[Congressional Record Volume 145, Number 76 (Tuesday, May 25, 1999)]
[Senate]
[Pages S5959-S5961]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SCHUMER (for himself, Mrs. Feinstein, Mr. Chafee, Mr. 
        Gregg, Mr. Santorum, and Mr. Moynihan):
  S. 1118. A bill to amend the Agricultural Market Transition Act to 
convert the price support program for sugarcane and sugar beets into a 
system of solely recourse loans to provide for the gradual elimination 
of the program; to the Committee on Agriculture, Nutrition, and 
Forestry.


                  sugar program phase out legislation

  Mr. SCHUMER. Mr. President, today I join with my colleagues Senators 
Feinstein, Chafee, Gregg, and Santorum to introduce legislation that 
phases out the federal sugar program. Remember that old story, if you 
believe this, I've got some swampland to sell you in Florida? Boy, I 
wish I bought some of that swampland and became a sugar grower.

  It is a can't miss, can't lose proposition where all of the risk is 
absorbed by the federal government and all of the reward goes to the 
sugar barons. It is one of the last vestiges of a centralized, 
subsidized U.S. farm sector which has mostly gone by the wayside.

[[Page S5960]]

  Ten years after the collapse of the Berlin Wall, Odessa on the 
Okeechobee with its generous price supports somehow still survives. 
This is a special interest program that benefits a handful of sugar 
barons at the expense of every man, woman and child in America.
  Several years ago, the GAO estimated that consumers paid $1.4 billion 
more at the cash register because of the sugar price support. Today, 
because the world price for sugar is lower and the price paid in the 
U.S. is higher, the cost to consumers could be twice as high.
  And let's not forget. It has already cost America thousands of 
refinery jobs. And it has already cost the Everglades hundreds of acres 
of pristine wilderness. In Brooklyn and in Yonkers, we have lost one-
third of our refinery jobs in the last decade. Why? Because the sugar 
program is such a bitter deal, refiners cannot get enough raw cane 
sugar to remain open.
  Four years ago, when we came within five votes in the House of 
terminating the sugar program, the world market price for sugar was 
about ten cents and the U.S. price about 20 cents. Today the world 
price is less than a nickel and the U.S. price is almost a quarter. In 
other words, the gulf between the free market and the sugar program is 
getting wider.
  Under any reasonable and rational measure the sugar program should be 
repealed. If the issue is jobs, the environment or the consumer--then 
we have no choice but to repeal. At all ends of the political spectrum 
the answer is the same--it's time to repeal the sugar program.
  Mr. President, I ask unanimous consent that the text of the bill be 
printed in the Record.
  There being no objection, the bill was ordered to be printed in the 
Record, as follows:

                                S. 1118

       Be it enacted by the Senate and House of Representatives of 
     the United States of America in Congress assembled,

     SECTION 1. RECOURSE LOANS FOR PROCESSORS OF SUGARCANE AND 
                   SUGAR BEETS AND REDUCTION IN LOAN RATES.

