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WASHINGTON — The U.S. government is getting into the sugar
business in a big way, and Agriculture Secretary Dan Glickman isn't
happy. To ease a glutted market, the agency is paying some farmers
to plow under their crops and then sell off the $54 million in sugar
the government already bought in June.
Uncle Sam will acquire even more sugar in the coming months,
Glickman said in an interview Thursday.
"I'm not quite sure what we're going to do about sugar
policy in the future," he said. "We are going to have to
honestly and openly look at the sugar program to determine if there
is a way to modify it to make it more acceptable."
"These questions are not really being asked now. There's a
lot of hand-wringing about our current farm program, but there is
not a lot of specific answers for changes."
— Agriculture Secretary Dan Glickman
Prices for sugar are at a 22-year low, due to increased imports
and record-setting harvests at home. Because of the program's
traditionally high prices, more and more farmers are switching to
sugar from less- profitable crops.
And because of a favorable "non-recourse" loan
agreement that processors have with the government, they don't have
to repay the money in this depressed market. They can simply unload
the sugar and let Washington deal with it.
One sugar beet producer in Utah already has forfeited 42,000 tons
of sugar because it couldn't recoup its loan money with the low
prices. More forfeitures are expected as the government's $550
million worth of loans come due at the end of the month and in
mid-September.
"If we stay on the current course, it does appear that the
government's going to end up owning a lot of sugar over the
years," Glickman said. "We're not going to be able to just
have the status quo."
The government chose this status quo.
It purposely set import limits last year at a higher level than
it actually needed, which triggered the favorable
"non-recourse" loan agreement with producers.
Through creative accounting, the USDA put the unneeded sugar
"in reserve" so it never hit the market.
Had the United States never imported that extra sugar, domestic
producers would have been financially liable if they defaulted on
the loans. That would have left the government — and the taxpayers
— out of the sugar business.
"(Glickman) got himself in a pickle. He helped make the
problem worse this year," said Rep. Dan Miller, R-Bradenton, a
strong foe of the sugar program. "By making (the loans)
non-recourse, they're encouraging over-production, and that's part
of the problem we have now."
There's no sign of letting up on the favorable treatment.
The USDA published a notice in the Federal Register on Thursday,
specifying how much sugar the United States needs to import above
the World Trade Organization requirements next year "in order
for USDA to offer non-recourse support loans."
The agency wants public comments.
Glickman said sugar is just one of many crops whose poli cies
must be re-examined. Congress has approved more than $72 billion in
the last four years as emergency payments to hurting farmers in
other crops.
Glickman compared these times with the Depression, saying we're
in "crisis mode."
"All we ever talk about is what the programs are going to
be," he said. "We need a lot more intellectual debate on
what is the purpose of farm programs and how we want to meet the
objectives. . . It ought to be a philosophical debate that we
haven't had, fundamentally, since the Depression."
He intends to form a committee this fall that will ask the tough
questions: What does the United States want farming in America to
look like — small family farms or huge agribusiness? How much land
should be preserved? And how are goals to be achieved?
"These questions are not really being asked now," he
said. "There's a lot of hand-wringing about our current farm
program, but there is not a lot of specific answers for
changes."
Sugar advocates spent the week talking about these problems at an
American Sugar Alliance conference in Steamboat Springs, Colo. They
agree with Glickman.
"We're in complete agreement with Glickman that farm
programs need to be addressed and sugar is among them," said
Judy Sanchez, a spokeswoman for the Clewiston-based U.S. Sugar Corp.
But integral to that is "fixing" our trade agreements, she
said.
Under the North American Trade Agreement, Mexico will be allowed
to send most of its surplus sugar into the United States on Oct. 1
— 600,000 tons compared with the existing 120,000-ton limit.
"We need to deal with the NAFTA issues on sugar as part of
fixing the domestic farm problems. Domestic producers are dealing
with a highly subsidized world market," Sanchez said.
But when the issue came up with Mexican officials in Steamboat
Springs, talks reached an impasse.
That leaves the government buying and selling sugar to keep
producers afloat.
"I don't expect any monumental reforms before the
election," Glickman said.
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