April 30, 2007 – 9:50 p.m.
In a fresh push to overhaul the nation’s sugar policy, manufacturers and service providers are teaming with food processors who have long battled to end import quotas on sugar.
Candymakers, soda and dairy processors have complained that import quotas artificially inflate sugar prices and increase consumer costs. But when Congress begins work on renewing farm programs (PL 107-171), food processors can count on their new allies in the manufacturing and service industries to contend that the quotas impede trade.
“The present U.S. sugar policy . . . is ill-suited for the rapidly evolving markets of the 21st Century,” more than 70 industry groups that make up the Sugar Policy Alliance said in a statement to Congress last month. The group includes such lobbying powerhouses as the National Association of Manufacturers, the International Dairy Foods Association and the U.S. Chamber of Commerce.
The alliance promises to intensify debate about sugar quotas, but growers remain a formidable lobbying force enjoying strong support on the House and Senate Agriculture panels, which will write the new farm bill.
Lawmakers from Southern states such as Florida and Louisiana, where cane sugar grows, have traditionally teamed with members from upper Midwestern states, where sugar beets are produced, to protect the quotas. The industry has generously dispensed campaign contributions to cement its support.
Instead of traditional government subsidies, such as those available to producers of other commodities, sugar growers rely on annual quotas that dictate how much foreign sugar is allowed into the country. That leaves the rest of the U.S. market to domestic producers and, critics say, drives prices artificially high. In fiscal 2006, U.S. raw sugar cost 22.62 cents per pound, compared with an average world price of 15.78 cents per pound.
Food processors contend that the high price of sugar squeezes profit margins and makes products such as candy and soft drinks more expensive for consumers. The sugar industry counters that wholesale sugar prices have fallen 35 percent since 1980.
But revamping the sugar program became increasingly important to other industries during the 2005 debate over legislation to implement the Central American Free Trade Agreement (PL 109-53). The U.S. refused to open its borders to more sugar imports and the countries party to the treaty — five Central American countries plus the Dominican Republic — retaliated by limiting imports of non-food products and services.
“This is the kind of thing that complicates negotiations” in the World Trade Organization, said William Reinsch, president of the National Foreign Trade Council. “If we have to defend an untenable program, it makes it hard to ask for more significant access in other areas of the agreement.”
The alliance would like sugar growers to get similar subsidies as corn, wheat and soy producers. Under such a plan, sugar producers may qualify for loan assistance.
But the sugar industry is likely to resist such proposals, contending that replacing import quotas with subsidies would impose new burdens on taxpayers. That argument has resonated in the past with budget-conscious lawmakers, many of whom are uncomfortable with agriculture subsidies.
The alliance members’ strategy of widening the forces opposing current sugar policy is geared more toward prevailing on the House and Senate floors, not necessarily in the Agriculture committees. Senate Majority Whip
Nevertheless, the industry has plenty of powerful friends on and off the Agriculture panels, including House Agriculture Chairman
The nation’s two largest farm organizations, the American Farm Bureau Federation and the National Farmers Union, have endorsed the existing sugar program.
And food processors are not alone in recruiting new — and in some cases unlikely — allies to their cause.
Earlier this year, growers from developing countries in Africa, South America and the Caribbean announced they will back the U.S. sugar program. The U.S. market became increasingly important to those countries after the European Union this year said it would limit sugar imports from Belize, Barbados and the Dominican Republic. The industry says switching to a subsidy system could cost developing countries $430 million annually.
U.S. sugar growers say support from the 15-country International Sugar Trade Coalition debunks the longstanding argument by free-traders that the U.S. program hurts developing countries.


