Diverse coalition calls for reform of U.S. sugar policy in 2007 farm bill

by Ron Sterk
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WASHINGTON — Senator Richard Durbin of Illinois and more than 75 companies and associations joined in a call for U.S. sugar policy reform in the 2007 farm bill.

"Current sugar policy distorts markets, hampers trade liberalization and will become increasingly costly to taxpayers in the years ahead," a diverse group of food, agricultural, consumer and business organizations said in a statement April 23 to the U.S. Congress recommending revision of sugar policy.

Senator Durbin at a news conference on April 23 said he supported U.S. sugar policy reform in the 2007 farm bill, citing job losses as candy companies move plants to other countries that have access to lower-priced world sugar. Senator Durbin is the Assistant Majority Leader and a member of the Senate Appropriations subcommittee on Agriculture, Rural Development, Food and Drug Administration and related agencies.

Signers of the statement included several baking, chocolate, candy and beverage manufacturing companies, food retailers, and food industry, consumer and environmental associations.

"We recognize that Congress has chosen to provide income protection for producers of many agricultural crops, and sugar is not unique in this regard," the statement said. "However, the present U.S. sugar policy — built around government-set price floors, government-enforced marketing quota and strict limits on imports — harms American consumers and is ill-suited for the rapidly evolving markets of the 21st century. No other agricultural market is so characterized by extensive government regulation of output, buying and selling."

The statement said the existing sugar policy creates economic market distortions of $1 billion to $1.9 billion per year.

The statement said it was apparent during debate over the Dominican Republic-Central America Free Trade Agreement that current sugar policy discourages trade liberalization even when such liberalization is in the interest of other farmers, businesses and their employees. As sugar trade between Mexico and the U.S. becomes unrestrained on Jan. 1, 2008, under the North American Free Trade Agreement, "a policy that relies on import controls cannot survive long," the statement said.

Sugar users long have sought increased access to lower-priced "world" sugar.

The U.S. Department of Agriculture has recommended the basic structure of the sugar program remain intact in the 2007 farm bill, with one major exception. The change would allow the U.S.D.A. to adjust domestic marketing allotments based on potential sugar imports, rather than requiring the Secretary of Agriculture to suspend domestic allotments when sugar imports are projected to exceed 1.532 million tons, as current policy now requires. The ultimate goal would be to keep the sugar program no cost to the government to prevent forfeitures of sugar to the U.S.D.A.

"Although the current sugar program is advertised by its supporters as ‘no net cost’ to the U.S. government, it hurts U.S. consumers, particularly low-income consumers, by artificially inflating U.S. sugar prices," the statement calling for change said. The Congressional Budget Office forecasts taxpayer costs will be $1.3 billion over the next 10 years as imports rise and the government is forced to purchase surplus domestic supplies, the statement said.

U.S.D.A. secretary Mike Johanns said in a recent interview with Food Business News that the U.S. sugar program "is not sustainable over time." The U.S.D.A.’s recommendation to make only slight changes in sugar policy in the 2007 farm bill would give the sugar industry — growers and processors — time to adjust before more sweeping changes were made in the 2012 farm bill, he said.

"The sugar industry needs to decide what it’s going to do next," Mr. Johanns said.

The sugar users in their letter said, "We believe it is imperative for Congress to reform the sugar program now. We are prepared to work with sugar producers and processors to develop meaningful, workable and equitable reforms."

But sugar producers also are building their support to retain the current sugar program, with caucuses in both houses of Congress and the powerful American Farm Bureau Federation offering support. The primary sugar lobby, the American Sugar Alliance, which represents growers, processors and refiners of sugar beets and sugar cane from 19 states, issued two press releases on April 23 concerning support for the program in the U.S. Senate and House of Representatives.

The Senate Sweetener Caucus includes more than two dozen senators, including eight that are members of the Senate Agriculture Committee. Two Democrats and two Republicans are joint chairs of the Senate Caucus. The House Sugar Caucus, with more than 30 members, is jointly chaired by Charlie Melancon of Louisiana and Mike Simpson of Idaho.

"A May 2006 sugar vote taken in the House of Representatives showed strong bipartisan support for the existing sugar policy, with 281 members (65%) voting against a measure that would have weakened it," the A.S.A. said, also noting that 70 senators voted for the current sugar program in the 2002 farm bill.

Sugar producers in the past have pointed out the consistency of U.S. sugar quality and prices, the no-cost aspect of the program, and the saving of U.S. jobs as reasons for maintaining the current policy. They said most of the candy manufacturing jobs lost to other countries are the result of high U.S. labor costs, not sugar prices.

The Agriculture Committees in the House and Senate write the farm bill, which will be debated in coming months.

This article can also be found in the digital edition of Food Business News, May 1, 2007, starting on Page 21. Click here to search that archive.

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