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Texas Agriculture Archive

November 18, 2005

Hurricanes' impact small
on Texas sugar prices

By Lana Robinson
Field Editor

The Texas sugarcane crop dodged the hurricane bullet and damage to crops in neighboring Louisiana and in Florida have had little impact on Rio Grande Valley growers. That's the assessment of Steve Bearden, president and chief executive officer of Rio Grande Valley Sugar Growers, Inc., a farmer-owned cooperative located in Santa Rosa.

"We had no effects from the recent hurricanes," Bearden reported Nov. 9. "Hurricane Emily hit Mexico in July. We got two to four inches of rain at the time, which was really at the perfect time for the crop. What's really affecting us is that we're 12 inches behind in rainfall for the year. Growers are having to irrigate more than normal. But I attribute the great quality of this year's crop to the drier weather, which allowed the cane to mature earlier and gave us the heavier sugar content."

Bearden said the harvest, which began Oct. 10, has gone rather well, with few disruptions. Yields per acre are averaging 207 pounds compared to 188 last year. In terms of sugar content, the yield is 9.59 percent sugar versus 8.71 percent per ton of cane in 2004, he said.

The Texas Cooperative Extension says Texas—the fourth largest source of U.S. sugarcane—annually produces 1.7 million to 1.8 million tons of the sweet crop. Approximately 140 farmers comprise the sugarcane sector. Extension estimates sugarcane's economic impact on the state's economy at more than $200 million, and point out that it generates hundreds of jobs for a region with few employment opportunities.

A little more than the typical 43,000 acres was planted within the three main sugarcane-producing counties of Hidalgo, Cameron and Willacy in 2005.

"Of that, we use about 1,500 to 2,000 acres every year for seed. We replant about one-sixth of the crop each year on a five to six year rotation. We plant stalks in August, September and October. The sugarcane planted this past August will be harvested next October. The ideal time to harvest is November, but to avoid the possibility of a freeze, growers don't have a choice but to start in October. We actually started a week later this year than the year before. We're behind a little on harvested acres. As of Monday (Nov. 7), we had 6,000 acres harvested compared to 7,300 acres this time last year. They're cutting 1,400 to 1,500 acres a week," Bearden said.

The Domino refinery, located in Louisiana's devastated St. Bernard Parish, has the contract to refine Valley-grown sugar. The Texas-based co-op has been unable to ship raw sugar to the plant since the hurricane.

"They hope to reopen by Dec. 1," Bearden reported. "We have 70,000 tons in storage here and can store 30,000 tons in the Harlingen warehouse until mid-January. We don't really have another option. All the refineries are running 24/7, and the transportation would eat us up if we tried shipping to the East Coast."

Sugarcane stalks are crushed to extract juice, which is then boiled and evaporated to produce a thick syrup from which sugar granules form. Sugarcane also produces two by-products: molasses and bagasse. Molasses is a thick syrup from which no more sugar can be removed and is used as a livestock feed or is fermented into fuel alcohol or beverages. Bagasse is the fiber constituent remaining after the juice is expressed. Bagasse is burned for steam generation to power the mill equipment and generate electricity. Excess bagasse is used in industrial fiber products.

The U.S. Department of Agriculture (USDA) announced, Nov. 3, that it intends to release an interim report, by Dec. 15, 2005, on a feasibility study on converting sugar into sucrose ethanol.

"We are looking closely at ethanol production down here," said Bearden. "However, it takes 13 pounds of sugar to make a gallon of ethanol, so today, it's worth more as sugar."

Meanwhile, the projected sugar production in Louisiana has dropped by at least 224,000 tons because of Hurricanes Katrina and Rita, according to the USDA. The USDA estimated production losses from Rita alone at $42 million for sugarcane. Production has fallen from 1.37 million tons to 1.15 million tons due to the damage. However, because of the allocation system in place, crop damage in Florida and Louisiana has had little impact on prices, Bearden noted.

"We have a 180,000-ton allocation. We'll make that, maybe a little over. The price ran up a little following the storms, but it's back down now that harvest is in full swing," he said.

The Florida Sugar Cane League, on Nov. 8, estimated that Florida sugarcane growers sustained $400 million in damage from Hurricane Wilma.

"Florida's crop was pretty much flattened," said Bearden. "The good thing is they didn't get that much rain. It went across fast and then took back the other direction. The hurricane broke some stalks, but it didn't uproot the cane. It did damage factories and sugar warehouses. However, all the mills in both Louisiana and Florida are running now."

Under the North American Free Trade Agreement (NAFTA), Mexico could send as much as 276,000 tons of sugar into the country. And that's on top of more than 100,000 tons that will come in next year under the Central American Free Trade Agreement (CAFTA).

"Imports of sugar have increased in order to balance out consumption," Bearden said. "Prices have held in the 21.5 to 22 cent range, which is better than last year when it was down to almost 19.5 cents. It's held the price to a respectable level. We've got to import it. That's how the program works, to balance the amount of sugar. And consumption in the U.S. has gone up in the past few years."