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Friday, June 7, 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 seek flexibilities in how the U.S. Department of Agriculture (USDA) administers the sugar program, with an eye toward paying lower prices as a result. In advocating change, 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), and to the jobs that their firms create. Consumer, trade advocacy groups, and general business organizations that favor freer trade also support their 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) extended the 2008 farm bill’s commodity program authorities for one year. This means current sugar program authority applies to the 2013 sugar crops (i.e., most of FY2014 as beets and cane are processed and sugar is marketed).

In the 113
th Congress, the Senate and House Agriculture Committees have approved omnibus farm bills that would continue the sugar program without any change through FY2019 (Section 1301 of S. 954 and H.R. 1947). Both bills also continue the sugar-for-ethanol program—a backstop intended to be exercised if the other program tools do not succeed in keeping market prices above minimum guaranteed price levels.

Opponents of the sugar program have signaled their intent to offer amendments similar to those considered on the Senate floor in June 2012. Identical introduced bills (S. 345 and H.R. 693) are expected to serve as the basis for such amendments. These measures would lower price support levels to those in effect through FY2008, make a number of changes to require USDA to administer sugar marketing allotments and sugar import quotas in ways that would result in sugar being available “at reasonable prices,” and repeal the sugar-for-ethanol program.

This year, sugar program supporters and opponents have continued to present arguments similar to those in 2012, and to challenge each other’s positions, in preparation for floor debate.

Date of Report: May 17, 2013
Number of Pages: 14
Order Number: R42551
Price: $29.95

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