Sens. Max Baucus and Conrad Burns recently asked the U.S. Department of Agriculture to expand a payment-in-kind program for sugar initiated last year.

Rep. Dennis Rehberg, however, was on the losing side in the House Agriculture Committee this week in a effort to provide emergency aid to specialty crop farmers like sugar beet growers. The House ag panel, on a 24-23 vote, defeated the designs of panel chairman Rep. Larry Combest, R-Texas, who wanted to add $1 billion to the supplemental package to the current budget. Part of that was pegged for sugar beet growers.

Baucus and Burns in a letter to Ann Veneman, secretary of agriculture, commended the USDA's recent decision to sell government inventory sugar to ethanol producers in an attempt to bring the sugar market into balance.

But the sugar for ethanol sale by itself will not alleviate the crisis in the refined sugar market, they wrote, noting the refined sugar market is in a crisis of over-supply and low prices.

The PIK program offers sugar beet producers the choice of diverting from production a portion of their crop in exchange for sugar held in federal storage, which costs taxpayers $1.4 million a month. Last year, farmers were limited to $20,000 in PIK payments.

We believe an improved and expanded Payment-In-Kind program, similar to last year's program is the best way to dispose of the remaining large quantities of government-owned sugar, reduce surplus production for the current year, and strengthen returns for producers from the marketplace, the pair argued.

Since 1999, about 890,000 tons of sugar have been forfeited to the government for a net cost of $365.8 million to taxpayers. The sale of sugar to ethanol producers has a cost also. Ethanol, when used as a 10-percent fuel additive, receives a 54-cent a gallon subsidy from the U.S. government. Initially set in 1978, the subsidy was to expire in 2000, but Congress extended it to 2007.

Wednesday's House Ag Committee action on farmer-aid money resulted in a $5.5 billion package being reported out to the full House. That was a substitute measure to the $6.5 billion package offered up by Combest, who voted against the final plan.

What did the package contain? It included $4.622 billion in market-loss assistance payments to grain and cotton producers and $16.94 million to wool and mohair producers plus varying amounts for other commodities. Gone is a provision providing $44 million for sugar producers.

Rehberg said the $1 billion cut was from a supplemental appropriation for the current budget year that ends Sept. 30. Because Congress goes on summer break the first week of August, he said he fears that Congress will leave town without providing a better level of assistance to farmers, many who are suffering from drought.

Rehberg argued that farmers and bankers, who lent them money, had reason to believe Congress would provide the higher amount.

It is a foolish mistake, he said.

Rehberg said the vote was all over the political spectrum and map. Arguments for cutting the money ranged from saving it for the farm bill re-write next year to fiscal restraint now.

White House pressure may have played into the reduction also. In a letter to Combest last week, White House Budget Director Mitch Daniels said he would recommend that President Bush not sign a bill providing more than $5.5 billion for additional assistance.