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Wednesday, July 17, 2013

Sugar Program Proposals for the Next Farm Bill

Remy Jurenas
Specialist in Agricultural Policy

The sugar program provides a minimum price guarantee to sugar crop processors and 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.

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.

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.

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 would 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 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, 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 vote. House opponents of the sugar program offered a similar proposal (H.Amdt. 227) during floor debate on H.R. 1947. On June 20, this amendment was defeated on a 206-221 vote. Subsequently, the House defeated H.R. 1947, and placed into doubt what comes next for the House farm bill.

The Congressional Budget Office (CBO) projects in its latest baseline that continuing current sugar policy would result in $188 million in outlays in FY2014-FY2023, all of it associated with the sugar-to-ethanol program. CBO scored the Sugar Reform Act amendment as reducing these outlays by $82 million over this 10-year period.

Sugar program supporters and opponents continued to present arguments for their respective positions, and to challenge each other’s positions, in preparation for floor debate. For each side, the key issue is what the level of domestic sugar prices should be. Sugar growers and processors seek the highest level possible, with the availability of backstops to ensure they receive the benefits of the current price guarantee. Users of sugar in manufactured food products seek as low a price as possible within the basic structure of the current program.

Date of Report: July 1, 2013
Number of Pages: 13
Order Number: R42551
Price: $29.95

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