|
WASHINGTON (AP) - With the nation awash in sugar, the government
is preparing to give some of the surplus to farmers who pledge to
destroy some of this fall's crop.
Although no final decision has been made on the sugar giveaway,
Agriculture Department officials said Wednesday that it was the most
feasible way to prop up domestic sugar prices at the least cost to
taxpayers.
Critics derided the idea as a desperate attempt to bail out
growers, who are partly to blame for the surplus.
Because of a steep drop in prices, growers have been threatening
to forfeit to the government up to $500 million worth of sugar
that's currently pledged as collateral on federal marketing loans.
USDA recently bought 132,000 tons of sugar at a cost of $54
million to avoid forfeitures this summer, but another 1.4 million
tons are still under loan.
Giving sugar to farmers to entice them to plow under part of this
year's crop will save the government on monthly storage costs,
currently about $2 a ton, said August Schumacher Jr., USDA's
undersecretary for farm and foreign agricultural services.
USDA is trying to help ``struggling sugar producers through a
very difficult period, deal responsibility with forfeited sugar and
implement existing law,'' Schumacher told the Senate Agriculture
Committee.
Farmers would not take possession of the sugar itself but would
instead receive a ``payment-in-kind'' certificate that they could
redeem for cash.
Details of the proposed program have not been finalized. But by
law, no producer could receive more than $20,000, the equivalent of
15 acres of sugar beets, which is about 7 percent of the average
farmer's production.
Wholesale sugar prices are down 23 percent this year because of
heavy domestic production and a surge in imports. Some farmers
switched to sugar beets in recent years when prices for corn and
other crops dropped sharply.
USDA officials acknowledge they have no long-term solution for
the price drop.
The government estimates that the federal sugar program is likely
to cost taxpayers $1 billion between now and 2005.
``Events this year indicate that the sugar program is becoming
increasingly unmanageable and that radical reforms are needed
urgently,'' said the chairman of the Senate committee, Sen. Richard
Lugar, R-Ind.
Lugar said the certificate program ``would be ill-conceived,''
adding that the government should consider paying farmers to quit
growing sugar altogether.
Thomas Hammer, president of the Sweetener Users Association, said
the program was unlikely to increase market prices even though it
would lower this year's production.
Farmers told the committee they are in desperate need of help.
``This is not a crisis of a particular group of growers, or
growers in a particular region. Without exception, this economic
crisis is hitting every grower through the industry because every
grower's income is directly tied to the price of refined sugar,''
said Ran VanDriessche, a Bay City, Mich., farmer.
USDA officials said they would have to act quickly on the
certificate program since farmers are due to start harvesting sugar
beets in September.
|