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Food industry to Congress: We're still paying over the odds for sugar...

By Elaine WATSON , 18-Jan-2013

While US refined sugar prices have dropped since last summer and sugar producers claim the nation is “swimming in sugar”, food manufacturers say prices are still “far above historical norms ­and about 30% higher than the world market”.

The Coalition for Sugar Reform, an alliance of food and beverage manufacturers and other groups, was speaking to FoodNavigator-USA after sending a letter to new members of Congress calling for change to the US sugar program.

“As Congress extended the current sugar program until September 30, 2013, there is an immediate opportunity for policymakers to reform the outdated program this year”, said spokeswoman Jennifer Cummings.

The sugar program should work for all stakeholders

The program - enshrined in the soon-to-be-revised 2008 Farm Bill - has reduced access to imports and distorted markets, causing sugar prices to spike to record highs in 2010 and 2011, claimed Cummings.

Ironically, artificially high prices have in turn created an incentive for domestic growers to expand production to such an extent the government may now have to use taxpayers’ money to buy the surplus, she said.

At a minimum the coalition is looking to restore the sugar policies laid out in the 2002 farm bill, she added: “Overall, we would like to see some of the worst aspects of the current sugar program rolled back, as proposed in reform bills introduced in the Senate and House Agriculture Committee last year.

“Those modest reform proposals included eliminating restrictions on USDA's ability to set import quotas at levels that adequately supply market needs, returning price supports to 2008 levels and repealing the Feedstock Flexibility Program, among other provisions.

“The fact is the [current] program has imposed a $14bn hidden food tax on American consumers and businesses over the past four years alone, in order to provide a special interest subsidy to sugar producers.”

The federal government has no business imposing such extraordinary costs on taxpayers

In the letter - signed by the National Consumers League, the Grocery Manufacturers Association, the American Bakers Association and other sugar buyers - the coalition claims that the government “has no business imposing such extraordinary costs on everyone except the sugar growers and processors”.

It adds: “The sugar industry is able to reap record profits when domestic sugar supplies are tight because of government restrictions, and yet pass on the cost of the sugar program to taxpayers when surplus sugar burdens the market.

“The federal government has no business imposing such extraordinary costs on everyone except the sugar growers and processors.

Candy makers have grown sales during the recession

However, sugar producers claim food manufacturers pay less for sugar than counterparts in other developed countries, and have grown sales during the recession.

When you factor in transportation costs, US raw sugar prices “are now in line with artificially low prices on the global dump sugar market, which has been called the most distorted and depressed commodity market in the world”, said Jack Roney, an economist with the American Sugar Alliance (ASA).

Bakers: There are many supporters of reforming the sugar program in both the House and the Senate

ABA: 'This is the most pressure Congress has ever faced to reform the program'

While amendments to the Farm Bill that included revisions to the sugar regime did not pass in the Senate or the House Agriculture Committee last summer, political support for a change is growing, American Bakers Association (ABA) government relations director Cory Martin told us late last year.

There are many supporters of reforming the sugar program in both the House and the Senate."

While ABA members would like to see the program scrapped completely, they accepted that a more realistic goal was an amendment that “would pare back the program to how it operated before the passage of the 2008 farm bill”, he said.

“It would still maintain import restrictions and loan rate guarantees, but it would open the program up a bit and allow the USDA to better respond to supply needs.” 

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