The sugar industry met a crossroads in the early 1980s. This article published in the 1981 issue of The Sugarbeet Grower magazine outlines what the future of the industry may look like moving forward.
Inclusion of a sugar program in general agriculture legislation, now being considered by Congress, is “vitally important to consumer interests and essential for the economic survival of domestic sugar producers,” according to David C. Carter, president of the U.S. Beet Sugar Association.
Testifying before the U.S. Senate Agriculture Subcommittee on March 6, Carter noted sugar is one of the nation’s basic commodities and a dependable source of sugar is “paramount” to the food processing industry.
“U.S. producers provide almost one-half of the country’s annual sugar requirements, and year upon year, have proven to be the most dependable source of this strategically important product,” he said.
Currently, the USDA reports beet sugar processors provide 30 percent of the total U.S. sugar demand, now estimated at more than 85 lbs. per capita annually.
According to Carter, U.S. sugar prices are determined by world market conditions. During periods of depressed prices, foreign sugar becomes available at prices substantially below production costs anywhere.
“The U.S. has little control over domestic sugar prices today,” remarked Carter. “Each year, the domestic sugar industry is forced to absorb the year-to-year volume fluctuations in the world market and most of the subsequent price volatility,” he added.
Since the expiration of the Sugar Act in 1974, the U.S. has experienced a short term of relatively high prices, followed by a long period of extremely depressed prices, then succeeded by a rapidly escalating market.
“These conditions not only meant price instability for consumers,” he said. “But also contributed to the permanent closing of 13 out of the nation’s 56 beet processing plants since 1974.
The current situation finds the world market prepared to either plummet or increase depending primarily on Russian sugar crop performance, and on other factors beyond the scope of influence of the American farmer, processor or consumer of sugar, Carter said.
Recently published commodity analyst statements report that the Soviet Union is likely to purchase substantial amounts of sugar on the world market this year pointing to a significant production shortfall in that nation.
Carter maintained American sugar producers are as efficient as any in the world and compete fiercely against one another and against other U.S.-produced sweeteners.
“They cannot, however, compete against the dumping of foreign-produced sugar on the U.S. market – sugar produced by slave labor or sugar exported here because the exporting nation needs U.S. dollars,” he said.
According to Carter, the domestic sugar industry needs a method to stabilize its existence. The Association president suggested a system that allows maintenance of a viable domestic operation during times of world overproduction, and, during world shortage periods, assures the American consumer of adequate domestic sugar supplies.
He urged Congressional approval of a program that would put sugar growers on an “equal footing” with producers of food and fiber crops.
“Only then can we meet our commitment to provide adequate sugar to U.S. consumers at fair and reasonable prices,” Carter concluded.
With the traditionally wide variety of views expressed by the U.S. sugar industry making it difficult to reach a consensus, it is unlikely sugar will be included in the 1981 U.S. farm legislation, according to Clayton Yeutter, president of the Chicago Mercantile Exchange.
Appearing at a Corn and Sugar Conference, Yeutter said it was unlikely sugar legislation would be able to attract much attention amid the more pressing matters facing both Congress and the Reagan Administration.
Yeutter did not expect any major alterations in the U.S. farm legislation as a whole while agreeing at least minor changes would be possible. The fact that there had been bipartisan consensus of the basic tenets for more than a decade should provide little reason for any major tampering, he said.
Yeutter said he expected minor increases in support levels for the major commodities encompassed in the Farm Bill as well as a strong effort to reduce spending levels on food programs.
Yeutter disagreed with U.S. Agriculture Secretary John Block’s proposal to eliminate the target price and rely solely on loan levels. Yeutter said that might lead to the U.S. pricing itself out of the world market and becoming a residential supplier.