|
A mountain of low-priced sugar is rising across America, and
it's casting a multimillion-dollar shadow that may reach Bay-area
producers.
The price of domestic sugar has hit a 20-year low, triggering
price guarantees that allow producers, such as sugar-beet growers
in the Saginaw Valley, to forfeit their sugar to the U.S.
government for a set price.
Now the government is considering buying 250,000 tons of
surplus sugar to pump up its domestic price. That sugar may be
sold to other countries, or be used in the production of ethanol
fuel. Either way, taxpayers could get stuck with a $100 million
tab.
"Sugar beet growers are really worried about this
situation," said Ray VanDriessche, a Bay City farmer and
president of the American Sugar Beet Growers Association.
"Forfeiture (of sugar back to the government) is a real
possibility if the (Department of Agriculture) doesn't step
in," he said.
Robert Hetzler, president and chief executive officer of
Monitor Sugar Co., 2600 S. Euclid Ave., says he is working with
government officials to help solve the surplus problem.
"Basically, what we have is too much supply and not enough
demand. The current situation is quite serious." Hetzler
said.
The goal now, Hetzler said, "is to take surplus sugar off
the human consumption market."
U.S. Rep. James A. Barcia, D-Bay City, says the U.S. Department
of Agriculture has sufficient funds that could be used to buy
$60-80 million worth of sugar.
"This seems like a good solution, but there are many
details that would have to be worked out," Barcia said.
"I believe Congress should support any future action taken by
the USDA to buy surplus sugar. The money that would be spent would
be a minuscule amount."
The current sugar problem stems from a government program that
guarantees U.S. growers a minimum price for their sugar. Until
now, the Agriculture Department has managed to keep domestic sugar
prices three times higher than the world price simply by
regulating supplies.
But the department is fast losing control of the situation
because of bumper domestic crops and rising imports. The current
price of domestic sugar is 21 cents a pound, 5 cents below last
year's average and 5 cents below the forfeiture rate.
Hetzler said the U.S. is importing more than 1.2 million tons
of sugar per year from foreign nations. That includes 25,000 tons
imported from Mexico - a number that is set to increase to 250,000
tons beginning in October, as dictated by U.S. obligations under
international trade agreements.
Domestic production is up 25 percent since 1997, partially
because many farmers have switched to growing sugar from less
lucrative crops.
While many economists say the forfeitures are a virtual
certainty, Hetzler believes the situation can be remedied in the
next few months. Hetzler said it is likely the USDA will buy some
sugar to boost the domestic price.
Opponents of the government's sugar program are urging USDA to
let sugar prices fall. The farmers "contributed to the
current oversupply and should cope with the problem on their
own," the Consumer Federation of America said in a letter to
Agriculture Secretary Dan Glickman.
Hetzler said there are no indications this trend will change.
"Boxed cereal prices have gone straight up over the last few
years, while sugar prices have gone down. There seems to be
absolutely no relation between the two. And, I hardly doubt the
price of a Hershey bar will go down because sugar prices are
low."
|