The Impact and future of US Sugar

The purchase of US Sugar would have a significant economic impact to the South Florida
region and the State of Florida according to a study conducted by University of Florida
officials.

Formulated by the Institute of food and Agricultural sciences, the study evaluated the
economic impact of the current operations of US Sugar Corporation and the potential
impact under the proposed purchase.

US Sugar has been a major contributor to the economic survival of the small town of
Clewiston where most residents are employed, or have been employed by the sugar giant.

Impact on Sugar Industry

The study shows US Sugar’s productivity impact on the sugar industry over the last four
years averaged over 652,000 tons of raw sugar being produced. This type of production
is significant in understanding how workers will be affected by the proposed buyout of
the sugar company by the state.

USSC raw sugar production,

2004/05 to 2007/08. Source: Sugar
Journal 2008 by way of UF.

Florida is currently the leading

producer of cane sugar, averaging
1.87 million tons followed by
Louisiana. According to the
study, of the 36 percent of cane
sugar supply in the United States,
Florida produces 18 percent and
imports produce 20 percent.

The study, however, claims that although US Sugar Corp. is the largest producer of sugar,
it’s disappearance would not likely cause any significant shift in the domestic sugar
market in the short run due to the controlling effect of the federal sugar program which
regulates supplies and prices.

Impact on Jobs

The greatest impacts to the economy include the agricultural and manufacturing sectors
where direct activities of USSC take place. These are mostly in the South and Central
Florida regions. These include Palm Beach, Hendry and Glade counties. According to
the study, the estimated impact on jobs include over 8200 jobs, $338 million in labor
income, $169 million in property income and $507 million in total personal income.
These would include the jobs of US Sugar workers and independent farmers and
employees affected by the Sugar industry. These numbers could change if US Sugar
decides to stay in business after the seven year lease contract.

Possible future business models for US Sugar

Representatives from Louisiana based firm Schaffer & Associates were hired by the
water management district to give an analysis of the business models of the sugar
industry. In their presentation at the December 2 board meeting they discussed four
possible business models US Sugar could follow to continue collecting revenues. These
include: ethanol production from molasses, refining imported sugar, extension of milling
operations with sweet sorghum and power exports for local utility companies. Ethanol
production however will come at a great cost.

“You have to install a distillery and a waste water treatment facility to create ethanol in
the Clewiston mill. Extra capital is needed,” said one of the representatives. “It does
however produce the byproduct molasses.”

The two representatives, Dr. Harold Birkett and Nigel Williams, however, do not believe
US Sugar is near the point of ethanol production.

“It’s not really ready for prime time yet. It’ll be years before we get there,” Dr. Birkett
said.

Birkett claims that ethanol production from cellulosing, a fairly new concept, has been
one of US Sugar’s long term plans.

Robert Coker, Executive Vice President of US Sugar Corporation said after the lease
contract ends they are interested in exploring other avenues such as ethanol production
although no specific plans are set in place as yet.

“This deal allows us to do other things with our business and we’re excited,” Coker said.