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Tuesday, February 5, 2013

Sugar Program Proposals for the Next 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 pointed 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.

During 2012, Congress considered the future of the sugar program in deliberating agricultural and food assistance policy but did not complete action on a new farm bill. Instead, Section 701 of P.L. 112-240 (the “fiscal cliff” bill) extends the 2008 farm bill’s commodity program authorities for one year. This means current sugar program authority will apply to the 2013 sugar crops (i.e., most of FY2014 as beets and cane are processed and sugar is marketed). Earlier, the Senate– passed farm bill (S. 3240) would have reauthorized the current sugar and sugar-to-ethanol programs with one change through crop year 2017. Adopted by voice vote, it would have advanced 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, 2012, would have reauthorized both programs without any change. An amendment offered in markup to modify the program was defeated on a 36-10 vote. No floor action occurred on this House bill.

Other bills and proposals formed the basis for sugar program amendments offered on the Senate floor, and were expected to be offered during House floor debate. These reflected changes sought by opponents of current U.S. sugar policy. 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 bills introduced in the House mirrored the amendments offered during Senate floor debate. They would have repealed all sugar price support provisions either immediately or starting with the 2013 crops, but differed in changes proposed to sugar import quotas.

Debate on U.S. sugar policy will continue once decisions are made on how to proceed with a new farm bill. Supporters and opponents are expected to make similar arguments as presented in 2012.

Date of Report: January 14, 2013
Number of Pages: 10
Order Number: R42551
Price: $29.95

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