Posted: Thursday, February 03, 2011 11:00 AM
Current program works well, doesn't cost taxpayers, official says
By DAVE WILKINS
A bill introduced last month in the Senate that would scrap much of the U.S. sugar program stands little chance of passage, according to industry officials.
Introduced in late January by Sens. Jeanne Shaheen D-N.H., and Mark Kirk R-Ill., the bill would phase out many of the features in the existing U.S. sugar program, including marketing allotments and import restrictions.
Those are outdated policies that make it extremely difficult for food and beverage manufacturers to make use of much-needed international sugar supplies, said Larry Graham, president of the National Confectioners Association.
"The sugar program has hurt Americans through higher consumer prices and lost jobs," Graham said in a press release.
"The current sugar program artificially limits the supply of sugar in the U.S., causing tremendous and sometimes irreversible harm to U.S. candy makers, especially smaller candy companies," he said.
The legislation, known as the "Stop Unfair Giveaways and Restrictions Act, would make U.S. sugar policy more market-oriented, less reliant on government regulation of supply and more in step with the nation's foreign trade obligations, Graham said.
But sugar industry officials say the bill has little chance of success. Its introduction does not signal an erosion of congressional support, said Jack Roney, director of economics for the American Sugar Alliance, which supports current law.
"We have enjoyed strong support in the past among a broad cross section of the U.S. public and Congress, and we expect that support to continue," he said.
Roney said existing U.S. sugar policy has worked well and not cost U.S. taxpayers anything since 2000-01 when processors forfeited surplus sugar to the USDA in lieu of repayment of non-recourse government loans.
"When you look at government programs you probably won't find any that are as successful as the U.S. sugar program," he said.
Existing government policy guarantees U.S. beet and cane farmers 85 percent of the domestic market. The remaining 15 percent is divided among some 40 different countries through a quota system and Mexico, which has unlimited access to the U.S. market.
The USDA regularly monitors U.S. and Mexican sugar production and estimates likely Mexican exports. The agency can adjust import quotas and domestic marketing allotments based on those forecasts.
U.S. food and candy companies have frequently blamed U.S. sugar policy for artificially inflating sugar prices and forcing some companies to move operations to Mexico or other countries.
But Roney said that argument is a ruse.
The real reason some U.S. candy companies have fled to Mexico is to escape U.S. labor and environmental laws, he said.
"They're trading $15-an-hour jobs for 50-cent-an-hour jobs," Roney said.
While U.S. candy companies may have shed some jobs in recent years, government data shows that U.S. candy production actually increased 7 percent from 2004 to 2009, he said.
"That in itself belies the argument that candy companies are struggling," he said. "This is an industry that is expanding and becoming more efficient."
Sugar prices have increased in the past year, not only in the U.S. but around the world, Roney said.
Raw cane prices have recently traded about 34 cents per pound on the world market, near a 30-year high. U.S. raw cane prices have been about 38 cents per pound.
"All other commodity prices are up as well. Sugar is not alone," he said.