sucrose, are called raw sugar. Producers may package the raw sugar, as turbinado, for consumer use or sell it to cane sugar refiners for the manufacture of granulated or powdered sugar. Any foreign sugar shipped to the United States is also transported in raw form.

Current Conditions

The late 1990s saw a sharp decline in U.S. sugar prices, blamed by cane sugar producers on increased sugar imports from Mexico under the North American Free Trade Agreement (NAFTA). As sugar cane harvesting for the 1999-2000 crop year got under way in October 1999, the U.S. sugar price had fallen below 19 cents a pound, its lowest level in decades. U.S. Sugar Corporation, a major player in the industry, reported that although the crop size outlook was good, price prospects were gloomy. "The good economy in the United States has bypassed farmers," said Robert H. Buker Jr., senior vice president at U.S. Sugar. "Even worse, though farmers are suffering, the prices in grocery stores haven't gone down. Sugar is at some of its lowest prices even, but Snickers haven't gotten any cheaper." In June of 2000, the U.S. Department of Agriculture spent $54 million to buy 132,000 tons of refined sugar in an effort to keep sugar prices from dipping any lower.

Sugar and other agricultural supports continue to be criticized by certain members of Congress and other government officials. Although cuts in price supports are likely, the government is unlikely to remove all supports. Sugar producers claimed that the federal sugar program protected U.S. consumers from wild swings in world prices. Critics say U.S. consumers spend an extra $1.4 billion annually because of the government program. The industry contends that figure should be about $200 million.

NAFTA promised to open up the sugar market to Mexico; however, rather than increasing overall import of sugar, it would probably reduce U.S. purchases from the Philippines and Caribbean nations. According to a 1988 Monthly Review article, "the industry is confronted with virtual extinction over the next decade," attributing the move to "policy decisions adopted in the boardrooms of a minuscule number of beverage companies with no consideration whatsoever for the millions of sugar workers and their families around the world." In other words, a shift to corn sweeteners and other sugar substitutes was to blame. The shift to high fructose corn syrup use by the U.S. beverage industry began in the 1980s. Its price in 1985 was approximately seven U.S. cents per pound less than sugar, and the savings to the industry megaliths the previous year had been $90 million. This move by the beverage industry was assisted, contended Monthly Re-view, by the push of corn conglomerates such as Archer-Daniels-Midland Company and Cargill. That same year the U.S. sugar market declined by about 8 percent.

U.S. Sugar Production in fiscal 2000 reached a record 9.035 million short tons, raw value (STRV), up by 700,000 tons from fiscal 1999. The increase was due partly to increased production in Louisiana, which has seen its sugarcane output grow by 34 percent between 1995 and 2000. In fact, Louisiana now exceeds Florida in term of actual sugarcane acreage. With modest demand simply unable to support this growth in production, analysts predict continued struggles for the U.S. sugar industry.

On the price front, world raw sugar prices hit a fourteen-year low on April 28, 1999, when the July contract traded as low as 3.93 cents per pound. The cut-rate sugar prices at the world level attracted buyers from Iran and Bangladesh as well as buying interest from Russia. As April ended, however, the July contract price firmed to 4.33 cents per pound. For the month as a whole, world raw sugar prices averaged 5.44 cents per pound, nearly half the 10.22 cents per pound of a year earlier. During the same period, U.S. nearby futures prices for raw sugar averaged 22.57 cents per pound, while the July contract traded in a range between 22.27 and 22.70 cents per pound. However, by the fall of 1999, U.S. sugar prices had fallen below 19 cents per pound, their lowest level in decades. U.S. sugar producers said the sharp drop in prices could be traced to increased imports of Mexican sugar under NAFTA.

Pollution in the Everglades. According to environmentalists, agricultural run-off from sugar plantations and milling processes in southern Florida have been responsible for damage to the Everglades. In 1991, United States Sugar Corporation was fined $3.75 million for improper disposal of hazardous materials from one of its Clewiston mills in the Everglades. The company pleaded guilty to knowingly allowing hazardous wastes into local landfills during three harvest years. Environmentalists continue to raise concerns about the impact of the sugar industry on the fragile ecosystem of the Everglades.