       (a) Gradual Reduction in Loan Rates.--
       (1) Sugarcane processor loans.--Section 156(a) of the 
     Agricultural Market Transition Act (7 U.S.C. 7272(a)) is 
     amended by striking ``equal to 18 cents per pound for raw 
     cane sugar.'' and inserting the following: ``, per pound for 
     raw cane sugar, equal to the following:
       ``(1) In the case of raw cane sugar processed from the 
     1996, 1997, or 1998 crop, $0.18.
       ``(2) In the case of raw cane sugar processed from the 1999 
     crop, $0.17.
       ``(3) In the case of raw cane sugar processed from the 2000 
     crop, $0.16.
       ``(4) In the case of raw cane sugar processed from the 2001 
     crop, $0.15.
       ``(5) In the case of raw cane sugar processed from the 2002 
     crop, $0.14.''.
       (2) Sugar beet processor loans.--Section 156(b) of the 
     Agricultural Market Transition Act (7 U.S.C. 7272(b)) is 
     amended by striking ``equal to 22.9 cents per pound for 
     refined beet sugar.'' and inserting the following: ``, per 
     pound of refined beet sugar, that reflects--
       ``(1) an amount that bears the same relation to the loan 
     rate in effect under subsection (a) for a crop as the 
     weighted average of producer returns for sugar beets bears to 
     the weighted average of producer returns for sugarcane, 
     expressed on a cents per pound basis for refined beet sugar 
     and raw cane sugar, for the most recent 5-year period for 
     which data are available; and
       ``(2) an amount that covers sugar beet processor fixed 
     marketing expenses.''.
       (b) Conversion to Recourse Loans.--Section 156(e) of the 
     Agricultural Market Transition Act (7 U.S.C. 7272(e)) is 
     amended--
       (1) in paragraph (1), by inserting ``only'' after ``this 
     section''; and
       (2) by striking paragraphs (2) and (3) and inserting the 
     following:
       ``(2) National loan rates.--Recourse loans under this 
     section shall be made available at all locations nationally 
     at the rates specified in this section, without adjustment to 
     provide regional differentials.''.
       (c) Conversion to Private Sector Financing.--Section 156 of 
     the Agricultural Market Transition Act (7 U.S.C. 7272) is 
     amended--
       (1) by redesignating subsection (i) as subsection (j);
       (2) by inserting after subsection (h) the following:
       ``(i) Conversion to Private Sector Financing.--
     Notwithstanding any other provision of law--
       ``(1) no processor of any of the 2003 or subsequent crops 
     of sugarcane or sugar beets shall be eligible for a loan 
     under this section with respect to the crops; and
       ``(2) the Secretary may not make price support available, 
     whether in the form of loans, payments, purchases, or other 
     operations, for any of the 2003 and subsequent crops of sugar 
     beets and sugarcane by using the funds of the Commodity 
     Credit Corporation or other funds available to the 
     Secretary.''; and
       (3) in subsection (j) (as redesignated by paragraph (1)) by 
     striking ``subsection (f)'' and inserting ``subsections (f) 
     and (i)''.
       (d) Termination of Marketing Quotas and Allotments.--
       (1) Termination.--Part VII of subtitle B of title III of 
     the Agricultural Adjustment Act of 1938 (7 U.S.C. 1359aa et 
     seq.) is repealed.
       (2) Conforming amendment.--Section 344(f)(2) of the 
     Agricultural Adjustment Act of 1938 (7 U.S.C. 1344(f)(2)) is 
     amended by striking ``sugar cane for sugar, sugar beets for 
     sugar,''.
       (e) Other Conforming Amendments.--
       (1) Price support for nonbasic agricultural commodities.--
       (A) Designated nonbasic agricultural commodities.--Section 
     201(a) of the Agricultural Act of 1949 (7 U.S.C. 1446(a)) is 
     amended by striking ``milk, sugar beets, and sugarcane'' and 
     inserting ``, and milk''.
       (B) Other nonbasic agricultural commodities.--Section 301 
     of the Agricultural Act of 1949 (7 U.S.C. 1447) is amended by 
     inserting ``(other than sugarcane and sugar beets)'' after 
     ``title II''.
       (2) Powers of commodity credit corporation.--Section 5(a) 
     of the Commodity Credit Corporation Charter Act (15 U.S.C. 
     714c(a)) is amended by inserting ``(except for the 2003 and 
     subsequent crops of sugarcane and sugar beets)'' after 
     ``agricultural commodities''.
       (3) Section 32 activities.--Section 32 of the Act of August 
     24, 1935 (7 U.S.C. 612c), is amended in the second sentence 
     of the first paragraph by inserting ``(other than sugarcane 
     and sugar beets)'' after ``commodity'' the last place it 
     appears.
       (f) Assurance of Adequate Supplies of Sugar.--Section 902 
     of the Food Security Act of 1985 (7 U.S.C. 1446g note; Public 
     Law 99-198) is amended by striking subsection (a) and 
     inserting the following:
       ``(a) In General.--Beginning with the quota year for sugar 
     imports that begins after the 1998/1999 quota year, the 
     President shall use all authorities available to the 
     President as may be necessary to enable the Secretary of 
     Agriculture to ensure that adequate supplies of raw cane 
     sugar are made available to the United States market at 
     prices that are not greater than the higher of--
       ``(1) the world sugar price (adjusted to a delivered 
     basis); or
       ``(2) the raw cane sugar loan rate in effect under section 
     156 of the Agricultural Market Transition Act (7 U.S.C. 
     7272), plus interest.''.

