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Monday, July 8, 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 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), and to the jobs that their firms create. Consumer, trade advocacy groups, and general business organizations that favor freer trade also support their position.

In the 113
th Congress, changes to the sugar program were not considered when the House and Senate Agriculture Committees marked up a new farm bill. Both committees approved farm bills that would continue the sugar program as now in effect through FY2019 (Section 1301 of H.R. 1947 and S. 954). 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 introduced identical bills (S. 345 and H.R. 693, Sugar Reform Act) to serve as floor amendments to the farm bill. These measures would lower price support levels to those in effect in 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.

On June 10, 2013, the Senate approved its farm bill (S. 954). Earlier, during floor debate on May 22, sugar program opponents offered S.Amdt. 925 to revise the Agriculture Committee’s reported sugar program provisions. Identical to S. 345, this amendment was defeated on a 45-54 roll call vote. House opponents of the sugar program plan to offer their amendment (similar to H.R. 693) during farm bill floor debate on June 19 or 20.

Sugar program supporters and opponents have continued to present arguments for their respective positions, and to challenge each other’s arguments, in preparation for floor debate.

Date of Report: June 18, 2013
Number of Pages: 12
Order Number: R42551
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