FOR IMMEDIATE RELEASE: August 7, 2017
CONTACT: Phillip Hayes, 202-271- 5734 (cell)
From the International Sweetener Symposium:
SAN DIEGO — The 2018 Farm Bill debate is heating up, U.S. sugar prices are still slumping, and America would be vulnerable to losing much of its domestic industry unless lawmakers maintain a strong sugar policy in the new law. That’s according to Jack Roney, an economist with the American Sugar Alliance, who today addressed the sugar industry’s annual convention.
“Sugar is a unique commodity and our policy is unique in that it is designed to operate without taxpayer cost,” he told the group. “Our growers don’t have access to ARC or PLC, so we rely on government-backed operating loans that we repay with interest.”
Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC) are Farm Bill programs available to other crops, and they are designed to provide financial relief when commodity prices fall below certain levels. Sugar producers, on the other hand, pledge their crops as collateral for loans designed to help them maintain their businesses throughout the year. Because loans are repaid with interest and no subsidy checks are involved, sugar policy has traditionally cost $0.
“After a sugar crop is completed, producers must hold the inventory until food makers buy it and ultimately need the sugar in their factories,” Roney said. “This keeps our customers from having to store massive quantities of sugar. That kind of just-in-time delivery would be nearly impossible without the cash-flow that government loans provide.”
Roney says there would be other consequences, too, if opponents of sugar policy are successful in gutting the loan system during the next Farm Bill.
“In today’s low-price environment, you’d see many domestic producers go out of business without a strong safety net – much like the century-old Hawaiian industry that recently went under after years of market uncertainty,” he explained. “Risk would increase, contraction would occur, and geographic diversity of the industry would shrink.”
That would also mean a greater dependence on subsidized imports, according to Roney.
“As we’ve seen in other countries that’ve outsourced sugar production, grocery shoppers would be vulnerable to market fluctuations and supply issues,” he concluded. “A reliable, affordable, homegrown sugar supply is in the public interest, and no-cost sugar policy makes it all possible.”
U.S. sugar farmers have made similar points in recent weeks, testifying before the Senate and House Agriculture Committees.
