|
Colorado sugar-beet growers and others across the nation would be
paid to plow under part of their record crop this year to cut
supplies under a plan being considered by the federal government.
In congressional testimony Wednesday, U.S. Department of
Agriculture officials said the proposal is the most feasible way to
prop up domestic sugar prices at the least cost to taxpayers.
If implemented, the plan would put cash in the pockets of
Colorado's 550 farmers who make the state the seventh-largest sugar
beet producer in the nation.
Beet production steadily has increased in Colorado over the past
decade, growing from 912,000 tons in 1989 to 1.5 million tons last
year.
However, as supply has grown, prices for farmers have fallen 19
percent from the modern-day peak of $43.70 a ton in 1988.
"We are experiencing a very serious oversupply situation
right now," said Gary Price, director of operations for Western
Sugar Co., Colorado's largest sugar processor.
A final USDA decision could come in days or a few weeks, USDA
chief economist Keith Collins told reporters.
"We are seriously considering a program of paid
diversions," or paying farmers not to produce, Agriculture
Undersecretary Gus Schumacher told the Senate Agriculture Committee.
It seems to be the best alternative for avoiding government
stockpiling of sugar, he said.
Under the preliminary plan, which would be voluntary, farmers
would submit bids to the government to destroy crops. In return,
they would be paid with certificates of government-owned sugar,
which could then be sold on the open market.
By avoiding government stockpiles, the USDA figures it could save
about $3.1 million a year in storage costs, Schumacher said.
Critics derided the idea as a desperate attempt to bail out
growers, who are partly to blame for the surplus.
"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 it could cost the government as much as $1 billion over the
next five years to maintain U.S. sugar prices.
Price of Western Sugar Co. said the plan would benefit sugar beet
growers but may not be advantageous for processors.
"It's a good proposal from the beet growers' perspective,
but not so good for the processing side," Price said. "It
means less raw product will come to us, which means less refined
product that we can produce." On the other hand, he said,
processors are fearful of overproduction because it drives prices
lower.
Under the USDA plan, growers and processors could turn over to
the government as much as 1.4 million tons of sugar by September,
because market prices have sunk below the government-set floor price
of 18 cents a pound for cane sugar and 22.9 cents a pound for beet
sugar.
That 1.4 million tons, worth about $550 million, is the amount of
sugar now under the government's loan program, and farmers can turn
it over rather than paying off their loans, making more money than
if they sold the sugar.
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.
|