| It might be hard for some taxpayers to understand why the
Fanjul family of Palm Beach, Fla., needs Uncle Sam's help. With estimated
holdings of more than $500 million, the Fanjuls control almost half a
million acres of sugar cane.
Yet their company, Florida Crystals, recently turned over more than
100,000 tons of raw sugar to the feds instead of repaying $37 million in
government loans.
But for every Fanjul, there are hundreds of sugar growers like David
Pauly of Great Bend, N.D.
Pauly farms about 82 acres of sugar beets, plus 1,500 acres of soybeans
and corn. From early spring to late fall, he's in his fields from before
dawn until after dusk, seven days a week.
This year, Pauly said, his net farm income will be exactly nothing.
Luckily, the family will earn about $70,000 from a machine shop he runs in
his spare time and the beauty parlor his wife operates. Last year, the
farm lost $50,000, he said.
Perhaps it's no surprise that Pauly doesn't want to see his son, a
junior in high school, take up the farmer's life.
"I hope he does something other than this," Pauly said
recently. "My brother's a bank president. He works eight hours a day
and spends weekends at his lake cabin."
In defending the U.S. government's system of price-support loans and
import quotas for sugar, intended to guarantee that domestic farmers can
sell sugar for a profit, sugar producers inevitably cite the need to
protect small family farmers such as Pauly.
Their critics counter with families such as the Fanjuls.
In truth, the debate over whether farmers should receive government aid
is more complicated.
The basic reason for government intervention in farming is that
agriculture is unlike any other business.
It's extremely volatile economically - a year's work can be wiped out
with a flood, an infestation or a hard freeze - and it requires large
investments with often modest returns.
Without some protections, small farmers say, they probably would go
bankrupt every time they had an off year.
To prevent that, the government historically has tried to stabilize the
ups and downs by dictating how much of various crops can be planted, by
setting minimum guaranteed prices, and by offering disaster payments and
cash loans.
But in recent years, pressure on the U.S. government has mounted to let
agriculture run a free-market course.
In part to respond to that pressure, Congress passed the Freedom to
Farm Act in 1996, which, among other things, began to phase out guaranteed
minimum prices on many crops, including wheat, rice and corn.
Since then, market prices for many staples have dipped precipitously.
But until last year, sugar prices remained fairly steady, thanks to the
government's retention of import quotas and loans that can be paid back
with crops instead of cash.
Predictably, more farmers have turned to cane and beets. That has led
to sugar surpluses, which dropped the price of sugar by 30 percent.
Recently, the price has nudged up a bit, from a low of 17 cents to 21
cents a pound, but it seems unlikely the recovery will last if the record
production continues.
In any event, the bounce came too late to stop sugar producers from
turning over a million tons of sugar to the government instead of paying
back loans. The loans are based on a certain price per pound, so when
sugar dips, it's more profitable for farmers to keep the money and turn
over the collateral: their crops.
And critics fear that even more sugar will be forfeited to the
government next year.
"The federal government just can't be providing a
billion-dollar-a-year subsidy to sugar producers," said Rep. Dan
Miller, a Florida Republican and one of the sugar program's leading
critics.
Miller and others contend that the real reason the government continues
to protect sugar is that the industry is a gold mine for political war
chests. Since 1990, sugar interests have contributed more than $15 million
to congressional candidates and political action groups, according to the
Center for Responsive Politics, a nonpartisan group that tracks
contributions.
"To me, the sugar lobby is a poster child of why we need
campaign-finance reform," Miller said.
Sugar critics add that the federal government's program also undermines
its attempts to negotiate freer trade agreements with other nations.
"The only reason we need a program is to protect ourselves from
these other countries that subsidize their growers," said Charlie
Melancon of the American Sugar Cane League, based in Thibodaux, La.
"We're not opposed to competing in a world market, as long as we're
not competing against the other guys' governments."
Nonetheless, supporters of a free market say the end result of
eliminating sugar subsidies would be a lower price for consumers and sugar
users, and a better deal for taxpayers.
©2000 THE PLAIN DEALER. Used with permission. |