Sugar industry defends government program

The U.S. sugar industry is accustomed to attacks on a government program that provides economic support to farmers and processors.

So it wasn't a surprise to industry leaders when the Washington Post called for scraping the U.S. sugar program in an editorial on March 22.

"They typically run that (editorial) once or twice a year," said Luther Markwart, executive vice president of the American Sugar Beet Growers Association. "It's the same old argument."

The Post editorial said the U.S. sugar program, while a sweet deal for sugar farmers, hurts consumers and food processors with domestic price guarantees and import quotas.

The newspaper pointed out the recent record-high price spread between world sugar prices and U.S. sugar prices.

While world sugar prices have dropped to as low as 17 cents per pound recently, U.S. prices have been about 35 cents per pound.

Markwart said the world sugar price is an artificial "dump" price created when countries, many with domestic subsidies, try to unload excess stocks at any price to make room in their warehouses for the next crop.

World sugar is typically sold below the cost of production, he said. Allowing it into the U.S. without strict import quotas would put American sugar farmers out of business, he said.

U.S. food and candy makers have long argued that U.S. sugar prices are artificially inflated by import restrictions and have been lobbying hard for the USDA to relax them.

Major users have turned up the heat recently with April 1 approaching. That's when the agency is allowed, under the farm bill, to adjust import quotas for the coming fiscal year based on a review of supply data.

Industry officials acknowledge that USDA has a difficult task. The agency not only has to analyze the domestic supply situation, but estimate imports, including those from Mexico, which has unlimited duty-free access to the U.S. market.

U.S. sugar policy allows limited imports from 40 other countries under a quota system. It also guarantees minimum prices and provides special non-recourse loans for processors.

Markwart said the program has worked well and needs to remain in place.

When it works like it's supposed to, it doesn't cost taxpayers a dime, he said.

"It hasn't cost taxpayers any money in the last eight years and the latest projections from USDA are that it won't cost anything through 2020," he said.

The U.S. sugar industry provides 146,000 full-time equivalent jobs and generates about $10 billion in annual economic activity, Markwart said.

U.S. sugar farmers defend a government program while major users continue their campaign to increase import quotas.

source: capitalpress