Plenty of Available Sugar

Published in the May 2009 Issue Published online: May 03, 2009 Luther Markwart, Executive Vice President
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On March 23, 13 senators sent a letter to Secretary Vilsack, requesting that he add more sugar to the market so that “USDA can help ensure that confectioners, bakers, ice cream makers and other U.S. food producers have access to an adequate supply of sugar at a reasonable cost.”

The senators were the usual group of sugar policy opponents with major users in their states: Illinois: Dick Durbin (D) and Roland Burris (D); Wisconsin: Herb Kohl (D) and Russ Feingold (D); Pennsylvania: Arlen Specter (R) and Robert Casey (D); other states: Sam Brownback (R–Kansas), Richard Lugar (R–Indiana), George Voinovich (R–Ohio), Judd Gregg (R–New Hampshire), John Ensign (R–Nevada), Lamar Alexander (R–Tennessee), and Kit Bond (R–Missouri).

The fact of the matter is that there is plenty of sugar available for our customers.

The letter is in anticipation of the April 1 date (now set in the new farm bill), after which the USDA can increase imports into the U.S.

The date was selected and specified in the farm bill to remove the foolishness of trying to speculate—well before the crop was harvested and a grain of sugar was imported in the new fiscal year—what our production and Mexican sugar exports would be.

Now our valued customers are asking the USDA to import another 750,000 tons of sugar to increase the current ending stocks projection from 9 to around 15 percent.

This outrageous request borders on the laughable.

Their intent is to substantially oversupply the market, drive down prices and cause forfeitures to the government.

For months, raw sugar prices have been well within or below the forfeiture price range in all cane-producing regions, and the Administration has been looking for ways to avert raw cane forfeitures.

More imports make absolutely no sense. The irony in all of this is that the senators who signed the letter would not want the government to spend money on the disposal of surplus sugar in order to avoid forfeitures. Most of the senators either did or would have endorsed the NAFTA, which now provides for free trade in sugar between our countries.

The old 14.5–5 percent ending stocks target is completely obsolete now, because unlimited imports from Mexico as well as their stock levels must be included.

With no control over those imports, greater uncertainty is now part of the supply-demand equation, which dictates that the program is run much more conservatively than in past years to avoid forfeitures. In addition, with our industry’s efficient “just-in-time-delivery” capability, the market can be adequately served with much lower stocks.

 

Sugarbeet Research

I attended the American Society of Sugar Beet Technologists meeting in February to catch up on much of the marvelous work being done by sugarbeet researchers across the country.

My greatest concern in this area is in maintaining adequate federal funding for our Agricultural Research Service programs around the nation. As the federal budget is tightened to pay for current rescue packages for the general economy, appropriators will be looking at cuts in every program for many years to come.

We need a greater focus to show the long-term economic benefits of our industry to the economy and the food security of our nation.

We are working with the top people at USDA to see how we can address this issue.

 

Crop Insurance

A great deal of effort is underway to address four crop insurance issues. First, by providing adequate data to Risk Management Agency (RMA), they were convinced to increase the price election from $38.50 to $43 per ton for the 2009 crop.

Second, we have been waiting many years to launch a pilot program in the western states (Idaho, Oregon, Montana, Wyoming) for revenue insurance (insuring both yield and price), but have always faced some delays by the RMA. In order to make it a higher priority for RMA, nine senators signed a joint letter to Secretary Vilsack, asking that the pilot program be in place for the 2010 crop. Many thanks to Senators Conrad and Dorgan (ND); Crapo and Risch (ID); Enzi and Barrasso (WY); Baucus and Tester (MT), and Klobuchar (MN) for their support. A similar letter was sent by House members Minnick and Simpson (ID); Lummis (WY); Peterson (MN), Pomeroy (ND), Rehberg (MT).

Third, we are trying to expand the stage removal pilot program to additional western states, and our request has been submitted.

Finally, we are trying to update the replant coverage to better reflect the higher cost of new seed treatments. This effort is a fairly complicated legal task that will take some time to navigate, but we are hopeful that we can prevail for the 2010 crop.