  Mrs. FEINSTEIN. Mr. President, I rise in support of legislation 
sponsored by Senator Schumer to phase out the antiquated sugar subsidy. 
The sugar program is nothing than a system of import restrictions, 
subsidized loans, and price supports that benefit a limited number of 
sugar growers.
  I find it incredible that the federal government continues to support 
a subsidy program that is driving the domestic refinery industry out of 
existence and costing thousands of good jobs. The US Department of 
Agriculture restricts the amount of sugar available to domestic 
refineries. Without sugar, a sugar refinery cannot operate and that is 
the result of this misguided program.
  It is clear that the U.S. sugar policy has served to strangle this 
country's sugar refining industry. By limiting the amount of raw cane 
sugar available for production, there has been a 40 percent decline in 
jobs in the sugar-cane refining industry. Since 1982, nine out of 
twenty one cane sugar refineries in the U.S. have been forced out of 
business. Those that have remained open are struggling to survive under 
onerous import restrictions.
  I first became involved with this issue in 1994 when David Koncelik, 
the President and CEO of the California and Hawaiian Sugar Company, 
informed me that his refinery was forced to temporarily cease 
operations because it had no sugar.
  This 93 year old refinery is the Nation's largest refinery and the 
only such facility on the West Coast. C&H refines about 15 percent of 
the total cane sugar consumed in the U.S.
  C&H is capable of producing and selling 700,000 tons of refined sugar 
annually. Therefore, the company requires in excess of 700,000 tons of 
raw cane sugar to meet its sales demand.
  Hawaii is C&H's sole source for its domestic raw cane sugar needs, 
but Hawaii's cane sugar industry has been in decline for over 10 years. 
This has meant that C&H is forced to cover over half its annual 
consumption through imports from other countries.
  The highly restrictive sugar import system forces C&H to pay an 
inflated price for raw sugar from both domestic and foreign suppliers. 
Even more devastating, however, the quota system limits the amount of 
sugar available to the refinery. Simply put, C&H has been unable to get 
enough sugar to refine and it has been forced to close it doors on 
several occasions.

[[Page S5961]]

  The reduced production capacity has resulted in a severe downsizing 
of the workforce. As recently as 1987, C&H employed over 1,400 people. 
These are not minimum wage jobs we are talking about: the average 
employee in the cane refining industry earns nearly $43,000 a year. In 
1995, C&H had to eliminate 30 percent of its workforce just to remain 
viable under the quota system mandated by the sugar program.
  C&H now employees just over 500 people. These jobs and many others 
around the nation are at risk if reforms are not made to the sugar 
program.
  The overly restrictive manner that the USDA administers the sugar 
program has a number of other flaws. The sugar program's existing quota 
system was put in place in 1982, using trading patterns dating as far 
back as 1975. The system has remained largely unchanged over the past 
17 years despite major alterations in the international sugar market. 
As a result, the current import quota system assigns export rights to 
countries that don't grow enough sugar to export or, in some cases, are 
net importers themselves.
  For example, the Philippines are granted one of the largest export 
privileges under the sugar import quota system. It, however, does not 
even grow enough sugar to meet it own domestics needs. What this means 
is that the Philippines sell their homegrown sugar crop to the United 
States at about 22 cents a pound. It then buys raw sugar on the world 
market at around 5 cents a pound. This is ridiculous. We are in effect 
giving money to foreign countries and forcing domestic consumers to pay 
the price.
  Beginning in September of 1994, I have asked the Administration on 
eight separate occasions to reform the sugar program. Simply increasing 
the amount of sugar available through the import program would provide 
immediate relief to C&H and the other domestic refineries. To date, no 
such permanent reform of the program has been made.
  In addition to choking off the refineries' access to sugar, the US 
sugar policy also has an adverse impact on US consumers. The General 
Accounting Office has found that the program costs sugar users an 
average of $1.4 billion annually. That equates to $3.8 million a day in 
hidden sugar taxes.
  The report found that ``Although the sugar program is considered a 
no-net-cost program because the government does not make payments 
directly to producers, it places the cost of the price supports on 
sweetener users--consumers and manufacturers of sweetener-containing 
products--who pay higher sugar and sweetener prices.''
  What this means is that unlike traditional subsidy programs, the 
funds do not come directly from the Treasury. Instead, the sugar 
program places the cost consumers by restricting the supply of 
available sugar which causes higher domestic market prices.
  The legislation we are introducing will eliminate the sugar subsidy 
program by 2002. This is a simple, straight-forward, and fair way to 
end a program that has not worked for U.S. consumers or workers.
  Congress has had opportunities in the past to kill this program and 
we have not taken them. As a result, workers have lost jobs and 
consumers have lost money. I am pleased to join my colleagues in saying 
that enough is enough. It is time to end the sugar subsidy program once 
and for all.
                                 ______