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Friday, August 24, 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. raw 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 also support this position.

The Senate–passed farm bill (S. 3240) would reauthorize the current sugar and sugar-to-ethanol programs with one change through crop year 2017. Adopted by voice vote, it would advance by two months the U.S. Department of Agriculture’s authority to increase the raw sugar import quota. Two amendments to phase out or modify both programs were defeated on roll call votes. The House Agriculture Committee farm bill (H.R. 6083), marked up on July 11, would reauthorize both programs without any change. An amendment offered in markup to modify the program was defeated on a 36-10 vote. Separately, House leadership considered bringing up H.R. 6228 to extend for one year most farm bill programs, including sugar, but no action was taken.

Congressional opponents of current U.S. sugar policy intend to seek changes. Introduced bills and other proposals form the basis for farm bill amendments offered on the Senate floor, and are expected to be offered during House floor debate. The text of S. 25 (to phase out sugar loan rates in stages through the 2014 crops, and eliminate all price support beginning in 2015) was offered as S.Amdt. 2393 during Senate floor debate on June 13, and tabled (i.e., rejected) on a 50-46 vote. S.Amdt. 2433 to S. 3240 (defeated 46-53) proposed to return price support loan rates to 2008 levels, and to require USDA to administer sugar import quotas and marketing allotments to provide “adequate supplies of sugar at reasonable prices.”

Other House bills—H.R. 1739; Title I, Subtitle C of H.R. 3111; H.R. 1385; and Section 521(a) of H.R. 408—would repeal all sugar price support provisions either immediately or starting with the 2013 crops. These measures would repeal all statutory authorities pertaining to sugar marketing allotments, payments made to processors to store sugar forfeited to 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 sugar import quotas. 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.” In contrast, 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.

Date of Report: August 14, 2012
Number of Pages: 8
Order Number: R42551
Price: $19.95

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