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FARGO, N.D. -- If the government
implements a payment-in-kind program to destroy sugar beet
acres this year, farmers can expect to hear detailsin June or
early July, a national sugar beet lobbyist.
The so-called PIK program destroys beet
acres to help reduce anoversupply and government sugar
stockpiles.
"One of the reasons for (a probable
June announcement) that is theydon't want people to 'game'
this thing, to put in half the seed or nofertilizer,"
says Luther Markwart, executive vice president of theAmerican
Sugarbeet Growers Association, speaking last week at the
annual International Sugarbeet Institute in Fargo, N.D.
Markwart says the point of PIK is to take
out "legitimate acres," and ifit doesn't, it will
"create a worse problem and make the government looklike
a fool."
Markwart expects the government will wait
until the crop is planted andwill judge whether crops have
been lost for other reasons that crop insurance would
compensate for.
"Then what you're going to get is
remaining, legitimate acres," Markwart says. "Then,
the sooner you take them out, the better the odds are that
you're going to have average-quality beets."
Last year, the farmers were allowed to
choose acres late so they coulddestroy less-productive beets.
"That's when if you do what you did
last year, as soon as you take themout, he looks forward to
working down government-owned sugar stocks and getting the
industry back into balance."
Markwart advises farmers not to "pin
your hopes" on a "pre-plant PIK,"because it
works like a "paid diversion" that isn't available
in currentlaw.
Last year, the PIK program took out the
equivalent of roughly 500,000tons of beet sugar out of
production.
"The feeling is if they could
'broaden' the rules to allow more peopleto participate or
participate at a greater level, they may be able to get it all
out in one year," Markwart says.
The sugar industry is pushing an
"iffy" program in which processorswould tell the
government they want to "buy" some surplus,
forfeitedsugar and offset that by reducing an equivalent
amount of production.The beet people will meet March 20 with
the cane people to discuss theconcept, Markwart says. The cane
people may have to consider whether to support a PIK program,
even if only beet growers could directly takeadvantage of it.
Markwart touched on numerous other
industry topics: Mexico. Officials in that country "want
to negotiate a deal" on sugarrevisions in the North
American Free Trade Agreement, Markwart says, to avoid
market-disrupting imports unde the trade deal. So-called"second-tier"
tariffs against Mexican sugar imports are phasing out by2008,
according to the agreement.
The Bush administration's U.S. Trade
Representative's office is stillwithout key negotiators,
Markwart says. One hopeful idea: convince theMexicans to
convert some of their sugar production into ethanolproduction.
The Mexicans have forgiven $2 billion of
debt to the sugar industry -- asubsidy. If the Mexicans start
dumping sugar into this country, U.S. growers will retaliate
with anti-dumping and countervailing duties.
"When that time comes, if we're
facing injury, we will pull the trigger on them,"
Markwart says. "From the time we start to sustain injury,
within 45 days the tariffs will be in place. We won't need two
to three years to get it in place."
Future trade deals should be based on the
idea that "imports have to bea residual supplier" to
the U.S. sugar markets.
Supply controls. "We cannot just
produce whatever we want to produce," Markwart says.
Continuing to overproduce will drive areas out of business and
reduce the industry's political base.
"If you erode your political base,
then the question is, can you sustain a policy, long
term," Markwart says.
Sugar policy may need a
"correction" tool to reduce U.S. acres when the
market gets out of balance.
"Let's try to address the problem at
the front end, so you don't incur the losses you have through
this process," Markwart says. "I think the industry
is working toward that. I think we will have unanimity on
that."
The industry will testify in April.
Efficiency. The U.S. sugar industry must
work to retain efficiencies in production and regulation,
including a marketing assessment imposed by the government.
The industry needs to ensure adequate funding for research and
to ensure approval and defense of farm chemicals, he says.
Food safety and biotech is the "No.
1 issue in agricultural (trade) negotiations" in upcoming
trade negotiations, especially after the hoof-and-mouth
outbreak in Europe.
"Technically, we're ready to go with
biotech sugar," Markwart says. "The market's not
ready and probably won't be for another few years, until we
get confidence back into the consumer."
Sugar co-ops. Markwart sees a continued
movement toward development of farmer-owned cooperatives in
the sugar business, because the law allows them to legally
market together.
"As we get co-ops around the
country, what does that mean for greater discipline in the
marketplace?" Markwart says, referring to the ability to
set prices together. "That has a lot of possibilities.
That's why you need a policy that gives confidence to
producers and bankers and allow that transition to happen. We
will eventually end up, I think, in a matter of a few years,
that if you're not a farmer-owned cooperative in the sugar
beet business -- perhaps in the sugar cane business -- you
might not be in business."
Stuffed molasses. The lawsuit against the
practice of slipping extrasugar into the United States by
putting it into Canadian molasses, shipping it into the United
States, extracting the sugar and then exporting the molasses
back to Canada to do it over again, still is awaiting U.S.
Appeals Court action. The timing of the decision depends on a
separate U.S. Supreme Court case involving Mead, the company
that makes notebooks and other office supplies, Markwart says. |