Sugar policy battle will be fierce

Published in the April 2013 Issue Published online: Apr 30, 2013 Luther Markwart
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Sugar HillFarm Bill: The 2013 farm bill remains in perpetual limbo until the larger political battles over spending cuts play out.

Agriculture is in a very defensive position to protect its policies from being raided, ravaged and plundered by those seeking funds for other priorities for government spending. At the moment it's unclear how and when this will all play out.

In the meantime, the Coalition for Sugar Reform launched its most recent attack on U.S. sugar policy on Valentine's Day, introducing bills in the House and Senate to strip away all of the improvements made in the 2008 farm bill. What they seek is a perpetually over-supplied market and sugar prices they paid 28 years ago. Those are the same prices that caused half of our industry to shut its doors.

Sugar users and consumers need multiple suppliers to provide stability when growing areas experience hurricanes, droughts, freezes and other calamities that threaten supplies. They also need multiple competitors in the marketplace to provide the best prices and service for their businesses. Recommending foolish policies that further consolidate the domestic industry is shortsighted and serves no one well. The battle over U.S. sugar policy will be fierce.

The Market: By now your processors have informed you of the magnitude of surplus sugar in the U.S. market. As of the February estimates, there are about 600,000 tons more sugar in this market than we need. Bumper crops and bad information that prompted a bad decision by USDA last April to import 420,000 tons we did not need have created the problem of oversupply.

Adding sugar to the market is simple; removing it is difficult and it takes time. Industry leaders are deeply troubled and working hard with the government to find a solution to this problem. We are anxiously awaiting the sugarbeet planting intentions that will be available the last day of March.

Trade Negotiations: With the 2012 elections out of the way and the president in his second and final term of office, there will be a strong push to complete the 11-nation Trans-Pacific Partnership negotiations this year.

We have a North American market that clearly does not need one more teaspoon of sugar, so objecting to additional access for sugar from these countries is where we stand. Mexico must also take a firm position, since any additional access to its market under a TPP agreement would only push more Mexican sugar into the U.S. market. Your industry leaders are watching this very closely and have been making our concerns known from the outset of the negotiations. We will continue to do so until the negotiations are completed.

During the president's State of the Union address, he announced he would launch a U.S.-European Union Free Trade Agreement this year. The 27 member countries of the EU are a market of 500 million people and 20 percent of the global domestic product ($17.6 trillion). It's estimated that it will take two years to negotiate such an agreement, perhaps concluding sometime in 2015.

With respect to sugar and sugar-containing products, we will need to watch this closely. As you will recall, the EU sugar policy went through major reforms in the last decade. They went from being a net exporter of more than 4 million metric tons of sugar in 2006 to a net importer of 1.7 million tons of sugar in 2007. Given that both the U.S. and the EU are now major importers, there is less of a concern of exporting sugar to each other, but there is a bigger concern over sugar-containing products. As this agreement proceeds, I will keep you updated on any issues of concern.