Sugar producers, who are embroiled in a contentious Farm Bill fight, just received a ringing endorsement from CoBank, one of the largest lenders in farm country.
“CoBank strongly supports the current sugar policy that has worked so well for Rural America and encourages the House of Representatives to continue the program without change,” its president and CEO wrote in a letter on May 10 to the House Agriculture Committee.
“Quite simply, the sugar program works,” CoBank noted, explaining that it is essential to giving lenders the confidence needed to extend operating capital to producers. “It is designed to run at no-cost to the taxpayer and it effectively stabilizes an efficient sugar industry against unfairly subsidized foreign sugar.”
Despite its success, sugar policy has come under attack by large food manufacturers that are angling to depress farmers’ prices. Sugar policy critics are lobbying for a Farm Bill amendment by Representative Virginia Foxx (R-NC) that is designed to weaken U.S. policy in favor of subsidized sugar imports.
This plan, which has been dubbed the “Sugar Farmer Bankruptcy Bill” in agricultural circles, has been thoroughly rebuked by others in the lending community.
More than 60 banks and accounting firms throughout rural America sent Congress a letter in March about the Foxx scheme. They explained:
If this [amendment] is adopted, it would force oversupply of the U.S. sugar market and would effectively remove the price safety net for American sugar farmers. The collapse of domestic sugar producers would cause major disruptions in the supply chain for food manufacturers and American consumers.
The House is expected to vote on sugar policy later this week, and financial institutions like CoBank know there’s a lot at stake.
“Weakening this policy would negatively impact our customers’ ability to repay loans,” CoBank concluded. “This could jeopardize the 142,000 U.S. jobs that sugar helps support and could send economic shockwaves through sugar-producing towns in 22 states.”