Referred to as a no-cost policy, the federal program meters imports and establishes prices in an effort to protect domestic sugar cane farmers against unfair competition.
The renewal of the U.S. Sugar Program is included in the latest versions of the Farm Bill. While the Senate has approved its version, the House has yet to bring its to a floor vote.
With the current Farm Bill set to come off the books Sept. 30 and most all of Congress facing re-election in November, Lenny Waguespack of First South Farm Credit in Thibodaux says action is needed.
Waguespack, a division vice president who also oversees loans in Terrebonne Parish as well, says the no-cost sugar policy gives his bank the confidence to extend capital to producers.
“The sugar program works, and that really takes the pressure off the local and regional banks,” Waguespack says. “It makes our job just a little bit easier.”
State Sen. Fred Mills, R-Parks, says banks still have to look “at each individual sugar cane farmer’s financial strengths” to make a loan.
But Mills, who also serves as president of Farmers Merchants Bank of Breaux Bridge, adds that “because of the sugar policy, a sugar cane farmer goes into the season knowing that he’s going to make at least a break-even crop.”
The American Sugar Cane League, an advocacy arm for growers and processors since 1922, is behind the public information campaign that’s folding bankers into the general conversation.
Sugar is the world’s most heavily subsidized commodity and a strong sugar policy is the only way to level the playing field for Louisiana sugar cane growers, says American Sugar Cane League General Manager Jim Simon.
“The world market is badly distorted, and it stands to reason that the American sugar cane grower needs help,” he says. “The amazing thing about sugar policy is that it doesn’t cost the taxpayer a dime. Sugar cane and sugar beet farms don’t receive a penny in any type of subsidy from the government. Sugar policy is a no-cost program.”
The House returns from its recess Sept. 10, after which Simon says he is hopeful a new Farm Bill will be passed and signed by President Barack Obama.
Other bankers from South Louisiana have sent letters to the House Agriculture Committee, like the following:
“Simply put, the sugar program works,” writes David Wilson of First South Farm Credit, which handles loans in the Pointe Coupee Parish area. “It is the only no-cost federal farm program and it effectively stabilizes an efficient U.S. sugar industry against unfairly subsidized, dumped foreign sugar.”
“Weakening the U.S. sugar policy or changing it to an unproven system would undoubtedly affect our customers’ ability to repay loans and would negatively impact not only our bank, but would send shockwaves through the entire economy, jeopardizing hundreds of thousands of jobs,” writes David Kessler, president and CEO of the Bank of Commerce in White Castle.
|State Sen. Fred Mills|
On the other side of the issue, the Coalition for Sugar Reform, a trade group consisting of food, beverage and candy associations, has been pushing to eliminate the sugar program.
Along with the U.S. Chamber of Commerce, the coalition attempted to frame the program as a form of social welfare.
During congressional hearings, the coalition argued that consumers are paying $3.5 billion more annually for food due to the program and it’s stifling manufacturing jobs.
In response, Jack Roney, an economist with the American Sugar Alliance, says the price sugar producers receive has fallen 24 percent since the summer of 2010, yet the price grocery shoppers pay for sugar and food products hasn’t fallen as grocers and food companies pocket the savings.
He points to a new Harris Interactive survey, commissioned by ASA, that found nearly 70 percent of Americans said they’ve seen an increase in retail sugar prices since the summer of 2010, and 81 percent said the price of food and candy have climbed over that same period.
As for other groups, the American Farm Bureau Federation and the National Farmers Union are also urging a renewal of the sugar policy.
Louisiana’s total sugar cane industry including farm and mill production is $1.1 billion, according to the LSU AgCenter. The total economic impact of sugar cane on the state is more than $3 billion.