Iowa Public Television


Sugar Makes Its Case

posted on July 20, 2001

Hello, I'm Mark Pearson.

The numbers confirming a slowing economy continue to flow into the marketplace. Consumer inflation is in check, factory activity has fallen for the 9th straight month, and the commerce department reports businesses are beginning to make a dent in unsold inventories. But economic recovery continues to be a distant gleam on the horizon.

In farm country prospects are less encouraging. After a brief weather rally, grain and oilseed prices have fallen as crops begin to look more certain. Moreover the stable U.S. economy has strengthened the dollar which effectively raises prices on U.S. farm exports.

Outside the marketplace the Washington farm lobby is working hard to mine what has become the mother load of the modern agricultural economy.


Hearings on the 2002 farm bill continued in the Senate this week with pitches from the sugar and peanut industries. Both rely on government programs that balance domestic consumption with import quotas to manage supply. But both have been plagued in recent years by burdensome supplies and a decreasing number of processors, even as retail prices continue to rise.

Sugar industry representatives place much of the blame in imports. Last year, 15 percent of domestic sugar consumption came from sugar import quotas mandated by the WTO and NAFTA. As a result, they say, wholesale refined sugar prices have sunk to 22 year lows, and sugar was forfeited to the government last year for the first time in two decades.

Jack Roney, American Sugar Alliance: "We must import this foreign sugar whether we need it or not. And Mexico wants more. Mexico is disputing NAFTA sugar provisions and demanding unlimited duty-free access to the U.S."

Consumer groups, citing the growing spread between retail and wholesale prices, blamed the government program for encouraging overproduction. They noted government costs for the sugar program have risen from zero in 1996 ... to $465 million last year.

Art Jaeger, Consumer Coalition of America: "Growers comments to the contrary, imports are not the problem here. The problem is our high sugar price support which has led to an unmanageable surplus of sugar."

Indiana Republican Richard Lugar, a long-time critic of the sugar program, said that 40 percent of the government payout last year went to just 1 percent of the nation's grower processors.

SLUG: Harkin

Iowa Democrat Tom Harkin, the new chairman of the Senate Agriculture Committee, has pushed conservation measures as a way to decouple government subsidies from most commodities.

While House lawmakers have promised their version of the farm bill before Congress takes its August recess, a Senate package is not likely before October.

Legislation that is being pitched by House Agriculture Committee Chair Larry Combest is already being actively opposed. The Nebraska Center for Rural Affairs is harshly critical of the measure's lack of limits on the amount of government subsidies that would be allowed to individual farmers.

The Center's opposition comes on the heels of a GAO study reporting 43 percent of government payments in 1999 went to farms with more than 250-thousand dollars in sales.

Tags: agriculture news nuts policy sugar