In The Face Of Climate Change And Severe Drought, US Expects To Set Sugar Production Record, Now Farmers Want To Strike A New Deal With The Government

Global sugar production is down. The supply dropped about 2% last year with extreme weather seen the world over. Despite this, the US may be setting a new 9.39 million tonne record according to the expectations set by the USDA for the 2023-2024 year.

Almost 4 million of these tonnes come from sugarcane, the rest from sugarbeets. Cane sugar production has been accelerating in places like Louisiana due to improved farming practices and genetics that allow for a greater yield per acre. The state has faced a severe drought this year, yet it managed to produce 1.8 million tonnes.

A Fair Price?

The USDA expects retail sugar prices to climb 5.6% in 2024. Consumers are being hit hard. Major food manufacturers, who purchase 70% of domestic sugar, have argued that consumer prices and inflation are being driven by increased prices from producers.

But rising costs have hit producers hard too. At the American Sugar Cane League annual meeting, Dr. Robert Johansson, the director of economics and policy analysis at the American Sugar Alliance, spoke about the need for a new farm bill to replace the one passed in 2018, and with it a renewed “safety net” for American farmers.

Much has happened since the bill was signed into law. Global production and supply chains have been disrupted or altered by events from the Pandemic to the invasion of Ukraine, not to mention the recent droughts.

Critically, production costs have been driven up by a steep increase in the cost of fertilizer, equipment, and labor. 

Johansson and other advocates of the American sugar industry plan to make a push in Washington over the next year to bring about a new bill that will meet their needs.

Investing Opportunities

Understanding the impact climate and geopolitics have on US agriculture is critical for those looking to invest in commodities. Individual investors can get involved in the markets by trading futures, but this can be a complicated practice out of reach for many. Even for seasoned traders, pitfalls abound.

An alternative is investing in a commodity ETF, like those offered by Teucrium Investment Advisors, LLC. The firm offers a host of agricultural funds carefully curated to give investors simple, liquid access to commodities funds like Teucrium Sugar ETF CANE.

Photo by Alexander Grey on Unsplash