During the pandemic, our nation and the world faced unprecedented challenges across the global supply chain. Processing and manufacturing of food, ventilators, masks, computer chips and other critical items strained under the enormous challenge. The shortcomings we experienced rippled throughout our economy, causing consumer doubt and panic. No one wants to experience this again and Washington, in a bipartisan fashion, is shaping policy to enhance supply chain resiliency.
On Feb. 24, President Biden issued an executive order directing the secretary of agriculture to submit a report assessing domestic agricultural commodities and food product supply chains. The secretary sought public comment, which provided an important venue to tell our story to the president and Congress. It was an opportunity to tout our industry’s success and the factors that contributed to it. As our national leaders look at the farm bill and future trade agreements in the coming months, they need to see U.S. sugar production in a new light. There must be greater appreciation of our industry and the farm and trade policies that sustain production and contribute to a resilient sugar supply chain.
On June 18, the domestic sugar industry filed its 23-page submission to agriculture secretary Tom Vilsack detailing our key points. They include:
- Concerns over adequate domestic supplies of sugar are not new to the United States. For reasons of food security, from 1890 to 1894, the U.S. Congress offered a bounty to entice investment by farmers to grow the crop and investors to build factories to encourage the growth of a domestic sugar industry. During World War II, sugar was the first commodity rationed and the last commodity to come off rationing.
- During the 2020 pandemic, consumer hoarding behavior was observed at the nation’s retail grocery stores as an essential food. Consumer goods supplies were overwhelmed by spiking demands. Ingredients for baking and cooking (sugar, flower, oils, etc.) were top food items in demand as retail foodservice shuttered overnight. From March to May 2020, the domestic sugar industry put an equivalent of an additional 53 million 4-pound bags on the shelf in record time to meet consumer needs and provided a calming effect of a resilient supply chain. This was achieved even in spite of having a disastrous 2019 beet crop.
- There are over 60 different forms of sugar that provide a multitude of functions in the U.S. marketplace, from making healthy foods more palatable to coatings on medicines, masking their bitterness.
- Beet and cane refined sugar warehousing and distribution terminals are strategically located throughout the U.S. to meet customer needs on a just-in-time basis. Refined sugar is sensitive to heat and moisture and as a food grade product must be kept under seal during shipment by train and truck. Sugar is heavy and transportation is expensive, so moving the product short distances is preferred to reduce costs and maximize efficiencies.
- There are significant challenges of moving foreign refined sugar to the U.S. market, such as questionable product quality (resulting from a host of issues, such as packaging, polarity, foreign materials, heat and humidity in transit). There are significantly higher handling and transportation costs for importing global sugar, and, at times, logistical obstacles arise. When world sugar production shortage occurs, prices spike and exporting countries concentrate on delivering shipments to nearby markets to save on freight costs.
- The domestic sugar industry is largely structured as farmer-owned cooperatives. These cooperatives have proven to be effective in eliminating excess costs, improving efficiency and providing growers the opportunity to vertically integrate, govern and earn more of the food production dollar.
- If we are to have a strong and reliable domestic sugar industry, there must be a strong sugar policy in the farm bill and trade policies that balance supply and demand. Our farmers need good crop insurance products to manage risks, as well as public and private research to address pests, disease and climate challenges in the years ahead. Over the past 20 years, sugar growers have produced 16 percent more sugar on 11 percent less land, and we need to continue those advancements.
- Finally, tax policy can have a direct and harmful impact on farm ownership as farms are passed from one generation to the next. Efficiency is driven by economies of scale. If families are forced to sell land to pay taxes, it would eliminate those efficiencies and would be disastrous to our industry, threatening the supply chain.
These are key talking points that help tell our nation’s policy makers and administrators to keep our food system strong and resilient. While members of Congress have had a multitude of problems to face during the pandemic, sugar has not been one of them because we have a farm and trade policy that works.