Both critics, supporters agree sugar protections not going away

By: Jim Spencer


WASHINGTON – Trade experts Bob Kudrle and Bryan Riley are convinced that price supports and other protections for the U.S. sugar industry force consumers and foodmakers to pay more for sugar than they should.

U.S. Rep. Collin Peterson, who represents thousands of Minnesota sugar beet growers and producers, believes the federal sugar policy guarantees jobs and stable commodity prices.

Still, all three men agree on one point: The current sugar policy won’t go away any time soon.

Over the past two weeks, the sugar industry has persuaded lawmakers to renew the sugar program in the 2012 farm bill, which will govern agriculture policy for the next five years. Further, tariffs on foreign sugar won’t be part of the negotiations for a new free trade agreement spanning the Pacific Ocean.

“We remain confident that the sugar policy that has been in place … will remain in place,” said Kevin Price, a lobbyist for Moorhead-based American Crystal Sugar Co.

To most observers, the likely renewal of the sugar program demonstrates the enormous political clout of the sugar lobby, and in particular, American Crystal Sugar, a farmers’ cooperative. During the first quarter of 2012, the co-op poured $951,300 into lobbying Congress, leading a

$2.5 million industry push that was roughly six times what opponents of the sugar policy spent.

“People have recognized that this is a bad policy all of my adult life, but it gets through,” said Kudrle, an international trade professor at the University of Minnesota. “There is no question that money talks more than ever.”

As the nation’s largest producer of refined sugar through beet farming, Crystal Sugar generates 15 percent of the country’s sugar supply, while cultivating deep roots in Washington, D.C. The co-op continues to be one of the biggest congressional campaign contributors, spreading the maximum allowable donations to hundreds of Senate and House candidates.

This strategy, critics and proponents agree, has preserved a unique federal program that virtually assures profits for the U.S. sugar industry through price controls, tariffs on foreign sugar and loan guarantees whereby growers can repay the government in sugar if the market crashes.

The sugar program passed out of the Senate Agriculture Committee unscathed on April 26 with the support of Sen. Amy Klobuchar, D-Minn. The senator has said current sugar policy has a positive impact on Minnesota’s economy.

Last week, another attempt to change the sugar policy failed, as the U.S. Trade Representative’s office spurned an effort to include sugar in the Trans Pacific Partnership trade negotiations. Associations representing some of America’s biggest food processors – including Minnesota-based giants Cargill, General Mills and Land O’Lakes – were pushing the trade office to eliminate tariffs on sugar produced by TPP countries.

“We have considered this issue carefully and expect to retain the existing market access provisions with the current group of TPP countries,” said Carol Guthrie, a spokeswoman with the U.S. trade office.

The Trans Pacific Partnership includes Chile, Brunei, New Zealand, Singapore and sugar-rich Australia.

Excluding sugar from trade talks could compromise the pact, said Devry Boughner, Cargill’s trade lobbyist.

“Once a country removes an industry from the table, other countries remove their offerings,” Boughner said. “TPP has meant to serve as the gold standard for trade agreements, meaning the agreement should be comprehensive.”

Don Phillips, trade adviser to the American Sugar Alliance, disagreed with Boughner’s assessment, arguing it would be a mistake to open U.S. sugar producers to global competition. “Typically, that’s a dump market,” he said. “To throw our market open to that would be a disaster.”

Back in Washington, William Reinsch, president of the National Foreign Trade Council, which is part of the Coalition for Sugar Reform, said his group will press for changes to the sugar program.

“It’s premature to say efforts to reform have failed,” he said, noting that the price gap between what the world pays for sugar and what American consumers and businesses pay is getting bigger.

But Reinsch, whose 98-year-old organization represents global companies, acknowledged an uphill fight.

“The sugar program has been around a long time, and we have never succeeded in killing it,” he said.

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