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Tuesday, July 3, 2012

Sugar Program Proposals for the 2012 Farm Bill

Remy Jurenas
Specialist in Agricultural Policy

The sugar program is structured to operate at no cost to the federal government—an objective that has been achieved over the last decade primarily using two tools: marketing allotments that limit the amount that sugar processors can sell, and import quotas that restrict the quantity of foreign sugar allowed to enter the U.S. market. Since the program records no outlays, its future did not receive attention among the proposals submitted to the House and Senate Agriculture Committees for revising the farm safety net and reducing farm program spending.

Producers of sugar beets and sugarcane, and the processors of these crops into sugar, favor retaining the current program without change. They highlight the jobs and economic activity created by the domestic sugar sector. Two general farm organizations and a coalition of some developing countries that benefit from selling against their shares of the U.S. sugar import quota also support continuing the current sugar program.

Food manufacturing firms that use sugar in their products advocate program elimination or a transition toward a free market in sugar in the United States. In support of these changes, they point to the higher wholesale refined sugar prices paid since the 2008 farm bill provisions took effect (twice the level compared to the previous 2002 farm bill period). Consumer, trade advocacy groups, and general business organizations that favor freer trade support their position.

The Senate Agriculture Committee’s reported farm bill (S. 3240) would reauthorize the current sugar and sugar-to-ethanol programs without any changes through crop year 2017. The American Sugar Alliance, representing sugar producers and processors, applauded the committee’s decision to continue the “no-cost” U.S. sugar policy. The Coalition for Sugar Reform, representing sugarusing food manufacturing firms and their allies, expressed disappointment that the committee extended what they call an “outdated and anticompetitive” program. The House Agriculture Committee plans to consider its version of a farm bill in late June.

Congressional opponents of current U.S. sugar policy have stated their intent to seek changes to the program in Senate floor action and House committee markup. Introduced bills and other proposals form the basis for amendments expected to be offered. S. 25 would phase out sugar loan rates in stages through the 2014 crops, and eliminate all price support beginning in 2015. The text of this bill was offered as an amendment during Senate floor debate on June 13, and tabled (i.e., rejected) on a 50-46 vote. Other pending bills, S. 685/H.R. 1739; Title I, Subtitle C, of identical bills S. 1658/H.R. 3111; H.R. 1385; and Section 521(a) of identical bills H.R. 408/S. 178, would repeal all sugar price support provisions immediately or starting with the 2013 crops.

All eight introduced bills would repeal all statutory authorities pertaining to sugar marketing quotas and allotments, payments made to processors to store sugar forfeited to the U.S. Department of Agriculture (USDA), storage facility loans, and the feedstock flexibility program for bioenergy producers (i.e., the sugar-to-ethanol) program. However, they differ in changes proposed to the sugar import quota. Some bills would require that each year’s import quotas for raw cane sugar and refined sugars be set to ensure “an adequate supply of sugar at reasonable prices in the United States.” By contrast, the other measures would go further and completely eliminate all U.S. tariffs on sugar imports as well as the quota-setting authority administered by USDA and the U.S. Trade Representative. Pending S.Amdt. 2433 to S. 3240 would return price support loan rates to 2008 levels, and require USDA to administer the sugar import quota and marketing allotments to provide “adequate supplies of sugar at reasonable prices.”

Date of Report: June 19, 2012
Number of Pages: 8
Order Number: R42551
Price: $19.95

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