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Published April 15, 2013, 10:45 AM

Sugar price collapse has USDA scrambling

Three key farm leaders in Congress said last week that they support continuing the current sugar program in the next farm bill even though for the first time in years the Agriculture Department is preparing to spend money to keep sugar prices up.

By: Jerry Hagstrom, Agweek

WASHINGTON — Three key farm leaders in Congress said last week that they support continuing the current sugar program in the next farm bill even though for the first time in years the Agriculture Department is preparing to spend money to keep sugar prices up.

“The sugar program is working and I am going to be hard-pressed to move away from that,” Rep. Michael Conaway, R-Texas, the chairman of the House Agriculture General Farm Commodities and Risk Management Subcommittee, told the North American Agricultural Journalists on April 8.

“For 10 years we’ve had no cost to the taxpayer,” Conaway said. With the recent collapse in prices, “the program has kicked in,” he added.

“There is no traction for changing the sugar program,” Senate Agriculture Committee Chairman Debbie Stabenow, D-Mich., also told the journalists at their Washington meeting. Stabenow noted that after the European Union changed its program prices went up, and said she wants to keep the 142,000 jobs in the sugar industry.

House Agriculture Committee ranking member Collin Peterson, D-Minn., told Agweek he agrees with Stabenow. Senate Agriculture Committee ranking member Thad Cochran, R-Miss., also addressed the group but had to leave for a vote before he could be asked about the sugar program.

Through a spokesman, Cochran said in an email, “The sugar program has long been a part of a balanced farm bill and it, like all programs in the current farm bill, will carefully be considered by the Agriculture Committee.”

Under current law, farmers have the right to take out loans from the government and if prices remain below the loan rate to forfeit the sugar to the government and keep the money.

Sugar-to-ethanol

To avoid forfeitures, the Agriculture Department has sent the Office of Management and Budget a proposal to implement the Feedstock Flexibility Program, a section of the 2008 farm bill under which the government would buy sugar and sell it at a loss to ethanol makers.

Agriculture Secretary Tom Vilsack said recently that USDA is making plans to implement the sugar-to-ethanol program “because it is the law.” Congress, he noted, instructed USDA “to put this program together. How much of it, if any of it, we use is still not yet decided. We will make that decision following a review of all circumstances.” But Vilsack noted there is a “an area of substantial oversupply,” particularly in Louisiana. “We need to deal with it quickly and minimize the cost to the taxpayer.”

Although sugar prices are low, some members of Congress have introduced bills to change the sugar program to reduce the benefits to growers. They argue that the ups and downs of the sugar market in recent years are reasons to change the program.

The bill in the Senate was introduced by Sens. Jeanne Shaheen, D-N.H., Mark Kirk, R-Ill., Pat Toomey, R-Pa., Dick Durbin, D-Ill., Rob Portman, R-Ohio, Frank Lautenberg, D-N.J., Dianne Feinstein, D-Calif., Bob Corker, R-Tenn., Kelly Ayotte, R-N.H., and Lamar Alexander, R-Tenn.

The bill in the House was introduced by Reps. Joe Pitts, R-Pa., Danny Davis, D-Ill, Earl Blumenauer, D-Ore., Bob Goodlatte, R-Va., and others.

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