Industry Leaders

The undisputed leader in the domestic cane sugar industry is U.S. Sugar Corp. of Clewiston, Florida, which produces nearly 10 percent of all American sugar. A privately held company, U.S. Sugar is not required to reveal its financial results, but its 1997 sales were estimated at $430 million. Another major player in the industry is Alexander and Baldwin Inc., headquartered in Hawaii. A widely diversified company with holdings in transportation, real estate, and other agricultural commodities, Alexander and Baldwin posted revenue of nearly $1.3 billion in 1998, up about 5 percent from the previous year. Another major producer in the cane sugar industry is St. Joe Co., which is also widely diversified. In 1998, St. Joe posted revenue of $322 million.

Another major player in the Florida cane sugar business is the Fanjul family which, through its network of family-owned sugar plantations, is said to supply the domestic market with more than 15 percent of its cane sugar. Members of the Fanjul family, which emigrated to this country from Cuba after Fidel Castro took power in 1959, control a number of cane sugar companies, including Flo-Sun Sugar, Okeelanta Corp., Osceola Farms, New Hope Sugar, and Kendall Sugar Cane.

In Louisiana and Texas, major sugar producers include Rio Grande Valley Sugar, Cora-Texas Manufacturing, Sterling Sugars Inc., Cajun Sugar Cooperative Inc., Alma Plantation Ltd., Louisiana Sugar Cane, M.A. Patout and Son Ltd., Iberia Sugar Coop Inc., and LaFourche Sugars Corp.

Workforce

Although cutters are employed by the sugar growers, they are discussed here because many southern Florida plantations are owned by the large sugar mills and are therefore part of this industry in the country's leading sugar-producing state. Sugar harvesters, called cane cutters, face one of the most grueling jobs imaginable. For decades, the Florida sugar cane industry came under fire for the severe, even slave-like conditions in which the cutters lived and for illegal practices concerning wages. Most Florida cane cutters were seasonal workers migrating from the Caribbean for the harvest.

A 1991 congressional report accused the sugar cane industry of violating labor laws. In 1992, U.S. Sugar Corp., one of the largest sugar concerns in Florida, agreed to a wage increase and other improvements. Farm-worker advocacy groups were hoping to win reforms for cane cutters working at other sugar companies. However, southern Florida producers were increasingly turning to machine cutting because of the historical controversy about the treatment of immigrant labor by the industry.

Employment in the fields and in the mills is seasonal, peaking between fall and spring. According to the Bureau of Labor Statistics, in 1990 total employment of production workers in the industry was 3,500 in July and 6,400 in November. One cooperative based in a single county in Florida reported employing about 900 people in 1996 on a payroll exceeding $26 million.

Further Reading

Bacon, Kenneth H. "U.S., Mexico Have Tentative Pact on Sugar Trade." Wall Street Journal, 29 July 1992.

Barry, Robert D. "The U.S. Sugar Program in the 1980s." National Food Review, January-March 1990.

Egan, Jack. "A New Battle for the Sultans of Sugar." U.S. News & World Report, 17 July 1995.

Lawrence, Richard. "Bitter Aftertaste for 'Big Sugar."' Journal of Commerce and Commercial, 5 October 1995.

"Sugar Cane Growers Cooperative of Florida Rejects Payment from Federal Government." PR Newswire, 3 July 1996.

United States Census Bureau. Current Industrial Reports. Washington, D.C.: GPO, 1998.

United States Census Bureau. "Statistics for Industries and Industry Groups: 2000." Annual Survey of Manufacturers. February 2002. Available from http://www.census.gov .

United States Department of Agriculture/Economic Research Service. "Weak Prices Test U.S. Sugar Policy." Agricultural Outlook. September 2000. Available from http://www.ers.usda.gov .

U.S. Sugar Corp. "U.S. Sugar Corporation Begins 1999-2000 Sugar Harvest Season as Sugar Prices Collapse," 1999. Available from http://www.ussugar.com/news/991011sugarharvest.html .

Wilkinson, Alec. Big Sugar, Seasons in the Cane Fields of Florida. New York: Alfred A. Knopf, 1989.



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