From the ASGA

Published in the January 2014 Issue Published online: Jan 03, 2014 Luther Markwart, Executive Vice President
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Farm bill: For many months now, American agriculture has been holding its collective breath in anticipation of the completion of a five-year farm bill. The long and torturous legislative trek for a new farm policy will hopefully be completed by year’s end and not spill into the New Year. The seasons wait for no one and American farmers are well into their business plans for 2014 and beyond. Political paralysis and policy uncertainty drive farmers to new levels of frustration.

While agreement on many parts of the bill was resolved early on, the commodity and nutrition titles have been the most contentious and elusive in search of a compromise that would pass both houses of Congress. The battle over the size and scope of the reforms is never easy and always comes down to the final hour to complete. Whatever the final compromises are policy certainty will help one of the most important, productive and efficient segments of the U.S. economy unleash its great potential.

Surplus sugar: No one understands the collapse of the U.S. sugar market better than the beet growers as they stare and glare at their December beet payment. OK, we have had a couple of extraordinary years, but production cannot be sustained long term at the new lows in the market. Clearly, Mexico is the culprit for the mess the U.S. market is in and there are few U.S. policy tools that can address the problem quickly and effectively. The problem is caused by expanded Mexican cane acreage, excellent growing conditions, substitution by high fructose corn syrup in the beverage industry and the failure to consolidate its production to adjust to the new market realities. As a result, Mexican cane farmers are also going to be very upset with their returns when their crop is harvested and marketed.

There are various ways to address the problems that North American beet and cane farmers are currently facing. Some are short term and some are long-term solutions. In the short term, since mid-July USDA has taken multiple actions to reduce supplies and rebalance the domestic market. By the end of the fiscal year on Sept. 30, 2013, 603,878 metric tons (665,655 short tons) were removed from the market at a cost to the government of $278,200,000. Much of the sugar was sold for pennies a pound for the commercial production of ethanol. By removing surplus sugar in the short term, it will help to avoid large forfeitures in this fiscal year that ends Sept. 30, 2014.

Mexico clearly needs to implement a market balancing sugar policy like the U.S. to avoid market collapse and government costs to the policies in both countries, but that will take time. Lacking such a policy in the short term, Mexico is attempting to move sugar to foreign markets, given since when adjusted for transportation, the U.S. and world prices have essentially converged.

Second, the beet crop is not yet processed, the cane crop is not yet harvested and the Mexican harvest will not finish until the summer of 2014. There are many unpredictable weather events that can still change the supply across North America.

Finally, U.S. sugar industry leaders have been aggressively reviewing other tools that may be available to respond to the huge influx of Mexican sugar. Hopefully conditions will be ripe for making further decisions and taking immediate actions to address the problem by the end of 2013.

Trans Pacific Partnership (TPP): Sugar industry leaders are following the negotiations very closely in an effort to make sure U.S. sugar policy is not harmed by providing more import access in an already oversupplied market. We expect the negotiations to come to a completion by early 2014. As we have seen with NAFTA, if the agreement is not negotiated correctly it will cause major problems well into the future, requiring substantial time and resources trying to fix it.

Biotech: Washington state voters defeated a ballot measure 51.08 percent to 48.92 percent (a difference of 2.16 percent or 37,894 votes out of 1.75 million cast) that would have required mandatory labeling of foods that contain or are derived from biotech crops. This follows on the heels of the defeat of the ballot initiative in California in 2012. We are seeing efforts in Oregon, Colorado, Arizona and perhaps California again to conduct ballot initiatives. You will see an effort in the weeks ahead to address the labeling issue at the federal level in response to the state legislative and ballot initiatives in various states.

Internship: ASGA will be offering an internship program for 2014. The term of internship will be between June and August and last six to eight weeks. Throughout the program, the intern will participate in a variety of tasks and projects necessary to the functionality of the association. The intern will have an opportunity to meet with members of Congress and gain an understanding of the political process of an effective lobbying organization. Applications will be accepted beginning Jan. 1 through March 31. You can find the application and information on our website.

2014 Annual Meeting: The 2014 ASGA Annual Meeting will be held in Tampa, Fla., Feb. 9-11 at the Tampa Marriott Waterside Hotel and Marina. This world-class downtown Tampa hotel overlooks Tampa Bay and is near Ybor City, with lots of shopping and restaurants within walking distance. The ASGA golf tournament is scheduled for the morning of Feb. 9 at the Innisbrook Resort and Golf Club (Copperhead Course). To register and make hotel reservations, visit www.americansugarbeet.org. If you have any questions, please call 202-833-2398.