Drafting of New Farm Bill Begins

Published in the June 2013 Issue Published online: Jun 29, 2013 Luther Markwart

2013 Farm Bill: By the first of May, the path for passage of the 2013 farm bill became clearer as Agriculture Committee chairs in both the House and Senate officially announced their intent to move the bills forward.

In the Senate, Chairwoman Debbie Stabenow, D-Mich., called for the mark up of the bill the week of May 6. The intent is to take the bill passed by the Senate last year and make additional modifications to address the concerns of southern crops (peanuts and rice) to garner more support for the bill from senators in the South and adjust spending reductions based on new Congressional Budget Office projections.

Once the bill clears the committee, it's scheduled to head to the Senate floor before the Memorial Day recess for any further amendment and final approval. The intent is to get this bill passed before a long debate on immigration reform ensues in June. Given that the Senate passed a farm bill last year, the expectation is that there will be fewer amendments and stronger support for final passage.

Sens. Jeanne Shaheen, D-N.H., Pat Toomey, R-Pa., and other opponents are again expected to lead the charge against sugar policy in an effort to effectively remove provisions added to the policy in 2008 and add language that would oversupply the market in various ways. While there is no certainty of the text of any amendments until they are filed prior to being offered, the intent of any sugar "reform" amendment is to keep prices depressed and sugar growers fighting to survive. This is a very tough fight on both sides of the sugar issue, and we express our deepest appreciation for those senators in the sugar-producing states who are working hard on your behalf to garner enough votes to stop the amendments.

In the House, Ag Committee Chairman Frank Lucas, R-Okla., called for mark up on May 15. Once again the view is that the committee should produce a bipartisan bill, as it did last year. The bigger question is how and when will it be considered on the House floor?

There are too many factors and unknowns to predict an answer to those questions in early May.

Rep. Joe Pitts, R-Pa., will champion the attack in the House against U.S. sugar policy.

With refined sugar prices plunging as a result of a glut of sugar in the market, sugar users are doing extraordinarily well. Profits are up, business is expanding and we are letting Congress know about it. Nevertheless, sugar users and their members of Congress will argue against the policy to keep prices low. They are trying to convince policy makers that the global shortages of sugar in 2010 and 2011 were caused by U.S. sugar policy, which we all know to be nonsense.

A recent study by Alexander Triantis, former chair of the University of Maryland's Finance Department, closely examined the impact of sugar prices on those makers of sugar-containing products. On average, sugar costs average only 4 percent of the cost of producing a confectionary product.

In the past 35 years, wholesale refined prices have risen 50 percent, but retail sugar prices have jumped 180 percent-and highly sweetened products have on average increased 220 percent to 300 percent.

Sugar-containing product sales are up 40 percent in the last 15 years. The share price of 10 large public sugar-containing product companies rose more than 300 percent from 2004 to 2013. Our industrial customers are doing just fine; yet they pursue policies that threaten family growers who are essential to their supply chain.

Oversupplied Market: Industry leaders are anxiously waiting to see what the USDA will do to respond to the dramatically low prices and avoid forfeitures as early as Aug. 1. There is no silver bullet solution to the dilemma.

One factor that may come into play is the lateness of the planting of the beet crop this year. How late will the crop go in (including replants), and under what conditions? Will planted acres go up to compensate for a shorter growing season?

Much of that will be sorted out by June 1, but it leaves precious little time to address the problem.

Mexico's huge crop will wind down around the end of June, and its exports from a record crop have had a huge impact on our market. On May 1, the USDA announced it would modify re-export licenses to allow refiners to refine domestic raw sugar and ship it to the world market and import a similar amount much later when the domestic market rebounds. It's a limited first step in attempting to rebalance the market.

ASGA Annual Meeting: For those of you making your winter travel and meeting plans, make sure to reserve Feb. 9-11 in Tampa, Fla. Visit americansugarbeet.org.

The Bioweek: Prior to the ASGA annual meeting, you should also consider attending the global sugar meeting Jan. 28-31 in Cancun, Mexico. In a first-of-its-kind meeting, beet and cane leaders from around the world plan to meet and hear about pressing issues, challenges and opportunities for the industry in the years ahead. You may review the program agenda at thebioweek.com.