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Organic food prices could soar due to new tariffs, restrictions

SIOUX FALLS, S.D. (AP) — The price of most organic food could jump this fall because of new policies and tariffs on imported organic sugar, frustrating manufacturers who say the actions won’t help sugar growers but could put some food companies out of business.

More than 90% of organic sugar used by U.S. manufacturers is imported. The price of that product increased in August when the Trump administration imposed steep trade tariffs and will rise even more when high-tier duties on most organic sugar imports take effect Oct. 1.

The result, according to the Organic Trade Association, is that the price of organic sugar is expected to soar by an average of 30%, increasing costs of producing most organic foods — everything from yogurt to cookies.

Each year, the U.S. imports 1,825 tons of specialty sugar because it is required under a World Trade Organization agreement. But demand for organic sugar far exceeds that amount, so the U.S. Department of Agriculture sets an annual quota for the amount of specialty sugar that can be imported into the U.S. duty-free.

Last year, the quota was 231,485 tons, which still wasn’t enough to meet demand. This year, the USDA’s quota taking effect Oct. 1 will be zero, and all organic sugar imports beyond the WTO minimum will be hit with high out-of-quota duties.

The U.S. Department of Agriculture has said its restrictions on specialty sugar imports are intended to help the U.S. sugar industry.

In response to questions about its new policy, the USDA released a statement saying that “the decision was not made to benefit any single entity,” and it would continue to monitor market conditions.

The limits on duty-free imports of specialty sugar plus a new 50% tariff on Brazil, which supplies 40% of the U.S.’ organic sugar, is especially difficult because organic products are already more expensive than their conventional counterparts. Growers must meet more requirements to be certified organic, such as restrictions on pesticides and fertilizers.

U.S. manufacturers say that buying domestic organic sugar isn’t an option because there is only one U.S. farm that produces the specialty crop, and converting a conventional farm to organic takes at least three years.

They warn the combined effect of the tariff and import caps may force them either to raise prices or curb production.

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