Purchasing Sugar

Consumers are getting a great deal

Published in the June 2012 Issue Published online: Jun 12, 2012 Luther Markwart
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Farm Bill Updates

As we reach the mid-point of 2012, the uncertainty of a farm bill being completed this year dominates the discussions in agricultural circles. While the Senate Agriculture Committee passed a bill on April 26, it did so with a vote of 16 for, 5 against.

The opposition to the bill was primarily from southern senators who objected to the lack of equity in support for rice and peanut producers. The Committee leadership pledged to continue working with them to try to address some of their concerns before bringing the bill to the Senate floor for approval, but solutions are not always certain.

As for sugar policy, the provisions contained in the 2008 bill were simply rolled forward with no changes, as the industry had called for. As we look to floor consideration in the Senate, there are two pending sugar reform bills with a total of 16 cosponsors. Senator Lugar (R-Indiana) has pledged to lead his usual fight against our policy during the floor debate.

As of the first week of May, a time for a full debate and action by the Senate has not been determined, but late May or early June are the initial target dates.

In the House, hearings by the Agriculture Committee are to be completed by mid-May, with a stated desire to finish its version of a farm bill in June. The committee bill may try to offer more balance between commodities than the Senate committee bill; the House Committee, however, has fewer dollars to work with given its budget parameters, which are not technically binding.

The House is not likely to move a bill to the floor until the Senate takes up its version. Again, legislative days are a critical factor. As of June 1, the House will be in session for only seven weeks until the August recess. As for sugar, there are two pending bills with 55 cosponsors, so there will also be a battle over sugar policy on the floor.

The biggest complaint by the industrial users is the price that they and U.S. consumers pay for sugar. They are giving policy makers the impression that U.S. prices are out of line with the rest of the world.

The fact is that what they are saying simply is not true.

Our industry conducted a survey of 23 countries to see what actual retail prices are. Many of the countries are "developed" and represent approximately 60 percent of global consumption.

The facts are that consumers in other developed countries pay 26 percent more for sugar than consumers in the U.S.; on a global basis (including developing country), consumers pay 15 percent more than in the U.S. The truth is American consumers are getting a good deal for sugar compared to other global consumers.

Additional Imports

On April 18, USDA effectively added 450,000 tons of imported sugar to the market, which has caused the market to soften.

What was most concerning is that the prospect of imports from Mexico was estimated at only 730,000 tons-which is believed to be about 300,000 less than what the market expects.

On May 4 the Mexican government announced an increase in their imports of 250,000 tons for this year. Work continues to get better export projection data out of Mexico so USDA can more accurately balance supply and demand.

We can also expect another 50,000 tons of sugar from Colombia as a result of the implementation of the Columbian FTA that went into effect on May 15.

Considerable Production

Due to the mild winter and early beet plantings there is a potential for a large beet crop this year, which may require earlier harvests and more sugar production in the current fiscal year.

The additional supply, along with stagnant demand, certainly does not justify USDA making any further increases of imports. There are adequate supplies and stocks to serve our customers for the remainder of the current fiscal year.

Biotech

The industry is looking forward to the publication of the final Environmental Impact Statement (EIS), which is expected to be released by the end of May.

After it is published, a 30-day public review period is provided before the Record of Decision is announced, which determines the regulatory status of Roundup Ready sugarbeets.

Trans-Pacific Partnership

The Obama Administration is aggressively negotiating a free trade agreement with eight countries-Australia, Brunei Darussalam, Chile, Malaysia, New Zealand, Peru, Singapore and Vietnam-with major negotiations in Dallas May 8-18.

We have made it clear to negotiators that existing FTAs with TPP countries must not be reopened and rules of origin must be strictly enforced.

2012 Elections

In the Presidential race, the only real intrigue left is who Romney will choose as his running mate. 

Two things to consider:

1) His choice is a very personal one as to who the public believes could run the country; and 2) historically the VP choice matters little in garnering votes in the general election.

Senate

Every Senate seat is important in determining control for the next two years. No matter who has control, the body will likely remain very evenly divided between the Republicans and Democrats. 

House

There are a lot of congressional primaries starting in June and continuing through September that will yield some surprises, given redistricting and the general mood of voters.

2012 ASGA Intern

Congratulations to Leah Kramer, daughter of Randy and Linda Kramer from Bird Island, Minn. (Southern Minnesota), for being selected as this year's intern.

Leah is a senior at Concordia College (Moorhead) with academic honors and a triple major focusing on Global Studies concentrating in Europe. She studied abroad in both 2010 and 2011, and is an outstanding individual. We look forward working with her this summer.

2013 ASGA Annual Meeting

Mark your calendar to join grower leaders from across the nation who will attend the Annual Meeting in beautiful San Diego, Calif., February 3-5. Watch for information updates on our webpage: www.americansugarbeet.org.