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Leaders cite problems with world market priority
By Julie Pence, Ag Weekly Correspondent, The Times-News
May 7, 2001
 
He had heard about how foreign countries subsidize farmers and make it unfair for the United States to compete in the world sugar market. But a trip to England in the early 1990s gave Del Traveller, Amalgamated Sugar Co's assistant vice-president of agriculture, a first-hand lesson on the subject.

"I learned a little bit about subsidies," Traveller said.

Visiting with an English farmer who explained the country's quota system, Traveller heard how each farmer has a quota to meet with guaranteed amounts to be paid. If a farmer under-produces he risks having his quota reduced the next year. So naturally, everyone tends to overplant, just in case of bad weather or unexpected circumstances.

The farmer told Traveller the previous year had been an excellent production year, and as a result his "Gift to God" was large.

"I wanted to know -- what's a Gift to God?" Traveller said.

It turned out that any sugar over the quota was given to the government and in turn the free sugar was sold for a ridiculously low price on the world dump market. And the Mother Country makes a profit.

"When you compete with that, you don't stand a chance," Traveller said.

The issue of the global sugar market is the single most important problem facing U.S. sugar producers, industry leaders told Congress last week as legislators prepare for the new Farm Bill.

A number of issues were discussed with the House Ag Committee, according to Mark Duffin, Idaho Sugarbeet Growers Association executive director, including the marketing assessment, the forfeiture penalty and loan rates in the sugar program. But those issues are secondary to addressing NAFTA and WTO, he said.

"Our proposals will not work unless the government resolves problems with stuffed molasses and the Mexican dispute over the NAFTA trade letter," Duffin said.

The industry also wants the Secretary of Agriculture to retain the authority to limit imports under the tariff rate quota system, he said, acknowledging that authority would still be subject to WTO and NAFTA schedules and rules.

In addition, Duffin said some in Congress would like to see the sugar program eliminated altogether, but he points out that it is a protection not only for growers but also for consumers.

Opponents to the sugar program want a simple supply-and-demand system to dictate prices, but hearkening back to the 1970s, Duffin talked about when the sugar program -- tied to the world market -- was dropped for a while.

"Prices started jumping all over the place," he said. "First they went through the roof, and then candy and pop were ratcheted up. Then prices crashed, but user prices never lowered. Eventually there was so much volatility in the market, that we had a shortage, and sugar couldn't even be found on supermarket shelves."

United States Department of Agriculture figures project U.S. plantings of sugar beets to come in around 1.398 million acres, or down about 9 percent, from last year. It is the direct result of processing companies going out of business due to record low prices. And many in the industry see the low prices as a direct result of competing with subsidized foreign producers.

For the time being prices on the domestic scene are a bit better, and that gives hope to worried sugar beet growers, but they need the help of Congress to maintain market stability, Duffin said.

"There will be a lot developing as Congress goes to work on this," Duffin said. "The House and Senate aren't in sync yet , but a lot of homework is being done to get ready" for the new Farm Bill.